Errors and omissions insurance
The BrokerFold Team — Product + Engineering
Last reviewed
Errors and omissions insurance — E&O — is professional liability coverage for the advice business. When a buyer alleges you missed a material fact, blew a condition deadline or measured the wrong lot line, E&O responds: it funds the defence and pays what the claim settles or judges out at, up to policy limits. In Canadian real estate it isn’t optional equipment — every province requires licensees to carry it, and the premium is effectively part of the price of holding a licence.
How each province delivers it
The delivery mechanism is provincial. In Ontario, every registrant participates in the group E&O program administered through RECO, with the premium collected alongside registration — there is no opting out and no shopping around for the base layer. In BC, licensees are covered through the Real Estate Errors and Omissions Insurance Corporation, a statutory body created specifically to run the indemnity plan, funded by assessments each licensing period; BCFSA licensing and the insurance assessment travel together. Other provinces follow the same pattern through their own regulators or industry insurance exchanges. The practical consequence is uniform: coverage exists the moment the licence does, and its terms are the same for the rookie and the twenty-year veteran.
What it covers — and what it never will
E&O answers for negligence in professional services: the honest mistake, the missed disclosure, the misdescribed square footage. Its most underrated feature is defence — meritless claims cost real money to make go away, and the program absorbs that. The exclusions are principled. Fraud and deliberate dishonesty are uninsurable by design; activity outside the scope of the licence isn’t professional services; and commission disputes between agents are business friction, not negligence. Personal real estate corporations don’t change the analysis — the licence, and the conduct, remain personal even when the income flows through a PREC.
Practice notes that keep premiums boring
Two habits matter more than any endorsement. Report early: policies require notice of claims and of circumstances that might become claims, and sitting on a brewing dispute is how coverage gets complicated. And write things down: E&O defence runs on contemporaneous records — the email confirming the client declined the inspection, the dated note of the advice given. Claims turn on what can be proven about who said what, and the agent with the paper trail is the agent whose insurer settles small or defends well.
Frequently asked questions
Does E&O cover me when a deal goes wrong because of my mistake?
That's exactly what it exists for — negligent errors and omissions in your professional services, including the defence costs that arrive whether or not the claim has merit. You pay the deductible; deliberate dishonesty, fraud and activity outside your licence aren't covered by any E&O policy.
Is the mandatory coverage enough on its own?
For many agents, yes; for teams and high-volume practices, often not. Mandatory programs carry per-claim limits and exclusions — commission disputes are a classic gap — and excess or supplementary policies exist to raise limits and cover what the base program won't.
Keep reading
- RECO RECO — the Real Estate Council of Ontario — is the provincial regulator that registers agents and brokerages and enforces TRESA's conduct rules.
- BCFSA BCFSA is the BC Financial Services Authority — the Crown regulator that licenses BC agents and brokerages and enforces conduct and advertising rules.
- PREC A PREC — personal real estate corporation — lets a Canadian agent run commissions through a corporation for tax planning, under strict regulator rules.