In Ontario, the current mandatory error & omission insurance is for the protection of the consumer although paid for by each individual registrant. This E & O Insurance should not be confused with malpractice insurance which usually provides a much broader coverage to the insured.

What your E & O Insurance provides is that in the event you are sued by a consumer, and you have followed the required procedure for notifying the insurance company of any claim and/or the potential of a pending claim, that the insurance company will examine the consumer’s allegations and determine, at their sole discretion, whether the consumer’s allegations have merit and whether or not they will defend the registrant or chose the most economical means of settling the consumer’s claim, and leaving the registrant with the liability for the $2,500. deductable providing it is the registrants first claim within a 3 year period.

The insurance company retains the option of refusing to fund the defence of a registrant in a civil lawsuit, who chooses to litigate the consumer's claim as opposed to a negotiated settlement and in that event the registrant must fund their own defence and if they are successful in their defence, that the insurance company will refund them their disbursements, minus the current deductable.

Your E & O Insurance does not cover you in the event the Real Estate Council of Ontario decides to prosecute you for a violation of the Real Estate and Business Brokers Act 2002 and/or a regulation thereunder, nor does it cover you in the event of any Criminal charges.

With the increase in both real estate and mortgage fraud, involving criminal charges, a registrant who may be implicated directly or indirectly would be well advised to perform their utmost due diligence and fulfill the requirement of “FINTRAC” and ensure the identities of all parties to a transaction, although they would still have to fund their own legal expenses, if implicated.


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.