While most states do not require real estate professionals to carry errors and omissions (E&O) insurance, there are a select few that do. E&O, or professional liability, insurance provides financial protection if a client files a lawsuit claiming your work caused financial harm due to any errors or omissions.
States that do not require E&O insurance
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Illinois
- Indiana
- Kansas
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Missouri
- Nevada
- New Hampshire
- New Jersey
- New York
- North Carolina
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- South Carolina
- Texas
- Utah
- Vermont
- Virginia
- Washington
- Washington DC
- West Virginia
- Wisconsin
Though these states do not legally require real estate professionals to carry E&O insurance, it is still a good idea to have it. Bank partners, your real estate franchise, and even your clients may ask you to have E&O coverage and show proof of insurance before they enter a business contract with you.
States that do require E&O insurance
| State | Requirement |
| Colorado1 | Minimum $300,000 annual aggregate limit |
| Idaho2 | Purchase E&O insurance |
| Iowa2 | Minimum $100,000 annual aggregate limit |
| Kentucky2 | Purchase E&O insurance |
| Louisiana3 | Purchase E&O insurance |
| Mississippi2 | Minimum $100,000 annual aggregate limit |
| Montana4 | Must purchase E&O insurance before license can be activated |
| Nebraska5 | Minimum $300,000 annual aggregate limit |
| New Mexico6 | Certificate of insurance to prove E&O coverage |
| North Dakota7 | Purchase E&O insurance |
| Rhode Island8 | Certificate of insurance to prove E&O coverage |
| South Dakota2 | Purchase E&O insurance |
| Tennessee9 | Purchase E&O insurance |
| Wyoming10 | Purchase E&O insurance |
If you are a real estate professional that works in any of these states, it is extremely important to know exactly what is mandated by your state.
Why is E&O insurance crucial for real estate professionals?
Whether your state mandates you obtain E&O insurance or not, it is still important to insure yourself and your livelihood.
- Personal Asset Protection. In the absence of E&O insurance, a single mistake or lawsuit alleging negligence could put your personal assets at risk. E&O coverage acts as a safety net, safeguarding personal assets against potential legal claims arising from professional errors or omissions.
- Client Confidence and Trust. Having E&O insurance can instill confidence in clients, showcasing that you are prepared for unforeseen circumstances and are committed to protecting your clients’ interests.
- Legal Defense Costs. Legal defense costs can be exorbitant, regardless of the validity of a claim. E&O insurance covers legal expenses, including attorney fees, court costs, and settlements or judgments in covered claims. Without this coverage, real estate professionals might have to bear these expenses out of pocket, which can be financially debilitating.
- Professional Reputation Protection. A lawsuit or claim can significantly tarnish a real estate professional’s reputation. Having E&O insurance in place can demonstrate a commitment to professionalism and responsibility in handling any potential errors or omissions.
- Comprehensive Risk Mitigation. While some errors or omissions might not immediately result in legal action, they can still impact client relationships and result in financial losses. E&O insurance offers comprehensive risk mitigation, providing coverage for a wide range of potential errors, even if they don’t lead to legal claims.
Even in states where E&O insurance is not mandated, obtaining this coverage is a prudent decision for real estate professionals. It acts as a shield against unforeseen legal challenges, protects personal assets, upholds professional integrity, and enhances client trust, providing a safety net in an inherently complex and litigious 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.
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.
Want to know more? Find out for yourself.
(800) 447-4982 | pearlinsurance.com/professional-liability-insurance/
1“When is Professional Liability Insurance Required?” Insureon, 2023.
2“How Does Professional Liability Insurance Protect US Businesses?” Insurance Business, 2022.
3“Real Estate Errors and Omissions in LA.” Firm Secured, 2023.
4“Montana Real Estate License Requirements.” Real Estate U, 2023.
5“Errors & Omissions Fact Sheet.” Nebraska Real Estate Commission, 2023.
6“Real Estate Brokers.” New Mexico Real Estate Commission, 2017.
7“State Real Estate Commission.” North Dakota Real Estate Commission, 2023.
8“Understanding Reciprocal Licensure in Massachusetts and New England Part 2.” New England Real Estate Academy, 2021.
9“Tennessee Real Estate Commission Instructor Training Manual.” Tennessee Real Estate Commission, 2023.
10“Real Estate Insurance in Wyoming.” PBI Group Solutions, 2023.
