Who does errors and omissions insurance cover in real estate transactions?

Errors and omissions insurance specifically provides coverage for licensees, such as real estate agents and brokers, who may be sued by consumers for mistakes, negligence, or failure to perform their professional duties in real estate transactions. This insurance is critical for protecting the financial interests of real estate professionals, as it helps to cover legal fees and potential damages that may arise from claims made by clients or other parties involved in a transaction.

The focus of this type of insurance is strictly on the professionals in the industry, rather than consumers or other parties, which is why licensees are the primary beneficiaries of this coverage. This coverage does not extend to consumers, brokers exclusively, or property owners, as they are not the parties being insured against potential lawsuits resulting from real estate activities. Such distinctions are important for understanding the role of errors and omissions insurance in the real estate field.