Real estate agents have to deal with a variety of risks and liabilities when doing their job. From handling client disputes to managing complex transactions, real estate agents and brokers must protect themselves against potential legal and financial consequences. One crucial aspect of risk management in real estate is understanding and securing the right type of insurance coverage, including E&O Tail Coverage. Read on to learn more about what tail coverage is, why it matters, and how it benefits real estate professionals.

What Is Real Estate E&O Tail Coverage?

E&O Tail coverage is a special coverage that applies to your past transactions, even after your standard E&O coverage has lapsed, and it is attached to your real estate license. Tail coverage is also referred to as Extended Reporting Period (ERP) coverage because its purpose is to keep you insured after your license lapses, expires, or otherwise becomes inactive, such as at retirement. The coverage only applies to actions taken while under the primary E&O period when your real estate license is active.

When Do You Need Tail Coverage?

Tail coverage is valuable in several situations. Retirement is a commonly cited reason and similarly useful if you are changing careers. In either situation, it is smart to stay covered after your license lapses. It’s also useful if you’re taking a significant break from work and you won’t be using your license and the E&O coverage attached to it.

It’s also valuable if there’s a significant change in your career path. For example, if you are going from an individual plan to a company plan, there may be a gap in coverage, which can be filled with tail coverage. Another great reason to look into tail coverage is when buying, selling, or closing an agency. Tail coverage is designed to fill in gaps in liability so that there is no question of your coverage in unique circumstances.

Why Should I Get Tail Coverage?

Tail coverage is valuable because a claim made against you could happen when you least expect it. Without tail coverage, you can be suddenly beset by the costs for legal defense as well as damages in the case of a claim. When your standard insurance is active, you have nothing to fear because these costs are absorbed through your coverage; if your license is inactive, tail coverage gives you the security that is only available when your license is in use.

It is very important to note that E&O tail coverage is only available to purchase while your standard coverage is active. If you do not have tail coverage after your real estate license expires, you won’t be able to get it. This requires some planning, but if you want tail coverage, plan ahead and don’t wait to get it.

Learn More With VanEd

Dealing in the real estate industry is not always clean and easy, and it is always wise to protect yourself from legal liability. E&O Tail Coverage gives you extended protection, even when your license is inactive. Even if you don’t expect any actions against you, it is smart to protectyourself from the unexpected.

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Written and Published by: VanEd