D-14    Errors and omissions (E&O) insurance

Every active real estate licensee, including licensed real estate companies, shall have in effect a policy of errors and omissions insurance to cover all acts requiring a license.

(a)   The Commission shall enter into a contract with a qualified insurance carrier to make available to all licensees and license applicants a .group policy of insurance under the following terms and conditions:

(1)                     The insurance carrier is licensed and authorized by the Colorado Division of Insurance to write policies of errors and omissions insurance in this state.

(2)                     The insurance carrier maintains an A.M. Best rating of "B" or better.
(3)         The insurance carrier will collect premiums, maintain records and report names of those insured and a record of claims to the Commission on a timely basis and at no expense to the state.
(4)                     The insurance carrier has been selected through a competitive bidding process.
(5)                     The contract and policy are in conformance with this rule and all relevant Colorado statutory requirements.

(b) The group policy shall provide, at a minimum, the following terms of coverage:

(1)                     Coverage for all acts for which a real estate license is required, except those illegal, fraudulent or other acts which are normally excluded from such coverage.

(2)                   Deleted (10/1/03)

(3)                     That the coverage cannot be canceled by the insurance carrier except for non-payment of the premium or in the event a licensee becomes inactive or is revoked or an applicant is denied a license.

(4)                     Pro-ration of premiums for coverage which is purchased during the course of a calendar year but with no provision for refunds of unused premiums.

(5)                     Not less than $100,000 coverage for each licensed individual and entity per covered claim regardless of the number of licensees or entities to which a settlement or claim may apply.

(6)                     An annual aggregate limit of not less than $300,000 per licensed individual or entity.

(7)                     A deductible amount for each occurrence of not more than $1,000 for claims and no deductible for legal expenses and defense.

(8)                     The obligation of the insurance carrier to defend all covered claims and the ability of the insured licensee to select counsel of choice subject to the written permission of the carrier, which shall not be unreasonably withheld.

(9)                     Coverage of a licensee's use of lock boxes, which coverage shall not be less than $25,000 per occurrence.

(10)     The ability of a licensee, upon payment of an additional premium, to obtain higher or excess coverage or to purchase additional coverages from the group carrier as may be determined by the carrier.

(11)              That coverage is individual and license specific and will cover the licensee regardless of changes in employing broker.

(12) The ability of a licensee, upon payment of an additional premium to obtain an extended reporting period of not less than 365 days.

(13) A conformity endorsement allowing a Colorado resident licensee to meet the errors and omissions insurance requirement for an active license in another group mandated state without the need to purchase separate coverage in that state.

(c) Licensees or applicants may obtain errors and omissions coverage independent of the group plan from any insurance carrier subject to the following terms and conditions:

(1)         The insurance carrier is licensed and authorized by the Colorado division of insurance to write policies of errors and omissions insurance in this state and is in conformance with all Colorado statutes.

(2)         The insurance provider maintains an A.M. Best rating of "B" or better.
(3)         The policy, at a minimum, complies with all relevant conditions set forth in this rule and the insurance carrier so certifies in an affidavit issued to the insured licensee or applicant in a form specified by the Commission and agrees to immediately notify the Commission of any cancellation or lapse in coverage. Independent coverage must provide, at a minimum, the following:

(i) The contract and policy are in conformance with all relevant Colorado statutory requirements.

(ii) Coverage includes all acts for which a real estate license is required, except those illegal, fraudulent or other acts which are normally excluded from such coverage.

(iii) Coverage cannot be canceled by the insurance provider, except pursuant to and in conformance with 10-4-109.7 CRS

(iv) Coverage ,is for not less than $100,000 for each licensed individual and entity per covered claim, regardless of the number of licensees or entities to which a settlement or claim may apply, with an annual aggregate limit of not less than $300,000 per licensed individual and entity.

(v) Payment of claims by the provider shall be on a first dollar basis and the provider shall look to the insured for payment of any deductible.
(vi) The ability of a licensee, upon payment of an additional premium to obtain an extended reporting period of not less than 365 days.
(vii) That the provider of the independent policy has executed an affidavit in a form or manner specified by the commission attesting that the independent policy is in force and, at a minimum, complies with all relevant conditions set forth herein and that the provider will immediately notify the commission in writing of any cancellation or lapse in coverage of any independent policy.

(viii) Coverage of a licensee's use of lock boxes, which coverage shall not be less than $25,000 per occurrence.

(4) Licensees or applicants who obtain equivalent coverage and wish to be on active status must present the affidavit referred to in subsection (2) of this section to the Commission:

(i) when renewing an active license, no later than at the time of renewal; or,

(ii) upon any request for reinstatement or activation of a license; or,

(iii) upon application for an active license

(d)         Applicants for licensure, activation, renewal and reinstatement shall certify compliance with this rule and 12-61-103.6 C.R.S. on forms or in a manner prescribed by the Commission. Any active licensee who so certifies and fails to obtain errors and omissions coverage or to provide proof of continuous coverage, either through the group carrier or directly to the Commission, shall be placed on inactive status:

(1)             immediately, if certification of current insurance coverage is not provided to the Commission; or,

(2)         immediately upon the expiration of any current insurance when certification of continued coverage is not provided.

Last updated 7/12/05