Real estate transactions are complex and involve significant amounts of money. Risk management can help proactively protect against claims, but even the most diligent real estate professionals can have claims filed against them due to perceived errors or omissions. In the instance of a claim, errors and omissions (E&O) insurance is there to provide financial protection and assistance.
To ensure claims are handled properly and effectively, it’s vital to understand what to do if a claim is filed against you. The following are a few simple steps to follow when handling a claim.
Step 1: Report the Claim
The first step is to contact your insurance company as soon as you find out about a mistake made or a lawsuit filed. Timely reporting ensures that your insurer will help investigate and solve the claim promptly. If you don’t report the claim quickly, your insurer could deny it leaving you without support—both financial and legal.
Many E&O policies will pay for your legal defense and even help you find a lawyer. Make sure you know exactly what your policy covers.
Step 2: Ask Questions
The claims process can be stressful, but your insurance company is there to help you through it. When reporting the claim, you can ask questions such as: 1
- Is this incident covered with my policy?
- How can I get in touch with the agent assigned to my claim?
- When can I expect a follow-up?
Your insurer should have experts to give you all the information you need and is a great resource throughout the claims process.
Step 3: Gather Documentation
Documentation is the best bet for a successful legal defense, and keeping detailed records of all professional activity is a key part of risk management for this very reason.
Gather all the documentation and records related to this claim, including all communication logs (e.g., emails, text messages, phone calls, face-to-face discussions). 1 It’s always better to have more information than not enough.
Step 4: Talk to a Lawyer
Litigation can be intimidating and tricky, but that’s where your legal defense comes in to help. Your lawyer will review your legal complaint and help you decide what the best move will be.
Your lawyer may decide to do one of the following.1
- Answer the claim: Go to court, admit to or deny the allegations, and provide defensive evidence.
- Dismiss the claim: Try to have the claim dismissed if the plaintiff doesn’t have legal standing to file or has a weak case.
- Settle the claim: Reach a monetary settlement out of court with the plaintiff, which could be cheaper than going to court.
- Go to trial: Prepare to go to court if the plaintiff isn’t budging.
At any time throughout the process, you can go to your insurance company to ask what is covered under your E&O policy.
Though submitting a claim can feel as though you’re admitting fault, know that it has nothing to do with your ability to perform your job well. Claims are learning experiences, and this process can be a great time to examine your risk management strategies to see what you need to add or bolster to prevent any future claims.
It’s vital to have a comprehensive E&O policy that will defend you should claims arise. Pearl Insurance has specialists with 40+ years of combined experience ready to help you. If you have questions about E&O insurance or the claims process, schedule a time to talk to our experts.
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.
Ready to get a quote for your E&O insurance? Give our experts a call at (855) 465-0200 or click on the button below to fill out a quote form.
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1“How to Make an Errors and Omissions Claim.” Insureon, 12 February 2024.
