agency
errors and omissions insurance
Professional liability insurance that protects licensees and brokerages from claims of negligence, mistakes, or failure to perform professional duties. It generally covers legal defense and damages for honest errors but not intentional fraud or illegal acts. Some states require licensees to carry it, while in others it is optional, so requirements vary by state.
- Exam tip
- E&O covers negligence and mistakes, not fraud. Do not confuse it with a state recovery fund, which compensates consumers harmed by licensee misconduct.
- Example
- A buyer sues an agent for listing the wrong school district in an ad; the agent's E&O insurer pays for the legal defense.
Related terms & state variants
Sources
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Last verified: 2026-10-23