New Indemnity Plan effective April 1; premiums stay the same
April 1, 2020 marks the beginning of E&O’s 33rd policy year. Your annual premium of $350 ($700 for the two-year licensing period), payable when you next renew your license, has remained unchanged since 2011. Stable and cost-effective coverage is a clear benefit of the E&O self-insurance program and is all the more evident when reading recent news reports about significant increases in insurance premiums in the private market.
Maintaining such low premiums depends mainly on the continuing care that you take to avoid causing losses. Doing things right works to the continuing financial benefit of everyone in the profession.
The Indemnity Plan RE0420 replaces Indemnity Plan RE0419, and will apply to new claims reported to E&O on or after April 1, 2020.
There have been some amendments to the wording in the Indemnity Plan to clarify coverage including:
The Indemnity Plan is no longer described as a “claims made” plan but rather as an indemnity plan that governs claims and potential claims reported during the indemnity plan period.
“Damages” now refers to compensatory judgements, awards or settlements and expressly does not include any property or benefit received for your services.
“Error” has been amended to further clarify when errors are related.
Part II: Insuring Agreements
Section 2. Defence and Settlement was amended to clarify that a defence is provided when all other terms of the indemnity plan are met and there is no obligation to defend a claim or part of a claim to which the Indemnity Plan does not apply. Sub-section 2.5 has been added to clarify that E&O may withdraw from the defence at any time if it’s determined that a claim is not covered.
Section 3. Scope of Coverage, Sub-section 3.1 has been amended to add a requirement that proceedings against you must remain in Canada. Sub-section 3.3 clarifies when a claim or potential claim is made.
Part III: Exclusions
Exclusion 7 has been modified to exclude claims relating to or arising out of invasion of the right of private occupancy.
Exclusion 9 has been amended to further clarify the types of ownership interests for which coverage will be excluded.
Part IV: Conditions
The wording in Sections 3, 7, 8, 15, 16 and 17 has been modified to update the language to provide clarity and consistency.
What you should know
The Indemnity Plan continues to provide you with $1 million in coverage against negligent errors and omissions that may occur in the course of your activities as a real estate licensee.
Please take a few moments to familiarize yourself with the terms in the Indemnity Plan. The wording and general information on E&O, including FAQs and instructions on how to report a claim, are available to you on the website at www.reeoic.com, using the password eno.
We will continue to save resources by foregoing the mailing of hard copies of the Indemnity Plan to licensees, but you may download or print a copy from the website at any time.
It’s a good idea to periodically review your insurance needs. Depending on your particular situation, you may need comprehensive general liability insurance coverage and/or excess insurance coverage. Check with your managing broker to find out what kind of insurance your office has and if additional coverage is appropriate in light of the risks to which you are exposed. If you are involved in transactions that put you at higher risk, such as the provision of real estate services involving multiple similar properties, selling commercial or waterfront properties, or working in areas where real estate prices are particularly high, you are at higher risk of facing claims that exceed the $1 million policy limit in the Indemnity Plan and excess insurance would be wise.
Remember that the legal fees incurred in defending you are paid first against the limits of coverage, so that in a complicated or hard-fought claim, there may be significantly less than $1 million available to pay damages.
Excess insurers should be provided with a copy of this Indemnity Plan to ensure that they are aware of the terms of coverage.
Excess insurance policies may also provide additional coverage such as cyber insurance or limited protection against the legal defence costs of disciplinary proceedings. Comprehensive general liability (CGL) insurance is essential for every brokerage and agent as it provides coverage for bodily injury and physical property damage to third parties including risks arising from your premises as well as any showing or listings. Ensure that the brokerage CGL policy extends coverage to independent contractors and not just employees of the brokerage.
Licensees acting as strata and property managers may or may not have coverage for bodily injury claims under their clients’ insurance policies. Brokerages providing strata or property management services should ensure that their licensees have this coverage under the brokerage CGL and/or excess policies and that these policies also extend to independent contractors.
For additional coverage, we recommend that you consult with an insurance broker who has experience in placing insurance for real estate brokerages and who can advise you about your needs and options. Check out additional information on excess insurance and a list of insurance brokers.
You may also find the article by Bill MacLeod on Risks and Insurance for the Real Estate Licensee useful.