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7 Comments on E&O Insurance.....What's the best type of coverage?
I have a small brokerage and I pay the E&O. It is a small amount $700 +/- per year. We average about 3 agents.
I have E&O Ins for our inspection firm it runs $1300 a year to cover me my inspectors and agents.
Joseph Keech (Blue Atlantic Properties) Joseph, that's not bad. That I could handle. Do you mind letting me know who you use? Some of the rates I've been quoted are pretty riduclous.
:)
David Salvato (David home Inspection Service) David, again that's something thats manageable. Thanks for your feedback!
:)
I actually specialize in E&O insurance for Real Estate professionals so I thought I would post. E&O insurance rates vary, and there are a number of factors that go into determining rates. If it is a smaller size firm with 1-5 agents and you are doing 100% residential Real Estate you can expect to pay anywhere from $700-$1000 per year. This rate covers you, your firm, its agents i.e. (Independent Contractors) for all of the transactions you consummate.
Some companies base their rates off of how many agents you have, some base it off of Gross commission income. Some base it off of both. All companies give credits for experience in the field of course and you can get other credits for the percentage of transactions where a home inspection is performed, home warranties are placed etc.
E&O Insurance is a claims made policy which means both the claim and occurrence have to happen within the policy period. When you purchase E&O insurance you will get what is known as prior acts some call it a retroactive date. This date is very important because the carrier will only cover those claims that OCCURRED after this date. So if you have a claim but the occurrence took place prior to your prior acts date no coverage is afforded.
I work with many size offices and depending on how you want to do it is optional. You can charge your agents a per deal rate, flat fee, or a monthly fee. It is optional and up to you however be aware that cost should only be inclusive of your actual rate you are paying. Some people build the deductible inside of the fees they charge their agents however if you are going to do this you may want to be sure to outline in your agreement who is responsible for the deductible. Of course you are ultimately responsible but if an agent does not have to pay the deductible because it is built into their fees it would certainly be a plus to the agent knowing that if there is a claim they don't have to come up with out of pocket expense. I hope this helps and if you need anything further please feel free to contact me at anytime.
John P Abosida
E&O Insurance AGency
jp@realestateeno.com
509-276-9428
As a compay owner/broker we pay based on the Gross sales volume but I charge the agent per charge of $40 for every $250,000 of units sold. It comes very close to covering our self some years and others we make a very small profit but after taking the time to add it and keep track I'm sure its more of a break even if were lucky. My parents own and sale insurance and they have told me many of the local agents have asked for a quote as thier broker is no long offering it to them. Who knows for sure if its a cost cutting factor but wait till they have a claim and the agent never had coverage. I'm sure the company will get stuck with the legal fees.
I just started my own small company, just to get out of paying some of the large company fees. My wife is also an agent and we don't plan on taking on any other agents. Any advice on where to go to get a quote on reliable coverage?