An overview

For real estate licensees, particularly those running brokerages, some basic advice may help orient you as to the kinds of insurance that you should consider. For the detailed planning of insurance, you should consult an experienced insurance broker.

Here is a table of the protection offered by Real Estate Errors and Omissions Insurance Corporation, as and from April 1, 2025, the Real Estate Compensation Fund, and commercial insurance policies.

	Risks	Real Estate Errors and Omissions Indemnity Plan	Real Estate Compensation Fund	Commercial policies
Negligence	Negligence in acting as a real estate licencee	Covered to $2 million per claim and per year	Not covered	Excess E&O extends the Indemnity Plan limits
Fraud	Criminal, dishonest, fraudulent or malicious acts unrelated to theft of trust funds or property	No insurance for your own such acts	Not covered	Excess may insure you for defence costs
		The Indemnity Plan covers innocent parties who are liable as a result	Not covered	Excess extends the Indemnity plan limits
	Loss of trust funds as a result of social engineering fraud	Coverage to $500,000 per error but subject to Secondary Verification discussed below	Not covered	Social Engineering and Funds Transfer Frauds-part of Crime (Fidelity Coverage) and Cyber
Theft	Stealing trust funds or property by licencee, brokerage employee or independent contractor	Not covered	Covered to a maximum of $200,000 for a single claimant and $1 million for a brokerage	Crime (Fidelity) Coverage extends limits of coverage
Data Breach	A data breach that leads to the misuse of information by a third party or a malware transmission	Not covered	Not covered	Cyber coverage applies
	A data breach that gives rise to an error in providing real estate services	Covered in some circumstances	Not covered	Excess and Cyber may apply
Damage	Bodily injury to third parties arising from your operations and premises	Not covered	Not covered	Commercial General Liability (CGL) applies
	Property damage to third parties arising from your operations and premises	Covered subject to $250,000 sub- limit	Not covered	Commercial General Liability (CGL) applies
	Loss of office property and assets and business interruption due to fire, theft, vandalism, flood, earthquake or other perils	Not covered	Not covered	Property policies apply
Employer and Director (usually sold together)	Claims against you for wrongful dismissal breach of contract sexual-harassment and other wrongful employment practices	Not covered	Not covered	Employment Practices Liability (EPL) policy applies as may some excess insurance
	Claims against you as a director or officer of a real estate brokerage for mismanagement, conflicts of interests and other allegations	Not covered	Not covered	Directors and officers liability (D&O) applies

Social Engineering Fraud coverage

The requirement for Secondary Verification applies to coverage for Social Engineering Fraud.

REEOIC provides a $500,000 limit for social engineering fraud claims with a 25% deductible or $2,000 if the instructions were verified by a secondary verification. Secondary verification is defined under REEOIC’s E&O policy as an action by an Insured, having received initial or amended payment instructions by means other than in person, to subsequently contact the person who purportedly gave such instructions, by telephone at a trusted number or in-person, and confirm that the instructions are genuine and accurate. Following secondary verification practices is vital to having this coverage.

For help in addressing cyber-risks REEIOC is providing all BC real estate licensees a set of cyber security loss prevention tools known as E&O’s Cyber Guard program.

Notes on the kinds of insurance policies for real estate brokerages

Excess insurance

This sort of coverage typically increases the limits of coverage above the limits provided by the E&O Indemnity Plan. Thus, an excess policy might provide say $1 million, $2 million, or more in coverage in excess of the Indemnity Plan limits.

Depending on the excess carrier, there may be additional coverages that are offered as part of an excess policy. This could be a limited form of cyber coverage, or a limited protection against the costs of disciplinary proceedings.

The nature of the transactions handled by a brokerage should guide decision-making regarding whether to buy excess insurance and how much. The following factors should be considered:

• The geographical area in which you practice as the higher values of transactions in the Lower Mainland and other higher-value areas exposes you to a greater risk of excess claims. When real estate values are declining this also exposes you to a higher risk of large claims.

• Whether you engage in commercial or real estate development sales as these tend to be of higher value and thus higher risk.

• Claims that arise out of co-listing will likely have all brokerages retained by the seller sharing the $2 million limit of the primary policy.

• If your brokerage is engaged in the marketing of multiple-unit housing, brokerages should note that multiple claims from the same project may be related claims and subject to one limit of coverage under the Indemnity Plan.

Tribunal Legal Expense

Some excess liability insurance policies can extend to cover legal expenses to defend or investigate a disciplinary action made by a tribunal such as the BC Financial Services Authority.

Crime (Fidelity) insurance (which may include Social Engineering and Funds Transfer Frauds)

Crime or fidelity insurance provides coverage for a brokerage against employee dishonesty. It would be additional to the protection given by the Real Estate Compensation Fund which protects against such dishonesty up to $200,000 per claimant. Where there are multiple claimants against a single brokerage, the limit of coverage is $1 million.

Such a policy may or may not protect against Social Engineering Fraud which would protect a brokerage against loss where a fraudster tricks an employee into divulging information or paying funds to someone not entitled to them. It may also include Funds Transfer Fraud insurance that will respond if your bank is defrauded.

Cyber insurance

Such a policy insures against risks of computer hacking, or malware transmission. Such policies generally insure against your own losses in the event of a hack or virus, notification costs if personal information is stolen, cyber extortion (ransomware) the costs of IT forensics, and the costs of restoring your computer systems if hacked.

It may insure you for third party claims as a result of stolen data or confidential information and may include the provision of immediate technical assistance in the event of a data breach.

The purchase of such policies typically include services which provide technical advice and support to harden computer systems against hacking and to guide responses in the event of a cyber attack. 

E&O’s Cyber Guard loss prevention tools are also available to all BC real estate licensees at no charge to help them from being the victim of a cyber incident. Note, Cyber Guard are loss prevention tools but not cyber insurance. Brokerages interested in cyber insurance coverage should contact their insurance broker.

Commercial General Liability (CGL) insurance

This coverage is an essential coverage. It provides bodily injury and property damage to third parties including risks arising from your premises, open houses, and showings. It may include coverage for advertising liability, tenants’ liability, defamation (libel and slander) and other personal injury claims. Those buying this insurance should note that many CGL policies do not insure licencees who are independent contractors, and not employees of the brokerage. Consultation with an experienced insurance broker can result in placement of coverage for independent contractors with some carriers through an additional endorsement to the brokerage’s policy or alternatively through a standalone policy for this purpose.

Brokerages that also provide property management services need extensions of coverage under their CGL policies to cover the broader risks that arise from those services. The situation is similar with regard to strata property management services, but broader coverage is usually affected by the addition of the brokerage as an additional insured to the strata management corporation’s policies.

Property insurance

A Property policy may be part of an “office package” policy with commercial general liability coverage. It covers the physical assets of the brokerage including office contents, equipment, and business interruption arising from perils such as fire, theft, vandalism, flood and earthquake. The amount of the coverage will depend on the extent of the assets.

Directors and Officers Insurance and Employment Practices Liability

These coverages are typically sold together. Directors and officers insurance coverage provides coverage against management related risks, i.e. claims by shareholders or others that the brokerage has been mismanaged. Employment practices liability protects against claims from a wide range of allegations related to wrongful employments practices, including claims of wrongful dismissal, sexual harassment and discrimination.

Real Estate Errors and Omissions Indemnity Plan

A more detailed summary of coverage under the Indemnity Plan is set out below for your guidance only. The application of coverage is determined by the wording of the Indemnity Plan.

See also FAQ’s re coverage under the Indemnity Plan. This table appears to contain a lot of “Nos” and fewer “Yeses” as to coverage, but this is misleading. In practice the coverage under the Indemnity Plan is quite broad, and it has protected real estate licensees well since the inception of the compulsory professional liability insurance program in 1988. 

Coverage under the Indemnity Plan is limited in part because other kinds of insurance are better able to provide the coverage (e.g. bodily injury.) Some kinds of risk are excluded because it would be a bad thing to insure them, and it would increase the costs of the insurance program unduly (e.g. insuring conduct which results in punitive damages).

	Risks	Covered?
What claims
	Negligence, including negligent breach of fiduciary duty	Yes
	Business or personal interest claims, i.e. claims by a company controlled by an insured party, etc.	No
	Data breaches that lead to the misuse of information by a 3rd party or a malware transmission	No
	Libel or slander	No
	Discrimination, restraint of trade, wrongful entry or eviction or other invasion of rights of private property or private occupancy	No
	Dishonest, criminal, fraudulent or malicious acts	No. Innocent parties are covered who are liable as a result of such conduct
	Contractual claims (unless they would be covered apart from contract)	No
	Bodily injury, mental injury, death	No
	Property damage related to an error in real estate services	Yes, but limited to $250,000 including costs of defence
	Commission claims, or any claims precipitated by commission claims	No
	Punitive and other damages, sanctions, special costs	No
	Costs or sanctions relating to disciplinary proceedings such as the BCFSA	No
	Thefts, trust shortages caused by frauds, and losses caused by dishonest employees	No
What activities
	Providing real estate services to the public	Yes
	Acting as a director or officer of a company	No
	Activities as an insurance agent or insurance broker, builder, property developer, mortgagee, notary public, property appraiser	No
	Giving a guarantee of future value or income of a property	No
	Obtaining a profit or benefit to which you are not entitled, e.g. secret flips.	No
	Failing to insure property	No
	Transactions where you and/or your spouse or a company in which you and/or your spouse hold more than a 10% beneficial interest or may acquire a beneficial ownership interest in the property (although the brokerage may be covered in such transactions)	No
When
	Mistakes made while a real estate licencee even if not discovered until you cease being a licencee	Yes
Who
	You, your Personal Real Estate Corporation, employees you supervise and the brokerage which is vicariously liable for your mistakes	Yes

Is there coverage?

Sometimes whether you have coverage for a particular mishap will not be clear. So call your broker and ask if you are covered. Do this promptly and follow the policies’ requirements for reporting claims or potential claims to your insurers. Failure to do so can also cause delay in settlement, complicated investigations and increased costs.

NOTE: Do not try to fix problems yourself before reporting. If you delay reporting or if your efforts to repair the problem on your own do not go well, this can cause a loss of coverage, so don’t delay in contacting your broker and reporting claims.

The above information is current as of April 1, 2025. Insurance markets change. As a result, new kinds of coverage may be extended or alternatively may become restricted. Those seeking to manage their risks effectively should seek updated advice from an experienced insurance broker as may be necessary.