Errors & Omissions (E&O) Insurance

Question 1

___ offers protection from claims made by clients, customers, and consumers.

Answer 1

Errors & Omissions Insurance

Question 2

___ has the duty to determine what level of E&O insurance coverage is necessary to meet the needs of the brokerage office

Answer 2

Sponsoring broker

Question 3

Office assistants and unlicensed brokerage staff are not covered by E&O insurance. True or false?

Answer 3

False

Question 4

If an E&O claim resulted from China, is it likely that an American licensee’s E&O policy would provide coverage? Why or why not?

Answer 4

Yes, because most E&O policies cover claims resulting from anywhere in the world.

Question 5

Licensees should be aware that ___ exposure could lead to E&O claims and litigation from outside of the USA

Answer 5

internet

Question 6

Most E&O policies have ___ that set a payment limit for each claim.

Answer 6

liability caps

Question 7

There are two basic types of deductible provisions in E&O policies. One applies to each ___, and the other applies to each ___.

Answer 7

1) Error
2) Claim

Question 8

Limits per error are found in a(n) ___ of an E&O policy

Answer 8

non accumulation clause

Question 9

All E&O policies have ___ that allow the insurer the right to initiate litigation where the insurer has paid on claims against the policy.

Answer 9

subrogation provisions

Question 10

Subrogation provisions allow the insurer the right to initiate ___ where the insurer has paid on claims against the policy.

Answer 10

litigation

Question 11

If an E&O policy includes prior acts coverage, it is generally limited to claims for no more than ___ years.

Answer 11

5

Question 12

If an E&O policy expires or is canceled and not replaced with a new policy that has ___, licensee must have an extended-reporting-period clause that allows a claim that occurred during the coverage period to be processed against the expired policy.

Answer 12

prior acts coverage

Question 13

If an E&O policy expires or is canceled and not replaced with a new policy that has prior acts coverage, licensee must have a(n) ___ that allows a claim that occurred during the coverage period to be processed against the expired policy.

Answer 13

extended-reporting-period clause

Question 14

Most E&O policies have provisions that limit payment to the amount offered in a(n) ___.

Answer 14

settlement offer

Question 15

If licensee refuses the settlement and the subsequent trial judgement is higher than the settlement offer, who will be liable for the payment amount in excess of the settlement offer, as well as the defense costs of the trial?

Answer 15

The licensee

Question 16

Involvement in areas that don’t require a real estate license such as property development or insurance agency operations are always covered by E&O insurance. True or false?

Answer 16

False

Question 17

Bankruptcy and workers compensations claims might be ___ from E&O insurance.

Answer 17

Excluded

Question 18

If coverage for bodily injury, property damage, and personal injury are not covered by E&O policy, sponsoring broker should ensure that these things are covered either by ___ or ___.

Answer 18

special endorsement or Commercial General Liability (CGL) insurance

Question 19

A legal standard that holds a licensee to the highest ethical standards

Answer 19

Fiduciary standard

Question 20

Mishandling money during transactions may result in what type of claim?

Answer 20

E&O claim

Question 21

Making misstatements about material facts or misrepresenting the size/dimensions of a property may result in a(n) ___ claim

Answer 21

E&O claim

Question 22

An E&O claim may be filed for disclosure of confidential information. True or false?

Answer 22

True

Question 23

Undisclosed dual agency could result in a(n) ___ claim.

Answer 23

E&O

Question 24

Failure to identify the real or personal property in a contract is a common…

Answer 24

E&O claim

Question 25

Mistakes regarding property index number (PIN) for subject property is a common…

Answer 25

E&O claim

Question 26

Violations of the Fair Housing Act and IL Human Rights Act could result in a(n)…

Answer 26

E&O claim

Question 27

___ determines if E&O policy adequately addresses what services are covered, person(s) are covered, damages are covered, defenses are covered, and territory is covered

Answer 27

Sponsoring broker

Question 28

The phrase ___ typically refers to services that require a person to have an IL real estate license in order to perform those services on behalf of clients, customers, and consumers.

Answer 28

professional real estate services

Question 29

A prerequisite for E&O insurance coverage is that licensees must possess all valid necessary ___ or ___ at the time of the act or commission giving rise to the claim, and must be acting in terms of the ___.

Answer 29

Must possess all valid necessary LICENSES or CERTIFICATIONS
Must be acting in terms of the EMPLOYMENT AGREEMENT