Artificial Intelligence is a topic that is talked about often, especially in industries where AI has the power to transform daily tasks and create new workflows. However, implementing AI within your real estate career can lead to certain types of risk, and it’s important to understand how these risks might be covered by your existing errors and omissions (E&O) insurance.

Common Usage of AI and Your E&O Coverage

AI tools offer a number of different benefits to real estate agents, including streamlining data collection, analyzing data, and offering around-the-clock customer service¹. For many real estate agents, this evolving technology has served to make their careers more efficient. That being said, incorporating AI tools and workflows into your real estate practice should be done with caution, as AI tools are a grey area within most E&O policies.

Traditional E&O policies for real estate agents are meant to cover claims of inadequate work or negligent actions performed by a real estate professional or business. However, most E&O policies do not have updated language² and coverage details, such as exclusions or inclusions for certain types of technology like AI, leading to potential risks when a claim is made for work or an action that AI played a part in.

Key Considerations for AI-Related Claims

When it comes to AI-related claims, there are a few key considerations that you should take into account. It can be helpful to think about these considerations as you review your E&O policy to see what might be covered in the realm of AI-related claims.

• Does the claim fall under the scope of professional services covered?
• Does your policy explicitly include or exclude technology or AI-related risks?
• What was the cause of the claim? Common issues could be misrepresentation, failure to perform, or negligence related to AI usage.

Real-World Example
Real estate agents who use AI chatbots as part of an overall customer service strategy may face issues if the AI tool gives the customer incorrect information or hallucinates³ an answer. The information given may be the basis for a misrepresentation claim, especially if it caused the customer to make a specific decision that negatively impacted them. Typically, a misrepresentation claim is covered by E&O insurance, but that coverage may be called into question when an AI tool is the source of the misrepresentation.

If the AI chatbot gave incorrect information to a customer due to a technical issue, then the real estate agent may be on the hook for any claims against them, as E&O policies might not cover technology-related failures or unregulated AI tools that a real estate agent chooses to use in the same way the policy would cover an alleged negligent or inadequate act performed directly by the real estate agent.

Navigating Potential AI Risk in the Future

Navigating risk is an essential part of maintaining your professional career, and understanding the potential for AI risks now and in the future can help you mitigate their impact on your work. In general, realtors using AI may face trouble with the following AI risks:

• AI-related exposures, such as claims of misrepresentation, data privacy breaches, or incorrect AI-driven advice that directly impacts clients
• Incorrect AI outputs, data breaches, or bias within the AI algorithm leading to a liability claim
• Unregulated AI tools that access sensitive client and business information, leading to potential cybersecurity issues
• AI-enhanced images must be marked clearly with a disclaimer stating AI was used to enhance the image, or agents could face misrepresentation and negligence claims

Real estate agents should note that they are always legally responsible for the final output of images or other documents presented to clients. Whether these outputs are generated by AI or a human assistant, or by the agent themselves, proper precautions should be taken and insurance coverages put in place to alleviate the impact of potential claims.

Protecting Yourself From AI-Related Claims
Real estate agents should utilize caution when implementing AI in their business, especially if the AI technology is considered high-risk or experimental, as it may open them up to claims and issues within their career that may or may not be covered by their E&O policy.

Some E&O policies may offer specific provisions or endorsements in the future to cover AI-related incidents. To date, we have not seen any new exclusions related to AI in the industry, but this does not mean language and coverage regarding AI usage won’t be added in the future.

Remember, there is no one policy that covers everything—data breaches require cyber insurance, not just E&O coverage, and general liability insurance can help bridge the gaps in your protection. It’s always a good idea to ensure you take all available steps to protect your business and career, especially when it comes to more unknown factors such as AI in the real estate industry.

Pearl Insurance is committed to helping you manage your risk. Our carrier, AXA XL, rated A+ (Superior) on AM Best, has been partnering with Pearl for 20 years, providing you with the best E&O protection. If you have questions about E&O insurance or the claims process, schedule a time to talk to our experts.

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¹“The Growing Role of AI in Insurance: Balancing Innovation with Risk.” Catalyit, 2025
²”DoNoHarm.exe: The Liability Reckoning for AI in U.S. Healthcare.” EPIC, 2026
³“What are AI hallucinations?” IBM, 2024.