As a title agent, you play a critical role in real estate transactions by performing title searches to ensure the property is clear of all encumbrances, preparing required documents to facilitate closing, acting as a witness or notary public for the signing of necessary paperwork, and managing escrow accounts. Negligent errors or omissions in any of these duties, whether real or merely perceived, can have significant financial and legal consequences for all parties involved. Victor’s errors and omissions (E&O) insurance can help!
E&O insurance is designed to protect you from the risks associated with any actual or alleged negligence in the provision of your services as a:
- Title agent
- Title insurance agent
- Title examiner
- Title searcher
- Title abstractor
- Escrow agent
- Closing agent
- Notary public
- Public record searcher
- Flood zone certification provider
- Witness closer
Value of E&O insurance: Real life claims example
In today’s market, where many homeowners are reluctant to sell their properties for fear of losing their low interest rates, the homes that do come onto the market are typically driven by (1) required moves due to a job relocation or similar circumstance or (2) the death of the owner. The latter scenario adds complexity to the transaction as it may involve reviewing probate and estate documents, confirming the identity and authority of the executor or personal representative of the estate, and identifying heirs and those with an interest in the property, including lienholders and creditors. These factors make the transaction more complex and also increase the risk of title disputes and claims against your firm.
For example, in a real claim scenario, a title company was sued for negligence by an individual (plaintiff) claiming to be an unidentified heir. The seller of the inherited property represented himself as the sole heir of his deceased father’s estate and executed an affidavit to that effect. After closing, however, the plaintiff emerged and challenged the sale of the inherited property and alleged the title company was negligent for failing to identify him as an heir during their title search.
The above example is a common risk faced by title companies. Even with careful due diligence you can still be exposed to claims of negligence by unknown heirs or other parties after closing. Because claims like this can arise unexpectedly—even when you are thorough in the performance of your services—having robust E&O insurance to protect your business from these unpredictable risks is essential.
Additional coverages that can help title agents
The Victor E&O policy also includes valuable additional coverages for the following losses (subject to policy terms):
- Licensing proceedings: coverage for costs incurred in investigating or defending you in a proceeding before a real estate licensing board.
- Loss of earnings: coverage for lost earnings for each day or partial day you are asked to attend a trial, hearing, or arbitration proceeding involving a claim against you.
Whether or not your policy provides similar protections will depend on who your insurance provider is and the exact terms of your policy. A trusted insurance agent or broker can help evaluate your options and find a policy tailored to your firm’s needs.
How Victor can help
Protect your business and your success with the right E&O insurance. We can help. For more information, visit our website or contact us at realestate.us@victorinsurance.com.
You can also download a copy of this article as a PDF.
