Annual fees are $250 per licensee per year and are paid every two years when you renew your license ($500 for the two-year licensing period).

Coverage under the Indemnity Plan is for errors, omissions and negligent acts of licensees in the course of providing real estate services under RESA. The specifics of what is and isn’t covered can be found in the Indemnity Plan. For more information, see also “Risks and insurance for the real estate licensee” by Bill MacLeod.

The Indemnity Plan provides up to $2 million (including damages, claims expenses and deductibles) for all claims arising out of one error. If actual or alleged errors are related, they are considered one error and are subject to one policy limit. 

If a claim is relating to or arising out of damage to, destruction of, or loss of use of tangible property, there is only $250,000 in coverage (see Exclusion 5).

Social engineering fraud claims have up to $500,000 in coverage and are subject to a 25% deductible unless secondary verification is made before funds are transferred (see Exclusion 17).

The Indemnity Plan provides coverage for both expense and indemnity payments.

Expenses are the costs of defending the claim, including legal fees and disbursements. Sometimes claims are defended by E&O staff lawyers; other times the defence of a claim is referred to private law firms whose lawyers have relevant experience. In either case, E&O’s goal is to defend you with care and skill to protect your financial position and your professional reputation, and in the interests of the insurance program as a whole.

Indemnity payments are payments made on your behalf to compensate a party who suffered a loss as a result of your mistake. This may be an award of compensatory damages made against you in a court action or it may be a settlement of a claim.

The Indemnity Plan does not pay for:

• the return or reimbursement of any property, benefit, commission or fees that you received
• fines, sanctions, penalties or disciplinary hearing costs
• punitive, aggravated or exemplary damages
• orders for payment of any sum resulting directly or indirectly from dishonest appropriation of money or other property by any insured.

The definition of “damages” in the Indemnity Plan sets out what indemnity payments may be made on your behalf.

The deductible, which is $2,000 per licensee, is only payable if E&O pays damages on your behalf. No deductible is payable if only defence costs are incurred. If a brokerage and a licensee under its supervision are both found liable, each pays a deductible of $2,000 for a total of $4,000.

Sometimes individual licensees may enter into agreements with their brokerages to assume responsibility for payment of the brokerages’ deductible obligations. These agreements are between the licensee and brokerage; regardless of this type of agreement, E&O will hold each party responsible for their respective deductible.

For a second paid claim within two years, the individual licensee’s deductible doubles to $4,000. If a claim is dismissed at trial, you do not pay a deductible even though E&O has incurred defence costs.

Claims for social engineering fraud are subject to a 25% deductible (see Declaration, s. 3(d) and 4(c )) unless steps have been taken to independently verify instructions through secondary verification (see Part I: Definitions for “secondary verification” and “social engineering fraud”).

If you surrender your real estate license during the first year of your two-year licence term, you can receive a refund of your second year’s insurance assessment. If you believe you are entitled to a refund, please contact our office administrator at dyerxa@reeoic.com and provide your name, licence number and address.

Excess insurance will protect you from claims that may exceed the amount of coverage available under the Indemnity Plan. Although the $2 million limit in the Indemnity Plan will protect you for the majority of claims real estate licensees face, it might not be enough to protect you and your brokerage. If a mistake you make in the provision of real estate services leads to a claim that will cost more than $2 million to defend and pay, both you and your brokerage are at risk.

We recommend that you review the amount of coverage your brokerage has in light of the risks you could face. Examples of transactions that could put you at higher risk of facing claims that will exceed $2 million are:  providing real estate services involving multiple similar properties, selling commercial or waterfront property, or working in areas where real estate prices are particularly high. If you do these types of transactions, you should consider excess coverage.

In addition to excess insurance, there are several other insurance products that brokerages should consider, including Comprehensive General Liability, cyber insurance, crime (fidelity) insurance, property insurance and Directors’ and Officers’ insurance. For more information, see “Risks and insurance for the real estate licensee” by Bill MacLeod.

Talk to one or more insurance brokers to review the various options available and the terms of coverage, including deductibles and premium rates. Speak to your own broker, or consult one of the brokers listed below*, who provide excess professional liability coverage to BC real estate brokerages and might be able to tell you about coverage for risks we don’t insure.

*This list is provided only to assist licensees interested in buying excess insurance. It is not intended to be an exhaustive list, nor in any way an endorsement of any insurance broker.

The answer is no.

If:

• you,
• your spouse, or
• a corporation or other legal entity in which either of you either separately or together, directly or indirectly, have more than a 10% direct or indirect interest,

have, may acquire or sell a beneficial interest in the property and get sued for professional negligence, you will not have coverage (Exclusion 9 of the Indemnity Plan). This exclusion applies even if you have complied with your professional obligations under the Real Estate Services Rules for disclosure of your interest in the transaction. The exclusion is strictly applied.

If you are sued in relation to the purchase or sale of your own property, you will not only have to pay a judgment if you are found liable, you will also have to pay for your own lawyer to represent you. That can be very expensive and a major hassle, even if you are able to prove that the claim against you is unmerited.

The Indemnity Plan does provide that your brokerage may be covered for such a claim if the brokerage is brought into the suit against you (Insuring Agreement 3.6), but if a payment is made by E&O on behalf of the brokerage, then E&O has the right to recover from you what they had to pay out.

Any way you look at it, this will be a bad situation for you; it’s far better to have someone else act as the professional real estate advisor where you or your spouse are involved in a transaction in which you have or may acquire an ownership interest.

Using a member of your own team to list your property for sale is also not recommended. As a member of the team, you must be listed as a seller’s agent on any disclosures and service agreements. Your team members will not lose coverage as long as they have no ownership interest, but the risks of a claim against you, your team members and your brokerage are increased when you are both the seller and the seller’s agent.

The Indemnity Plan does not provide coverage for complaints made against you to the BC Financial Services Authority, real estate boards, or to the Human Rights Tribunal. Licensees are advised to retain their own counsel to represent them in such matters.

Sometimes licensees face claims for damages that are handled by E&O and also face a complaint made against them to the BC Financial Services Authority. Any information you provide to E&O on a claim you have reported to us will be kept confidential and will not be shared with the BC Financial Services Authority unless you consent or disclosure is required by law.

No, there is no coverage under the Indemnity Plan for complaints made against you to the BC Financial Services Authority or a real estate board or for any fines, sanctions or penalties (including orders requiring you to disgorge, or give up, commissions or fees) that the BC Financial Services Authority or a real estate board may impose on you  (see Exclusion 18 and definition of “Damages”).

Licensees who are sued in court for breach of fiduciary duty or fraud may face claims for the return of commissions or profits, in addition to claims for compensatory damages.

The Indemnity Plan does not cover “a claim relating to or arising out of the gain of a personal profit or advantage to which an Insured is not legally entitled” (Exclusion 11 in the Indemnity Plan). These claims may also be excluded by other provisions of the Indemnity Plan. If you engage in the type of activity that may result in an order for you to give up commissions or fees (called a disgorgement order), either to the BC Financial Services Authority or to a party in a lawsuit, you should be prepared to repay the money out of your own pocket.

In addition, you will not have coverage for a claim triggered when you press for payment of a commission or fee. Exclusion 6 in the Indemnity Plan sets out that the Indemnity Plan does not apply to “a claim precipitated by an attempt to collect a commission or fee.”

You will have coverage under the Indemnity Plan for errors occurring anywhere, provided that the claim is first made and proceedings are instituted and remain in Canada (Part II: Insuring Agreement, section 3.1). Licensees providing real estate services outside of BC should ensure that they are compliant with all licensing, legal and regulatory requirements of the jurisdiction where they are operating.

Yes, if you surrender your licence, you will continue to have coverage. This coverage applies to claims that are discovered and reported after the termination of your licence, but that arose during the time while you were both licensed and insured. This is an important feature if you are retiring or leaving the industry to take up another career.

Coverage under the Indemnity Plan is for claims arising out of errors by you “in performing or failing to perform real estate services for others.” “Real estate services” are defined in RESA (and the Indemnity Plan extends this to also include services in regard to disposing of or acquiring a business, with or without a real estate component, for a client). If claims are made against you for services that do not fall within this definition, you may not have coverage.

If you are giving advice or opinions on property values outside of a trade or prospective trade in real estate, you may not have coverage if you are sued for negligent advice. For example, if you are retained to provide an expert opinion to a lawyer on the value of  property for use in a matrimonial or other legal dispute where there is no trade in real estate (as defined in RESA), you may not have coverage under the Indemnity Plan if you are sued for negligence in providing that opinion.

The Indemnity Plan also excludes coverage for claims relating to or arising out of activities as an insurance agent or insurance broker, builder, contractor, property developer, mortgagee, notary public, property appraiser or court-appointed administrator (Exclusion 2 of the Indemnity Plan). Licensees who take on these roles explicitly or implicitly are taking on additional risks beyond that of a real estate licensee. If you are engaged in any such activities, you should consult with an insurance broker about arranging insurance coverage that does apply.

Licensees preparing Depreciation Reports required by the Strata Property Act will not have coverage under the Indemnity Plan for this service. E&O’s view is that the preparation of such reports is not the provision of real estate services and thus falls outside of coverage provided in the Indemnity Plan.

Preparing Depreciation Reports is a highly specialized service and does not require a real estate licence. If you are offering this service to clients, you should purchase separate coverage from an appropriate insurer. It is good practice for strata managers to expressly advise strata corporations to hire only service providers who are properly insured.

No. An executor having a grant of probate and selling a property is a “court appointed administrator” and does not have coverage as per Exclusion 2 of the Indemnity Plan. The licensee’s brokerage would also have no coverage, as per Insuring Agreement s. 3.6.

Your first obligation is to report a claim or potential claim to E&O as quickly as possible (see below), along with complete information about it. Include your written statement responding to the allegations and provide us with all documentation related to the matter.

Your second obligation is to assist and co-operate with E&O staff and any outside counsel we may retain to handle the matter. This may include assisting us in investigating coverage, attending interviews, examinations and court hearings, negotiating settlements and generally defending the claim.

You are also obligated to obtain our agreement before you take any steps on your own in relation to a claim or potential claim, including making any admissions, settlements or assuming any obligations.

If you become aware of a claim against you, or an incident that may give rise to a claim, however unmerited you believe it to be, you must report it immediately in writing to our office, along with the fullest information obtainable. A telephone call to E&O is not sufficient to obtain coverage.

A claim may be a demand for money, an action or a claim or institution of proceedings against you. If a client suggests you are negligent or that you made a mistake, or if you think you made a mistake, report to us without delay.

We bring many years of experience in handling problems like yours to assist you and it will not cost you anything to simply report the matter. Sometimes we can make the problem go away entirely, but we need to have the chance to do so. This opportunity could be lost if you delay in reporting.

If you are asking yourself, ”Should I report a matter to E&O?” the answer is that you should. It’s better for you to contact us about a problem when it arises than to have problems get worse because we didn’t know about them until it was too late to take steps to address them. Delay in reporting can cause the loss of your insurance coverage.