Coverage Summary

COVERAGE SUMMARY

The coverage provided by the RECO Insurance Program is comprehensive.  To help make it easier to navigate, we’ve broken it down into the above mentioned sections.

INTRODUCTION

Registrants of RECO currently enjoy three types of insurance coverage under the Professional Liability Policy administered by RECO.

Part A

Errors & Omissions

Part B

Commission Protection

Part C

Consumer Deposit

This coverage summary focuses on some of the more significant highlights of the Policy and what they mean to you, the registrant.

Note: The word “Insured” is used in this summary instead of “Registrant” to describe those individual salespersons, brokers, or brokerages that are registered with RECO and who are insured under the Policy.

This summary is not intended to be an exhaustive review of the Policy, nor is it to be relied upon as such. Please read the Policy carefully. You can view the Policy by going to the Documents page of this website.

Coverage Questions?

If you have any questions about your insurance coverage please contact Alternative Risk Services

ERRORS & OMISSIONS COVERAGE

Who is Covered?

The Policy provides protection for an Insured who has or is alleged to have committed a negligent act, an error or omission. Brokers and salespersons are covered, as are brokerages. 

Reminder: An Insured must not accept liability for a negligent act as this would prejudice the Insurer’s position to defend the claim made against the Insured.

E&O Coverage Highlights

$2,500 Deductible

The deductible payable by a registrant for the first claim paid.

$1M for One Claim

The insurance protection afforded to an Insured for Errors and Omissions claims per claim.

$3M Aggregate

The insurance protection afforded to an Insured for Errors and Omissions claims in aggregate for one policy year.

The insurance protection afforded to an Insured for Errors and Omissions claims is $1,000,000 for any one claim and an annual aggregate of up to $3,000,000 in the event of multiple claims within a Policy year.  These limits apply only to damages, not legal costs.

Effective September 1, 2009, risk rating was introduced to the Policy in the form of a graduated deductible. The deductible amount increases with each additional claim settlement made on behalf of the same registrant within a three-year period. This means registrants with more than one claim will contribute more towards the cost of each additional claim settled on their behalf. The deductible payable by a registrant for the first claim paid is $2,500. However, any further claims paid by the insurer within any three-year period will result in an increase to the deductible by  $2,500 for each paid claim with no maximum. i.e., $2,500 for claim one, $5,000 for claim two, $7,500 for claim three, etc. Note, however, that deductibles only apply to damage payments, not defense costs.

What is Covered?

The Policy covers claims arising out of the provision of “Professional Services” as a real estate salesperson or broker registered with RECO. “Professional Services” would include work as a real estate consultant, real estate counselor, property manager (not exceeding 35% of revenue), property management consultant and rental agent.

The Policy does not provide any coverage for opinions of market value given for the purpose of financing. This restriction applies to all Registrants in Ontario. 

However, the Policy does cover activities such as:

Limited Bodily Injury & Property Damage Coverage

$500 Deductible

The deductible payable by a registrant for a paid claim.

$100K for one claim

Coverage for theft or damage to customers’ property while in the care, custody and control of the Insured.*

$100K For One Claim

Coverage is also extended to include bodily injury arising out of Professional Service.*

*Coverage is extended to include theft or damage to customers’ property while in the care, custody, and control of the Insured (e.g., during an open house). This coverage is subject to a limit of $100,000 and a $500 deductible.

Coverage is also extended to include bodily injury arising out of Professional Services. This is limited to situations where the salesperson or broker is attending with someone at a property for reasons related to a trade in real estate. It also covers mental anguish or distress following a sale where it is alleged that the Registrant failed to disclose an adverse condition relating to the property. Bodily injury coverage is limited to the same $100,000 limit, and subject to the same $500 deductible, as the property damage coverage described above.

Reminder: The Policy does not provide property damage and bodily injury coverage for all business activities, and registrants are advised to seek out commercial general liability insurance to complement their professional liability coverage.

What is not Covered?

The Policy does not cover claims arising out of fraudulent, criminal, dishonest or malicious acts, claims for unpaid commissions or arising out of disputes relating to commissions (see also the related commentary under the heading Commission Protection Coverage), claims for fines, penalties or taxes, claims arising out of property management where over 35% of an Insured’s or Insured Firm’s revenue is generated from that business, claims for property or property held on deposit or claims relating to or arising from mortgage brokering except where an Insured simply identifies a source of funding and directs the borrower to that source.

The Policy does not cover claims arising from bodily injury (including sickness, disease, mental anguish, mental distress, and death) and property damage other than as described above under “What’s Covered”.

Direct or Indirect Interest
Excluded

This exclusion applies to an Insured that has a direct or indirect interest (including as a shareholder or otherwise as a principal in the transaction) unless the Insured has fully complied with the Section 18 “Disclosure of Interest” of the Code of Ethics as set out in Ontario Regulation 580/05 under the Real Estate and Business Brokers Act, 2002 or successor legislation.

RECO REGISTRATION IS A PRECONDITION TO COVERAGE

The Policy only covers activities of an Insured who is registered with RECO. However, an insured who inadvertently or unknowingly employs an unregistered salesperson and who is vicariously liable for the acts of that employee will be covered.

Notice of Claim

As an Insured, you must give written notice to the Insurer as soon as possible once a claim is made against you or a circumstance which might give rise to a claim arises (i.e., a potential claim). A potential claim arises where you could reasonably foresee that your actions will or could result in a claim. For example, if there is a problem with the closing of the transaction or a complaint is made by someone about your actions either before, on, or after closing, it is possible that the party making that complaint may allege that the situation arose as a result of an act, error or omission of one or more of the Insureds involved in the transaction and should be reported as a potential claim.

You should immediately notify the Insurer of any claim or potential claim (see claim reporting instructions below). The adjuster or the defense counsel appointed by the Insurer will investigate and, if necessary, provide you with guidance on what you can and cannot do.

When a claim or a potential claim arises, even if you feel that it may be another Insured’s error, you should refrain from providing statements or taking any steps to assist any parties to a dispute without first consulting with the Insurer and/or the defense counsel assigned to your claim, if applicable. Ultimately, any statement may contain admissions of liability that may result in the Insurer denying coverage to you.

Claims Made Policy

This is a claims made Policy which means that claims must be reported in the policy year that the potential claim is discovered.

Retirement or Leaving the profession

Coverage for all those who have either retired from the business or left the business for any reason, other than for disciplinary reasons, is provided by the policy that is in force at the time a claim arises.

There is no additional cost and no notification of retirement to the insurer is required.

COMMISSION PROTECTION COVERAGE

Who is protected?

The Commission Protection coverage under the Policy provides coverage for registrants (salespersons, brokers, and brokerages) to whom a commission is owed, but not paid, due to the insolvency of, or the theft, fraud, misappropriation, or wrongful conversion of commissions held by another registrant.

Under this part of the Policy, losses are tracked against occurrences, which include all related losses.  For example, the insolvency of a brokerage will constitute a single occurrence, and that occurrence would also include, for example, any related acts of theft leading up to the insolvency of the brokerage.

Commission Protection Coverage Highlights

$250 Deductible

The deductible payable by an Insured/Claimant.

$100K per Claim

The insurance protection afforded to an Insured for loss of commission due to an “Occurrence” under this Policy is $100,000.

$25K Per SEF Claim

Claims arising out of Social Engineering Fraud (SEF) under Commission Protection and Consumer Deposit Coverages are covered up to $25,000.

$3M Aggregate

The Policy will cover up to a maximum of $3,000,000 for all claims arising out of an “Occurrence”.

Reminder: A claim under this part of the policy is for all commissions lost as part of an occurrence, meaning that $100,000 is the maximum amount any one registrant can be paid, regardless of the number of trades affected by the occurrence. You will, however, be required to complete a separate form for each trade in order for the Program Adjuster to confirm the amount claimed.

What is Covered?

This Policy covers the loss of an Insured’s commission arising out of an Occurrence.

An occurrence is the insolvency of, or the theft, fraud, misappropriation, or wrongful conversion of commissions held by another registrant.

An occurrence also includes situations where a registrant is misled or convinced through misrepresentation by a third party to misdirect funds, resulting in a loss of commission, which under the policy is called “Social Engineering Fraud”. Coverage is limited to $25,000 per claim for social engineering fraud.

What is Not Covered?

The Policy does not cover a claim by an Insured while acting as an executor or trustee or in any role as a fiduciary other than as a salesperson or broker.

The Policy does not cover commission disputes.

This policy does not cover commissions lost or stolen by builders or other non-registrants, except in cases meeting the definition of social engineering fraud.

RECO Registration Is a Precondition to Coverage

The coverage only covers activities of an Insured who is registered with RECO at the time of the occurrence.

Notice of Claim

Notice of occurrence or claims can be provided to the Insurer by either RECO or by a salesperson, broker, or brokerage that has lost commissions as a result of an occurrence.

Claims Made Policy

This is a claims made Policy which means that claims must be reported in the policy year that the potential claim is discovered.

Retirement or Leaving the profession

While there is no coverage under this Policy after an Insured leaves the profession, so long as a commission becomes due and owing to an Insured before leaving the profession, coverage would be provided, and a claim would be paid even if the occurrence takes place after the Insured’s departure.

CONSUMER DEPOSIT COVERAGE

Who is protected?

The Consumer Deposit coverage is for the customer or the client of a registrant, in other words, consumers. Consumers become an Insured under this coverage part. Consumers are covered for lost deposits due to the insolvency of, or the theft, fraud, misappropriation, wrongful conversion of deposits by a registrant (salesperson, broker, or brokerage).

Under this part of the Policy, losses are tracked against occurrences, which include all related losses.  For example, the insolvency of a brokerage will constitute a single occurrence, and that occurrence would also include, for example, any related acts of theft leading up to the insolvency of the brokerage.

Consumer Deposit Coverage Highlights

$0 Deductible

There is no deductible under this coverage.

$100K for One Claim

The insurance protection afforded to an Insured for loss of commission due to an “Occurrence” under this Policy is $100,000.

$25K Per SEF Claim

Claims arising out of Social Engineering Fraud under Commission Protection and Consumer Deposit Coverages are covered up to $25,000.

$3M Aggregate

The Policy will cover up to a maximum of $3,000,000 for all claimants arising out of any one “Occurrence”.

What is Covered?

A consumer has protection for a loss sustained in relation to a trade in real estate arising from an Occurrence*.

What is Not Covered?

Claims arising out of an Insured acting as an executor, administrator, trustee, guardian, conservator or in any other fiduciary capacity other than as a salesperson or broker for a claimant are not covered under the Policy.

RECO Registration is A Precondition

The Policy only covers claims relating to activities of a salesperson or broker who is registered with RECO.

*An occurrence is the insolvency of, or the theft, fraud, misappropriation, or wrongful conversion of commissions held by a registrant.
An occurrence also includes situations where a consumer is misled or convinced through misrepresentation by a third party to misdirect deposit funds, resulting in a loss, which under the policy is called “Social Engineering Fraud”. Coverage is limited to $25,000 per claim for social engineering fraud.

Notice of Claim

If you become aware of a situation where you have cause to believe that a registrant, broker, or brokerage may be engaged in activities that contravene RECO’s rules or regulations and/or which might give rise to a claim under this coverage please report this situation on a confidential basis to RECO immediately.

POLICY ENDORSEMENTS

The USA Jurisdiction Endorsement

Details the per claim and aggregate limits for claims brought or judgments awarded in the United States of America.

The Terrorism Exclusion endorsement

Precludes any coverage for claims for damage arising out of acts of terrorism.

The Nuclear Incident Exclusion endorsement

Limits coverage for claims arising out of nuclear incidents.

The Personal Real Estate Corporations Endorsement

Clarifies that no coverage is available under the Policy for Personal Real Estate Corporations (PRECs), and that those lack of coverage in no way affects the coverage for the registrant who is the controlling shareholder of the PREC.

OTHER CONSIDERATIONS

Termination of your membership in RECO for non-payment of premiums has the following consequences on your insurance coverage:

You will have no insurance coverage after the expiry date of the current Certificate of Insurance issued to you by RECO.

If your registration with RECO is terminated before the expiry date of the current certificate of insurance issued to you by RECO, your insurance coverage remains in force until the expiry date noted in the certificate of insurance but only with respect to claims made prior to the said expiry date which relate to your professional services as an Insured and prior to the termination of your registration with RECO and/or loss of registration under the Real Estate and Business Brokers Act, 2002.

If your registration with RECO is reinstated, then in the case of (2.) above, your insurance coverage will cover claims made against you arising from your professional services as an Insured only from the date of reinstatement. You will have no insurance coverage for claims made against you or arising from conduct which occurred during the period in which your registration was terminated and/or you were not registered under the Real Estate and Business Brokers Act, 2002.

You will have no insurance coverage for any claim made against you regardless of when the conduct giving rise to the claim occurred if you have no insurance in force at the time the claim is made.

CLAIMS REPORTNG INFORMATION

Notice of Claim

For Errors and Omissions and Commission Protection claims, please send your completed Claim Reporting Form to Claimspro. 
For Consumer Deposit claims, claimants should send completed Claim Reporting Forms to RECO.

Send Completed Form for

Consumer Deposit Claims

Send Completed Forms For

Errors & Omissions Claims &
Commission Protection Claims