More good news about reduced professional insurance costs
December 2023
On the heels of strong financial performance in the 2022/23 fiscal year, and a 10 per cent reduction in our annual fees, E&O is doubling the coverage limits for all licensees from $1 million to $2 million effective April 1, 2024, with no increase in annual fees for licensees.
Increased limits come into effect April 1
The Board of Directors have been monitoring the adequacy of the $1 million limit and noted concerns that inflation over the past 20 years has eroded the limit. While the frequency of claims that exceed the $1 million limit is not high, the consequences for those licensees who do not have sufficient insurance can be devastating.
Given E&O’s strong capital and risk management plan, and effective claims handling and loss prevention work, coverage for all licensees will be enhanced as of April 1, 2024 at no additional cost as follows:
- Your limit of liability for each claim will increase from $1 million to $2 million;
- Your annual aggregate limit of coverage for all claims in a given policy year will also increase from $1 million to $2 million; and
- Your sub-limit of liability for tangible property damage will increase from $100,000 to $250,000 per claim
Happily, deductibles will remain the same, with one exception: social engineering fraud claims.
We will also be introducing, a new sub-limit of $500,000 for social engineering fraud claims, where fraudsters intentionally mislead a person into sending or paying money based on false information that is provided to that person. The deductible for these claims will be 25 per cent of the amount of damages unless the insured has taken steps to independently verify the instructions through secondary verification.
The present article is for informational purposes only. For purposes of issues of coverage, the Indemnity Plan wording is binding and determinative. Indemnity Plan RE0424 that will take effect on April 1, 2024 will be provided to all licensees in the March Risk Report.
E&O’s ability to provide such improvements in coverage reflects the overall loss experience of the profession. This, in turn is a product of the care and cooperation by all members of the profession in reducing the risks of covered losses for the benefit of their clients. E&O’s success is a reflection of the continuing professionalism of real estate licensees and the relative stability of the real estate market. If there should be declines in the real estate markets the dollar value of claims will increase as well. The increased limits of the policy provide better protection for both present loss exposures, and possible increased future exposures as well.
Excess coverage may still be a smart option
With this increase in coverage some licensees and organizations might be inclined to reduce or cancel their excess insurance coverage. Although, the increased limits will provide additional protection and comfort, we’d strongly advise all licensees to do a proper, up-to-date risk evaluation, preferably after consultation with an insurance broker, before making that decision.
Some licensees will continue to face a higher risk of claims that may exceed the new policy limit because, for example, they:
- provide real estate services involving multiple similar properties such as project marketing or land assemblies
- sell commercial, development or waterfront properties
- work in areas where real estate prices are extremely high.
Remember that any legal fees incurred in defending a claim are paid first against the limits of coverage, which can result in there being significantly less than the current $1 million ($2 million April 1, 2024) coverage limit available to pay damages in a complicated or hard-fought claim.
We continue to recommend licensees at higher risk consider excess insurance and comprehensive general liability insurance coverage and have listed information on our website.
