Real Estate E&O, Franchisors, & Additional Insured Endorsements

E and O Additional Insured

If you’re a real estate franchisee, your real estate franchise likely requires that you carry $1 million in real estate errors & omissions insurance coverage (aka a real estate professional liability policy).

Real estate franchises will also typically ask that the independently owned & operated franchisees add the franchisor as “additional insured” on the franchisee’s E and O policy. What exactly does this mean?

Real Estate Franchise Insurance

What is an Additional Insured Endorsement?

An additional insured endorsement extends your insurance coverage to protect a third party. It is fairly common for a franchisor to require that a franchisee name them as an additional insured.

If the franchisor is sued because of an action of the franchisee, the franchisee’s insurance can cover the franchise for that vicarious liability.

Some real estate E & O policies actually extend additional insured status to a real estate franchisor “automatically” within the definitions of the policy, without listing the franchisor by name. This extension of coverage comes with certain limitations on when/how the franchisor is covered.

It’s typically stated that this coverage is limited to “vicarious liability” arising from a wrongful act of the franchisee.

Franchisee Real Estate Additional Insured

An additional insured endorsement does not cover errors that your franchisor makes. They carry their own insurance for that reason. Rather, it can cover liability a franchisor might have due to a franchisee’s wrongdoing.

Many franchisors may require that they be specifically named with their address in a separate additional insured endorsement, regardless of whether that “blanket” or “automatic” franchisor additional insured language is included within the policy.

A Certificate of Insurance (COI) May Not Be Enough

A certificate of insurance can reflect that your policy does have an additional insured named, but it does not necessarily specify who that additional insured is, or what the terms might be for that additional insured coverage.

Many franchisors will want to see the policy itself so that they can confirm that the additional insured clauses are worded correctly.

That said, most real estate franchisors will likely also want to see a certificate of insurance for your real estate E&O.

Not Just E&O: Cyber & General Liability

Many real estate franchisors will also require that franchisee’s carry a general liability policy, and that the franchise be named as additional insured on a real estate firm’s general liability policy.

A number of real estate franchises are now also requiring that real estate franchisees purchase and maintain cyber liability insurance coverage. While they might not ask to be named as additional insured, a cyber insurance requirement in and of itself is often a new concept for many real estate broker/owners.

Check out our blog on the cost of cyber insurance for real estate firms if that describes you.

A Team Who Understands Real Estate E&O

Many insurance agents not familiar with writing real estate E&O policies could hold you back from getting your real estate franchise the proper endorsements and certificates within a timely manner.

At FirmSecured, we work with real estate firms representing nearly dozens of real estate franchises nationwide. We’ve likely worked with other franchisees in your franchise.

We can help you find the right E&O policy for your specific firm & needs, while at the same time helping you provide the adequate certificates and endorsements to your franchisor.

To begin the process and to discuss your E&O coverage, you can book a time on Google Meet.

Jonathan Lugo Insurance

About the Author

Jonathan Lugo

Founder | FirmSecured

I am the founder of the FirmSecured program powered by Veritas Risk Management. I’m licensed in over 30 states and love helping real estate brokers find quality E&O and cyber liability insurance coverage. I currently live in Northeast Tennessee with my incredible wife, Madeline.