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Today we live in a litigation-prone society. Lawsuits are especially prevalent as a result of real estate transactions. Increasingly, brokers and their sales agents are targeted in those lawsuits.

Even if those suits are unfounded and frivolous, legal expenses can be substantial for all parties. Thus, increasing numbers of real estate professionals are protecting themselves with the purchase of Errors and Omissions insurance coverage.

E and O is the name used to describe a type of malpractice insurance coverage for real estate professionals. The coverage protects against financial losses from lawsuits filed as a result of the individual’s work in the real estate profession.

According to the 2011 National Association of Realtors’ Member Profile, there has been a significant increase in the rate of E and O insurance provided by Realtor firms in recent months and years. About 20 percent of all Realtors received the coverage last year, up from 11 percent during the previous year.

“E and O coverage as a benefit is most common in non-franchised corporation subsidiaries,” said Stephanie Singer with NAR. “Last year, 27 percent of Realtors in non-franchised subsidiaries of national or regional corporations received E and O insurance as a benefit, compared to 26 percent in independent, franchised companies, and 17 percent in franchised subsidiaries.”

NAR Legal Counsel Mike Thiel noted that E and O coverage is priced differently in each area, usually based on some kind of measure of activity (number of transactions, number of transaction sides, etc.).

A bit of basic information about E and O insurance:

The coverage pays claims that come about due to error, omission or negligence in regard to a real estate professional’s duties. It pays claims that are made during the policy period.

Exclusions often include claims resulting in dishonest or criminal acts on the part of a broker or agent. And there are deductible amounts to consider — the amount of the claim before the coverage kicks in. Deductible amounts vary with individual plans.

Why are mortgage rates continuing to fall?

Here’s one explanation offered by Mike Fratantoni, vice president of research and economics for the Mortgage Bankers Association:

“Interest rates continued to fall, driven by the latest Federal Reserve actions to invest in longer-term Treasury and mortgage securities, but potential borrowers largely remained on the sidelines, seemingly unimpressed by the lowest (by any measure) mortgage rates since the 1940s.”

What proportion of homes are now underwater?

Just over a fifth of homes are now underwater (with outstanding loans greater than the property’s market value), according to CoreLogic, an analytics firm. About 22.5 percent of all homes had negative equity at the end of this year’s second quarter.

“The figure is actually a slight improvement from the 22.7 percent of all mortgages with negative equity in the first quarter of 2011,” it was noted by CoreLogic. “An additional 2.4 million borrowers had less than 5 percent equity in the second quarter, which also shows that nearly three-quarters of homeowners in negative equity situations are also paying higher, above-market interest.”

Are delays in processing short-sale transactions a serious problem?

Processing delays have taken their toll on first-time homebuyer interest in short sales, according to the latest HousingPulse Tracking survey. First-time homebuyers were a part of 39.7 percent of the short-sale transactions completed in August, DS News reported.

“That’s the lowest percentage for this buyer segment ever recorded by the survey. The study found that the average time-on-market for short-sales is 16.6 weeks, with the majority of that time spent waiting for approval,” the report stated.

Find out more about Jim Woodard at the Creators Syndicate website, www.creators.com.