• MISREPRESENTATION
• NUMBER OF CLAIMS IN A DOLLAR CATEGORY
• DOLLARS PAID BY AMOUNT CATEGORY
• PERCENTAGE OF CLAIMS DOLLAR DISTRIBUTION

• When aware of a potential problem, notify Broker or manager immediately.
• Notify your insurance carrier or agent.
• Forward all demands, suits, or other correspondence to insurer, and, create a file including: listing agreement, sales contract, closing documents, and correspondence.
• Prepare a chronological history of participation and understanding of incident.
• Do not discuss with anyone other than a representative of insurer
• Do not copy your records for others without consultation with insurer.
• Insurer will provide legal counsel and that person will provide further instructions.

• Meet immediately in person with the unhappy party. Before the meeting, do not ignore any calls or mail. Respond at once!
• Be an active listener with good eye contact. Show you care. Give them a chance to calm down
• Let them say anything, but listen carefully. Be a sounding board for negative feelings. Be comfortable with moments of silence.
• Determine the facts and try to separate from feelings.
• Determine options available, but remain neutral and don't argue.
• Be a facilitator and know when to get others involved to determine a solution
• Following this meeting, document in writing and give to respective parties.

• Be familiar with what E/O policies will do and will not do. Know your policy limits and deductible. Invite your insurance representative to a sales meeting to answer questions.
• Know what to do when an incident or claim is realized. See first section above.
• Work hard at documentation of files, realizing this will help your insurer help you when involved in a claim. Document all activities, and conversations pertaining to the transaction.
• Use home warranties. First year claims can many times be covered by warranties.
• Watch for "red" flags and raise questions when data is lacking.
• Stay within your area of expertise, and when something doesn't need to be said, keep quiet. Use other professionals when needed. (Attorneys, inspectors, appraisers, etc.)
• Most important of all - document! If the other party has better documentation, who will the judge believe?

1. Conduct a careful visual inspection of each property you list or sell and document any defects you find. Make sure you have studied the property carefully before a showing.

2. Investigate all clues that there may be a defect. For example:

• Homes constructed before 1979 may have lead-based paint. Watch for flaking or peeling paint.
• Watch for asbestos: a fluffy, cotton candy-like material sprayed on ceilings or walls.
• Radon problems may occur in homes with basement cracks.

3. After consultation with the seller, disclose all defects you identify to potential buyers and document details.

4. A completed Seller's Disclosure Statement is strongly recommended and is most likely required by state law. Share this information with prospective buyers.

5. Note that not all property conditions or representations are covered by the standard disclosure statement.

6. Answer all questions carefully. Don't exaggerate descriptions.

7. When answering a buyer's questions:

• Clarify what is fact and what is opinion.
• Indicate your sources for the facts you present - shift the risk!
• When appropriate, recommend further professional opinions.
• Avoid predicting the future.

8. Don't act outside your area of expertise. Recognize when to ask for help from another professional or suggest when to use the services of another professional.

9. Don't make statements concerning structural soundness, condition of appliances, size of lot, etc., if you have no firsthand knowledge.

10. Use a home inspector. This action is strongly recommended. Keep a list of inspectors handy. These inspectors should be routinely checked for qualifications and experience, including consumer complaints. Provide prospective buyers with a list of three or more qualified inspectors.

11. Remember the "Four Ds" of a good working relationship with both sellers and buyers:

• Decide whom you will represent.
• Disclose to all parties.
• Document in writing.
• Do as you say.

12. Make sure to disclose all conflicts of interest, preferably in writing. A well-documented file is often the best defense against errors and omissions allegations.

13. Individual agents must be educated on procedures for reporting potential incidents to their brokers. The broker should review this procedure with all new sales associates. The broker is responsible for all transactions of the firm (whether the agent is working as an independent contractor or not). Late reporting of a claim may jeopardize coverage under the firm's errors and omissions policy.

14. Avoid discrimination allegations. Besides providing equal service to all, you should educate yourself on the consequences and penalties of noncompliance. When you display evidence of a commitment to comply with fair housing laws you help to educate the buyer and seller. To avoid discrimination allegations, do not work with a discriminatory seller and do not assume that you know the buyer's preferences.

15. Maintain written office procedures and review them frequently. Firmly established office procedures, attention to detail and adherence to initiated procedures by everyone in your firm will assist in the reduction of errors and omissions claims.

16. Attend risk reduction seminars at least every three years. These seminars provide tips on how to reduce risk and a possible reduction on errors and omissions insurance premiums.

Remember that documentation is critical to the prevention and defense of errors and omissions allegations.