A California broker has E&O insurance with a $1 million policy limit and a $5,000 deductible. A buyer sues the broker for $250,000 in damages due to the broker's negligent failure to disclose a property defect discovered during the agent's visual inspection. If the court awards the full $250,000, how will the E&O policy respond?
Correct Answer
D) The E&O insurer pays $245,000 and the broker pays the $5,000 deductible
E&O insurance in California operates like other professional liability policies. The broker is responsible for paying the deductible ($5,000), and the insurer covers the remaining amount ($245,000) up to the policy limit. Negligent failure to disclose findings from a visual inspection is a covered professional error, not an excluded intentional act.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
The legal ending of an agency relationship, which can occur through completion, expiration, mutual agreement, breach, death, incapacity, or bankruptcy of either party.
More Laws Of Agency Fiduciary Duties Questions
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