March 01, 2026

Does E&O cover situations like Code of Ethics, TREC, and fair housing complaints?

It’s possible. You should check with your E&O carrier to determine whether you have coverage in these areas.

What if it’s not a claim yet?

You also should let your broker know if you receive any written or verbal threats or issues that could become a claim, Prouse advises. These are often called incidents or reporting purposes only. Reporting policies vary, so it’s a good idea to read your policy to know what’s required.

Being able to recognize claims and potential claims can help you and your broker avoid trouble and make the most of your errors and omissions coverage.

Laura Prouse is Director of REAP/REALAX Data Analytics at CRES, Gallagher Affinity Insurance Services, Inc., a Texas REALTORS® risk management partner. Here’s what she recommends.

Claims take many forms

A claim isn’t another word for a lawsuit. It’s any written imperative for money or actions. Claims can take the form of letters from an attorney, mediation demands, or even emails. Demands from aggrieved parties are the most common form of claims, Prouse says, followed by lawsuits, complaints filed with licensing agencies or membership boards, and subpoenas.

Prouse recommends reading your policy carefully to know how your insurance carrier defines claims and what’s covered. Many policies offer help when responding to subpoenas and board complaints. The license holder should have attorney representation with subpoenas, she notes.

“In regard to subpoenas, it is not uncommon for a license holder to get pulled into someone else’s litigation,” Prouse explains. “The license holder can be asked to provide documents and/or appear as a witness. Subpoenas seem harmless but depending upon how you handle it, the license holder can go from being a witness to becoming a defendant.”

Tell your broker ASAP

If you receive something you think may be a claim, notify your broker immediately. Your broker should then reach out to your insurance carrier, Prouse says, adding, “When in doubt, report it!” The only way to know if a claim is covered is to report it.

Claims must be reported during a policy period

Errors and omissions policies are usually “claims made and reported” policies, Prouse explains. That means the policy applies to claims that are made against you within the policy period and reported to the carrier within a specific window. If you fail to report that claim within the policy’s window, you could jeopardize your coverage for the claim, she warns. Reporting requirements can vary by carrier, so it’s important to know your policy’s deadlines and requirements.

Whatever you do, don’t ignore it

“Ignoring it doesn’t make it go away and sometimes it makes the claim worse,” Prouse notes. “Not reporting a claim or incident can also cause coverage issues.”

Protect yourself with documentation

Documenting the real estate transaction in writing is critical, Prouse says. “Save all communication—including text messages, which are business communications too—and confirm conversations in writing,” she continues. “Claims can occur years after a transaction, and trying to remember conversations is almost impossible years later. A written trail helps document what was said and when and to whom.”

Don’t feel bad about it

“Everyone should understand that all claims and potential claims should be reported immediately,” Prouse emphasizes. “There is no shame in being pulled into a claim. You can do everything right and still get pulled into a claim.”

“Even if you think the claim is meritless or you are not the target, it is always best to report it and let the insurance carrier decide the best course of action,” she adds.