This is a classic topic.

A huge part of my preparing to open a brokerage time was spent shopping around for a good provider of E&O insurance.

Here are links that I found for some providers.

http://www.pearlins.com/index.cfm?Bd=xl_eo.htm
http://www.axisins.com/
http://www.portnov.net/errorsomissions.html (San Francisco Bay Area only)



I think we would all benefit from brokers sharing who they ultimately found to provide the E&O insurance for their brokerage. When you post ones you have found, if they only provide their service in certain states, please note that.

Thanks,
R

Hey there Rebelbroker & fellow moderator,

Good topic. I was spoiled a bit, I guess. When I started my brokerage, I decided to immediately affiliate with a franchise. Cendant had set up a preferred alliance with AON, who serves as an agent for The St. Paul.

For my six offices, I pay about $3,500 per year. This is based on my GCI for the previous year and the agent count. I am free to add as many agents to my offices as I wish throughout the year without extra charge.

In my second year, I doubled my agent count and tripled my office count, but my E&O only went up about $500. Not a bad deal!

Since my premium is so low, I split the bill with my agents when the policy renews. I mark it up just a little bit to cover the admin fee for billing and such, but I try not to nickel and dime the agents too badly.

I'd be interested in seeing what everyone else is paying. I hear the premiums vary widely.

S-

MLH--

I use St Paul as well but I am paying around $10K/year. What was your GCI? We were a touch over $5M last year.

We're in the $3m+ category right now. This year will likely be a bit higher as one of my new locations is really starting to take off and I am still looking for one or two acquisition opportunities.

It will probably go up this year, but even if it's $5,000 per year, I think it's a bargain.

I've talked to a lot of fellow C21 brokers and their rates are all over the chart. Maybe it's a regional thing too?

Now it is definate. I will be getting quotes this year.

Thanks for the links. It is a start to me getting some E&O insurance.

My office uses Pearl Insurance.

MinnesotaLakeHomes, what were some of the deciding factors that had you decide to go with a franchise?

I am still trying to decide which way to go myself and just can't see a real dominating reason to go franchise. Wondering if maybe there are just a bunch of little reasons I am missing.

R

Hello everybody!!!!

I just found that site because of the link to my web site in the first message - got a few clicks.

Let me share what I've learned doing E&O for realtors in California.

1. The market is very narrow - just a few carriers are interested in writing that business due to litigation/claims/losses statistics
2. Insurance companies are protective by nature and they have to be, of course. So, if they do not know that particular type of risk in depth they either not write it at all or charge too much. The best rates are coming from companies, whicgh specialize in real estate.
3. There are three different areas to be insured on E&O:
- real estate sales
- real estate financing
- property management

Some insurers would take just one. For example Philadelphia takes mortgage brokers only. They have the best rate in that class, but they will not consider sales or property management. They will not sell you the policy if you do something besides mortgages.

Next great company is GoldStar. They would insure all three exposures and the prices are the lowest.

4. For a brand new brokerage starter policy would cost in the range of $1,200 - $2,000 a year. When it comes to renewal the insurer will look back at the previous year volume to come up with the next year premium.

5. Never-ever allow your E&O policy to lapse. If it happens you have no coverage any more for the past. You will buy new policy, which would cover you from the new effective date, not from the date you purchased you very first policy. This is the danger.

6. When you decide to terminate your business you might purchase SUNSET coverage (normally cost 2 annual premiums), which will protect you forever against claims arising from what you did in the past. Smart thing to have.

wow, that is great insight, thank you

One more detail: for a tiny operation of 3-5 transactions a year, there might be a small saving in getting per-transaction policy. It would have some minimum premium ($300 or so) and $100-120 per transaction charge.

The only one place I know in California selling that product is www.cresinsurance.com

Mikhail,
I am a broker/salesperson in Missouri, and have been for over 3 years, licensed under a broker. If I were to leave and start my own company, are the rates high as a new company, or is there generally a lower rate since i have already been in the business (as office manager) for this long? Do all insurers cover REO/BPO work?

I would suggest that you prepare a detailed professional resume in the real estate field to be attached to your E&O application. The underwriter is duying to learn more about you. The more good things he finds the better the rate.

Being new venture helps to get lower rate with the same experience. If you move from another E&O insurer to the new one, that new company will pay for the claims arising from your past. But they did not collect premium in the past, so, they have to charge more. The premium is a function of 2 arguments:
- your industry experience (years, volumes, claims)
- how many years of prior coverage you have to be taken over by the insurer. The more years, the higher the premium.

I am not sure what the abbreviations are for

You are in the E&O business and you don't know this?

I have an idea, but it is not the insurance policy language as you might realize.

Look at that sample policy:
http://landy.com/download/genstar/Realto...Connecticut.pdf

On page 6 there is an Exclusions section. And you can see that Broker Price Opinion, for example, is not mentioned as a specific exclusion. Is that covered? Or is that just under another exlusion? I would talk to an underwriter to find out. If the answer is COVERED I would document the date, time, person name and what was said since it is not in the policy language.