Does Your Broker Require You To Cover Their Legal Expenses

Question

This is for any Brokers or Realtors out there. If your a Realtor, does your broker require you to cover them in the event you are sued by a buyer or seller for whatever reason and your E&O will not cover you or your Broker, are you on the hook to pay for their legal expenses? Just wondering if this is industry standard or not.

Curt Davis · Answer

Here in TN E&O for the actual brokerage is optional. So here if I get sued and for some reason my E&O does not cover me then it wont cover my Brokerage.

Thanks @Michael Liddicoat for commenting

Ryland Taniguchi · Answer

In Washington State, the brokers E+O policy does not cover the Consumer Protection Act and this is being very liberally interpreted by the current attorney general. The Consumer Protection Act involves unfair business dealing or deceptive advertising.

So a litigating attorney will try to go after your E+O and try to prove that you violated to the Consumer Protection Act so that can go after personal assets.

So the agent can be on the hook for some things.

Karen Morrison · Answer

My E&O has limited liability expenses I am required to pay if I am at fault and the E&O covers the remaining amount. Zero cost to me if I am not at fault.

Kevin Romines · Answer

You would be well advised to get your own E&O policy even if the managing broker has theirs. Do you want to trust in that persons policy, when you’re not exactly sure what it covers? What if that person’s E&O coverage is exceeded, then are you at risk? The safe bet is to pay the small amount required for your own policy and also ask to get a copy of the managing brokers policy so you can actually see how you are covered. Keep in mind, these policies pay for legal defense as well, we all know Lawyers are not inexpensive?

Does Your Broker Require You To Cover Their Legal Expenses

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