Distressed property broker specialists know that performing broker price opinions is a possibility without transacting real estate owned. But transacting REO is not a possibility without performing BPOs.

One of the main requirements in working REO and BPOs is that each broker has adequate errors and omissions insurance coverage. E & O insures principles in real property transactions that the licensee has professional liability claim coverage. Most corporate clients require $500,000 minimums and some require loss limits of up to $1,000,000 per occurrence. Obtaining a comprehensive E & O policy can be difficult, especially for those of us who own and operate our own shop. Broker/agents at large firms typically obtain E & O policies through their brokerage's group insurance. Premiums are generally deducted from an agent's transaction fees.

What aspects of your business practice do underwriters analyze in order to determine your E & O premiums?

? Value of properties you sell

? Individual transaction volumes

? Your gross revenues

? Your formal risk management procedures

Misrepresentation and failure to disclose are the two most common professional claims associated with licensed broker/agent business practices. To minimize your liability, be sure you thoroughly disclose your agency relationship with each client. If you are acting as dual agent, by representing both buyer and seller in a transaction, ensure this relationship is acknowledged and agreed-to in writing by both parties.

Make sure material facts are always brought to the forefront of any transaction so you are not accused of failing to disclose relevant facts you would have or should have known. A material fact is one that would likely affect the conduct of a reasonable person, thus affecting a buyer's decision to enter into a contract or affecting the price offered.

What specific business procedure basics can you employ to reduce E & O premiums?

? Utilize seller and buyer disclosure forms

? Always use standardized contractual documents

? Utilize home warranties in your sale transactions

? Recommend qualified home inspectors for buyers

The following companies are a few of the largest errors and omissions insurance providers in the country for licensed real estate professionals:

? Sentry West Insurance Services, Salt Lake City, UT

? Hartford Financial Products, Hartford, CT

? Travelers Insurance, St. Paul, MN

You can also visit the following URLs for specific insurance benefits provided by a variety of underwriters. Make side-by-side comparisons between companies to compare rates and policy exclusions:

http://www.landy.com/re_home.html

http://www.axisins.com/eo_residential_re.asp - Axis Insurance

http://www.businessinsurancenow.com/professional_liability.aspx - Business Insurance Now

http://www.pearlinsurance.com/professional/eohighlights.cfm'gclid=COi1gaS92YoCFQZtYAodWyRXzw - Pearl Insurance

http://www.findinsurance.us/business/eo/realestateagents-insurance.html - Good overview of E&O insurance

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