There is an old saying that "Forewarned is forearmed" therefore you should read your Error & Omission policy carefully.

First and foremost is the realization that embedded in the fine print of any insurance policy there are usually exclusions related to things that will not be covered and conditions and/or policies that must be fulfilled or followed by the insured in order for the insurance company to honour the terms of the insured’s policy. In the event the insured, breaches the terms of their policy, the insurance company would be justified in denying them coverage.

Excluded: Locally, coverage is excluded, where a registrant is charge with a violation under the Real Estate and Business Brokers Act 2002 and its related regulations, the Provincial Offences Act and/or the Criminal Code of Canada.

This leaves a (poor registrant, if not now they soon will be) with the sole responsibility for mounting a defence together will all related legal costs, and any penalties as may be imposed should the registrant be unsuccessful in their defence.

There may be a subsequent civil lawsuit against a registrant for damages which would normally be covered under their E & O Insurance policy, provided that the lawsuit did not fall within the ambit of the excluded areas of coverage.

Subrogation: Generally insurance company policies contain a “Subrogation Clause” in relation to claims filed, that gives them the complete authority over when and how a claim will be handled and whether or not they will dispute the claim in court or chose to to settle a claim out of court. Their decision is usually based upon which would be the less costly solution and a negotiated settlement is usually the prevailing choice.

Option: The insurance company may allow the registrant, to chose not to settle the claim and who desires to dispute the claim in a court of law, in which case the insurance company may withdraw all funding of legal representation and related costs, but with a proviso, that should the registrant be successful in the defence of the claim, that they may reimburse the registrant their costs.

Recourse: Is your insurer able to recoup their costs in relation to a claim ? Insurance companies naturally like to reduce their risk and imbedded in the fine print is usually a clause giving them “recourse” to recoup their costs from the insured, in the event they were compelled to settle a claim regarding the insured’s wrong doing.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this
information .

Good thing this is not the case in good old Alberta as far as exclusions go. However should you not be operating within the criminal code and your act therefore eliminating any need to worry about being excluded.

Hi Sheldon
It's appears you have better insurance coverage and protection then we do in Ontario.

Locally: The mandatory Error & Omission Insurance coverage is designed primarily for the protections of the consumer in relation to their funds being held in-trust by brokerage firms, and that there is insurance in place, if and when a real estate practitioner is successfully sued civilly in a court of law.

Our insurance Error & Omission coverage should not be confused with the more comprehensive protection under what is commonly referred to as "malpractice Insurance" which may be a more expensive "all perils" policy and somewhat similar to the insurance coverage of physicians that covers just about everything including their legal defence costs, irregardless of the civil claims and/or criminal charges filed against them.

It has been suggested, that from the regulators (enforcement) point of view, that it is much easier to successfully prosecute a real estate practitioner, who does not have legal counsel advising and representing them from the start of the regulators investigation.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information