November 01, 2025

By the time a lawsuit nears a trial date, the defendant is often not significantly involved in the settlement of the case. Almost everything is being handled by legal counsel and the insurance company.

The named real estate agent and broker may be surprised to learn that their counsel and insurer are pursuing a settlement even if they have a strong defense.

More than 95% of claims settle before reaching trial, says Barney Schwartz, Senior Vice President with Assured Partners, a Texas REALTORS® risk management partner. Understanding the uncertainties claims adjusters face helps make sense of why the vast majority of claims settle.

Juries are unpredictable

In recent years, jury decisions have become harder to predict and have awarded large sums to plaintiffs, Schwartz says. He noted that about three years ago, insurers started raising the cost of umbrella coverage to offset losses.

The defendant is at risk in this more erratic environment, shouldering the responsibility for verdicts that exceed the insurance policy limits. “If the defendant’s policy goes up to $1 million and the verdict is $2 million, then the plaintiffs could try to collect against the client,” Schwartz says.

Assessing the risk

The defendant’s insurance carrier will estimate how much it may cost to try the case. “If there’s an opportunity for that attorney or adjuster to settle for less than that, there’s really no motivation to take the case to trial,” Schwartz explains. “Especially if there’s an unpredictable jury or unexpected verdict, the client will ask the insurer, ‘Why didn’t you settle?’”

The claim would have to be a wholly unreasonable expectation by the plaintiff or a very strong defense for the insurer to want to go to court. Even then, unpredictable defense costs may still be a deterrent to trial, he adds.

Prepare in advance

Document everything! In general, the best defense against E&O claims is to ensure all client communications are well documented, Schwartz states. Provide the entire transaction file, including all text messages, to the supervising broker and insurance company as early as possible.

Review insurance policies—know what they cover and the policy limits. Talk to the insurance agent if changes are needed. If desired, agents and brokers can ask about policies with higher limits or ones that do not include defense costs in the limit.

Understand that when responding to a claim that is covered by the insured’s policy, the insurance company generally has a duty to defend the insured and resolve the claim in a responsible manner. This includes acting in the insured’s best interest, considering exposure for potential damages, defense costs, and the uncertainty of the outcome, all while adhering to the terms of the policy.

Years ago, Schwartz remembers talking with a bailiff about an E&O claim before the court. He felt confident because he had put together a strong case for his client. “I don’t know,” the bailiff replied. “We never know what the people on the jury will say and think.”