Under Ontario's TRESA, what is the minimum insurance coverage required for real estate brokerages?

Q: What is the correct answer to: Under Ontario's TRESA, what is the minimum insurance coverage required for real estate brokerages?

The correct answer is $1 million per claim with $2 million aggregate. Under Ontario's Trust in Real Estate Services Act (TRESA), real estate brokerages are required to maintain professional liability insurance with minimum coverage of $1 million per claim and $2 million aggregate. This insurance requirement ensures adequate protection for consumers against potential losses from professional errors, omissions, or negligent acts by brokerage staff while providing reasonable coverage levels that balance consumer protection with industry viability.

Q: What background knowledge is needed for this Regulatory Compliance question?

TRESA (Trust in Real Estate Services Act) replaced REBBA in 2021, establishing comprehensive regulatory standards for Ontario real estate professionals. Professional liability insurance is mandatory for all registered brokerages and must be maintained continuously. The insurance covers errors, omissions, and negligent acts in providing real estate services. Coverage must be obtained from insurers approved by the regulatory authority and must include specific policy terms protecting consumers. Brokerages must provide proof of coverage during registration and renewal processes. The insurance requirement is part of TRESA's consumer protection framework, ensuring financial recourse when professional mistakes cause client losses.

Q: What is a good way to remember the answer to this Regulatory Compliance question?

Remember '1-2 TRESA': $1 million per claim, $2 million aggregate - the numbers double from per-claim to aggregate coverage under TRESA. When you see insurance coverage questions, immediately think '1-2 Million Dollar Rule' and recall that TRESA requires $1M per claim and $2M aggregate. The doubling pattern helps distinguish between per-claim and aggregate amounts.

Q: What exam tip applies to this Regulatory Compliance question?

Focus on 'minimum required' in insurance questions - don't choose higher amounts that exceed regulatory requirements.

Q: How does this Regulatory Compliance concept apply in real world practice?

A Toronto brokerage's salesperson incorrectly advises a client about property boundaries, leading to a $800,000 loss when the client discovers the lot is smaller than represented. The client sues the brokerage for professional negligence. The brokerage's TRESA-compliant $1 million per claim coverage would cover this loss, protecting both the client's recovery and the brokerage's financial stability. Without adequate insurance, the brokerage principals could face personal liability, potentially forcing business closure and leaving other clients without recourse for future claims.

Question

Regulatory ComplianceConsumer ProtectionONMEDIUM

Under Ontario's TRESA, what is the minimum insurance coverage required for real estate brokerages?

Answer Options

A

$500,000 per claim with $1 million aggregate

B

$1 million per claim with $2 million aggregate

C

$2 million per claim with $4 million aggregate

D

$5 million per claim with $10 million aggregate