Errors, Omissions, Insurance
The Real Estate Professional Guide to E&O Coverage

Part 1: How Does Errors and Omissions Insurance Protect Real Estate Professionals from Lawsuits?
How E&O Insurance Reduces the Cost of Lawsuits

If, despite your best efforts, someone brings a lawsuit against your real estate agency, the good news is that Errors and Omissions Insurance can reduce the cost of the lawsuit. Here's how it works.

What You Pay for Errors & Omissions Insurance

In order to have real estate Errors and Omissions Insurance, you'll pay…

  • An annual premium. This is the amount you pay each year to your insurance agency. In essence, you pay a little each year in exchange for a lot of protection when you need it.
  • A deductible. This is the amount you're responsible for paying before your benefits kick in. Most real estate agents have a deductible between $1,000 and $2,500. When you've paid that, your insurance can cover the remaining legal costs until you reach your policy limit, usually $1 million.

Because your legal bills will accumulate quickly in a lawsuit, E&O can save you from having to pay out of pocket for the mammoth expense of legal costs, judgments, and settlements.

How Much Does E&O Insurance Usually Cost for Real Estate Agents?

You can view our more detailed real estate insurance cost estimates online, but let's take a quick look at what your annual premiums might be for Errors and Omissions Insurance.

The typical annual premium of E&O Insurance for different real estate professionals breaks down as follows:

Profession Typical Annual Cost of E&O Insurance

Mortgage Brokers


Property Managers


Real Estate Agents


Real Estate Appraisers


Title Abstractors


Title Agents / Closing Agents


Depending on the area of real estate you work in, you could have to pay between $660 and $2,760 for E&O Insurance. These numbers are based on what the typical small-business owner pays — larger agencies may have higher premiums.

How Much Do Lawsuits Cost?

It's difficult to estimate what a real estate lawsuit might cost because lawsuits can come in all shapes and sizes. Think back to the case studies we looked at. The less expensive lawsuits cost a few thousand dollars, while the most expensive lawsuits for a big agency were multi-million dollar cases. That's a fairly accurate sample of the range of lawsuit costs you could see.

But let's look more at how costs can vary:

  • Frivolous lawsuits ($2,000 to $5,000). A frivolous lawsuit is an unfair complaint that a judge throws out before it can go to court. Even these unfair claims can be costly. The US Chamber Institute for Legal Reform New browser window icon. estimates that small-business owners pay between $2,000 and $5,000 for the typical frivolous lawsuit.
  • The typical E&O lawsuit (approximately $44,000). Our research shows that for a "malpractice" or Errors and Omissions case, you can expect to pay around $44,000 in legal costs. The total costs will also depend on a number of factors, including where in the country the case is tried, what the outcome is, whether the defendant owes damages, and many more.
  • Non-lawsuit costs. There are "costs" other than your legal bills and damages that come with a lawsuit, namely damages to your reputation. Much of your business is likely based on referrals and customer loyalty, and the reputational damages that come with a real estate lawsuit could be damaging. E&O Insurance may also cover settlements, which occur when you settle out of court. Settlements are typically a quieter and quicker way to resolve a lawsuit.

In an uncertain time when you're not sure how much a lawsuit will wind up costing you, you'll have comfort knowing that real estate E&O can offer financial protection to your real estate agency.

Next: Pt. 2: When Do Real Estate Professionals Need E&O Insurance?

Grab-n-Go Information

Real Estate E&O eBook
Errors, Omissions, Insurance - The Real Estate Professional's Guide to E&O Coverage
Browse eBook
Sample certificates
See a sample Certificate of Liability Insurance, the proof of coverage you need for most contracts.
View Sample
Sample Quotes & Cost Estimates
See what insurance really costs: actual quotes by policy & specialty.
Get Estimates
Ask A Question
Submit your questions about small business insurance and get answers from our experts.
Read Answers