Why Real Estate Title Agents Need Errors And Omissions Insurance
In fact, no matter if you have been in business for quite some time, or you are new to the real estate industry, the risks you face daily, from errors in closing costs and payoff amounts to failing to meet client expectations, make you a major target for lawsuits. Even if you are cleared of all claims, the fees spent on defense, the time spent away from your business, and the added stress of dealing with the situation can prove costly. Without the right coverages, real estate agents may put their professional and financial future on the line.
Also, it is the title industry’s role to safeguard the client’s escrow and other funds by providing a means for the secure transfer of their real estate in the industry. If an error or breach occurs during this transaction, the agent is held accountable for damages incurred resulting from the error or breach.
Title Agents Errors and Omissions Insurance protects title agencies, including the escrow agent, closing cost agent, title searcher, and more, against the impact of a lawsuit incurred as a result of title agents omissions and errors and fraudulent wire activities.
This insurance covers all costs suffered as a result of an emerging lawsuit claiming alleged errors in the title documentation process, including title searches and escrow. Under this coverage, the insured is compensated in the event of final settlement up to the policy limit, as well as compensation for defense costs.
Title Agents Errors and Omissions Insurance Under the Fidelity-Pak Program
Title Agents Errors and Omissions Insurance Coverage under the Fidelity-Pak Program provides a wide range of comprehensive errors and omission coverage for real estate title agents, including:
Claims related to defect or deficiency coverage
Sometimes the real estate process can become damaged due to a defective or unmarketable title, also known as a title defect, which means there is an omission, error, or other complication related to the ownership of the property that makes it unsuitable for sale to a valid buyer.
Typically, as part of the settlement process under a contract of title, the buyer will pay the title company or attorney to search the title to the property to ensure the seller has a valid and marketable title to transfer without title defects to protect the buyer’s right to the property. However, sometimes important details related to the property are not recorded in state and county records, which prevents certain information from being known, which puts the agent at risk.
The claims related to defect or deficiency insurance covers claims related to defect or deficiency claims resulting from a deficiency or defect not recorded in public.
Consumer Financial Protection Bureau Matters (CFB) Coverage
The Consumer Financial Protection Bureau protects consumers from abrasive, unfair, or deceptive practices and takes action against businesses that break the law, such as predatory lending.
If a consumer files a complaint against your company with the CFPB, and upon investigation, the CFPB decides that your company has indeed violated federal consumer financial laws, it could result in a court proceeding.
The Consumer Financial Protection Bureau Matters Coverage assists with costs incurred as a result of Consumer Financial Protection Bureau matters. Under this coverage, Insureds receive up to $150,000 sub-limit coverage for relevant attorneys’ fees, costs, and expenses, including civil investigation, hearing, subpoena, or civil action conducted or received by the CFPB.
Claims Caused by Independent Contractors
The claims caused by independent contractors insurance covers Insureds against a claim caused by independent contractors.
Occasionally, you may need to hire an independent contractor to assist you in your real estate business. During these times, it is important to verify that the contractor is covered by insurance, which will cover damages if the contractor’s errors or accident causes damage.
Prior Acts Coverage
Title Agents Errors and Omissions Insurance covers prior acts coverage is a feature of liability policies that extends the coverage of insurable occurrences to dates before the purchase of the policy. In other words, it covers the time between when services are provided and when claims are filed as a result of those services. Under this coverage, all claims caused by wrongful acts following the retroactive date and before the end of the policy period are covered.
Fraudulent Email Wire Transfer Coverage (Third Party)
Under the Fraudulent Email Wire Transfer Coverage, compensation is paid on behalf of the Insured, those sums insured become legally obligated to pay up to $1 m for a covered loss as a result of an employee transferring escrow funds from an account of the Insured in dependence upon fraudulent email instructions relieved from a criminal claiming to be a lawful party to the transaction.