Error and Omission insurance, sometimes called E&O, is a risk insurance for real estate agents and real estate brokerages. There is no single standard E&O policy, policies can come from different companies or can be different plans. Most policies will cover scenarios where a real estate agent has failed to perform their professional duties, or has otherwise performed their professional duties in a negligent way. Forgetting to attach a document, missing a page in a contract and leaving several provisions blank, those sort of acts will typically trigger an E&O policy. Knowing or reckless acts may not be covered by an individual or brokerage policy; so if the agent intentionally leaves an attachment off the contract or if an agent provides cavalier advice to a client that was truly irresponsible [e.g. “oh sure, you always see black mold in houses like this; just spray some lemon-vinegar on it and it’ll go away, I guarantee it.”], the E&O insurance may avoid covering that broker for those acts.
Policies will typically have exclusions where the policy doesn’t cover, things like criminal acts or bankruptcy issues may not be covered by the policy. Consult your individual policy for more clarity on the scope of the coverage. When a policy covers someone, it can provide several protections such as paying for damages caused by the agent’s act, paying for attorney fees and filing fees.