Disclosure Protection Plan Seller's Agent Frequently Asked Questions

1. What is this Disclosure Protection?

This is insurance your seller can purchase to cover DEFENSE COSTS AND DAMAGES resulting from unknown and therefore undisclosed defects in their owner-occupied primary residence.

Coverage ranges from $25,000 to $100,000. Over the last 20 years of offering it nationwide (as part of CRES E&O for real estate offices and agents), the average claim is $20,000 to $25,000. (There is a $2,500 retention).

Coverage doesn’t apply to misrepresentations, intentional, dishonest and/or fraudulent acts committed to effectuate coverage.

The program also includes Legal Consultations covering 2 transaction-related matters pre-closing, and 1 unrelated matter post-closing.

Additionally, the seller will receive a Permit History Report on their listed property. The Permit History Report accesses 90 million records from direct, onsite inspection sources. Permits for additions and remodels that often don’t show up in tax assessor data can be found here, too. Each report includes relevant data on the property in question, including; incomplete permits, completed permits, contractor names (if any), and a description of the work done.

2. What type of claims does the $25,000 protection cover?

The plan is intended to cover claims resulting from unknown and therefore undisclosed defects in your seller’s primary residence. Coverage does not apply to misrepresentations, intentional, dishonest and/or fraudulent acts committed, in fact, by or on behalf of the seller to effectuate the sale of their property.

Please read Plan details for all benefits, exclusions and limitations.

3. Why is my seller seeing it?

Disclosure issues are the number one reason buyers make claims against their seller. The product is another tool to help sellers with their disclosures. In the event a claim is made, it provides sellers with coverage for defense and damages.

4. Why do sellers need legal protection when they sell their home?

CRES’ twenty years of claims history shows that sellers are the main target of claims and lawsuits, with nearly 48% resulting from disclosure issues. The average disclosure claim costs between $20,000 and $25,000.

Sellers don’t expect to get into legal trouble over the sale of their home, but they often do. And they often bring the agents in with them. The Disclosure Protection Plan helps sellers before they even open escrow. And, protection continues while in escrow and up to 12 months after the close of escrow.

5. Doesn’t my real estate E&O policy cover my seller?

No, sellers are not covered under an agent or broker’s E&O policy. No one wants to think that their client will turn on them, but when sellers are threatened with legal action by a buyer, they frequently make a claim against their listing agent to minimize their own damages.

That’s why Disclosure Protection Plan provides sellers with their own policy with $25,000 (or up to $100,000 coverage in some counties) in defense and damages coverage.

6. How is this different from a Home Warranty?

Home warranty plans benefit the buyer. The home warranty is designed to cover malfunctions with home systems and appliances. The Disclosure Protection Plan is designed to cover DEFENSE COSTS AND DAMAGES resulting from unknown and therefore undisclosed defects that the buyer discovers. Limits of $25,000, $50,000, or $100,000 are available.

7. What is the benefit to me as an agent?

You have peace of mind that your sellers are protected in the event of legal action associated with unknown and therefore undisclosed defects. There's nothing worse than spending time and energy with a client to have their sale experience sullied by legal action after the purchase. Plus, you'll be able to recommend they seek legal counsel during the disclosures process, if needed, knowing they have access to that advice as part of the Disclosure Protection Plan.

8. Why might sellers need to talk to a risk management attorney?

Throughout the transaction, there are often times when questions are best answered by an attorney -- minimizing risk for the seller and you as the agent. Seller’s Risk Management allows your client to talk to an experienced real estate defense attorney. Our defense attorneys have answered thousands of real estate questions over the course of twenty two years assisting our clients.

For questions about Disclosure Protection Plan:

To report a claim:

Please include your name, contact information, property address and closing date. Also, let us know when you first received something in writing demanding money or a service.