Dear VanEd: Another agent in my office recently suggested I purchase “tail coverage” to cover a period of time when my license was inactive. What is tail coverage? And should I get it?

From VanEd: Good question! This is simply a type of Errors & Ommissions (E&O) coverage that will bridge the gap between activities that occur when you are licensed and a period of time after your license expires, is placed inactive, or you retire. This type of coverage is only applicable to acts that occur during your real estate license period.

Extended Reporting Period (ERP or ‘Tail Coverage’) Announcement

Below is a copy of an announcement about “Extended Reporting Period” (ERP or “tail” coverage) from one of the Errors and Omissions providers in the country.

Protection After Your Policy Expires

If an insured licensee retires, places his/her license on inactive status, or allows his/her license to expire, the … policy insures the licensee for claims made and reported within 90 days of the expiration date of the policy, provided the error or omission upon which the claim is based took place after the retroactive date and before the expiration date. Claims made more than 90 days after the expiration date will not be eligible for coverage consideration under the … policy, unless an optional Extended Reporting Period (ERP) Endorsement is purchased.

Optional ERP Endorsement

Optional ERP Endorsements are available to licensees who are currently insured … under a policy and who are not renewing their coverage for any reason, including because they are retiring, inactivating their license, or obtaining insurance through another carrier.

An ERP endorsement may be purchased within the first 90 days after the licensee’s policy expires and allows the insured to report claims made after the expiration date and during the ERP. The optional ERP Endorsement is important because many professional liability claims are not made until years after the underlying transaction occurred. If a claim is made after the … policy expires and there is no applicable ERP, then the claim will not be covered under the … policy. Licensees with coverage expiring … may obtain an optional ERP endorsement for one year (plus any applicable endorsement premium), two years (plus any applicable endorsement premium) or three years (plus any applicable endorsement premium).

Note: The fees listed have been removed from the announcement as they will likely vary from provider to provider. Also, not all providers will offer this type of coverage so it is important to contact your E&O provider directly to determine your eligibility and the costs associated. And don’t forget to ask for specifics regarding what the tail coverage will cover in case it is not an all-inclusive type of coverage. And licensees should be aware that, as stated in the announcement, this is usually not a new policy but rather an endorsement to your current policy. That means if your current carrier doesn’t offer this type of endorsement you may need to look into changing carriers if you desire to put this in place.

Written and Published by: VanEd

Dear VanEd: I am just about to finish my real estate pre-licensing course online and wanted to know if you have any tips on how to decide where I am going to hang my real estate license? There are lots of companies out there!

Glen M.

You are right, Glen, there are a ton of companies, many business models and an almost overwhelming number of ideas on what an Employing or Managing Broker should do for new real estate licensees. Don’t even get us started on best practices! And while we have some considerations that you may want to take into account, remember that your license is a commodity and you should be interviewing the brokerage firm and managing broker as much as they are interviewing you!

Start by interviewing with at least three brokerage firms in your area, even if you think you already know where you are going to start your new career. This will give you ideas on commission rates, splits and current licensing fees as well as how the firm can help you get started. We suggest to new brokers that the following items should be considered when considering hanging their brand new real estate license at any brokerage. When choosing a brokerage to work for as a real estate agent make sure to discuss the following topics with the Employing or Managing real estate broker:

• The Company: Image, Location, Convenience, Environment, Size – is camaraderie important in your firm? In your local sales area?

• Franchise vs. Non-Franchise: And the fees that are associated

• What Training and Educational Opportunities are Provided

• Is Membership in a REALTOR Organization Required or Optional

• Office Support: Clerical, equipment such as telephone system, voice mail, copier, fax, scanner, office vs. personal computer, access to the Internet, Board membership(s), personal assistants, Off-Hours services – answering service, setting showings

• Broker Support: Assistance in review & preparation of market analysis, listing presentation, drafting contracts, etc. vs. a competing/selling broker or buddy system? Team approach?

• Earnings/Commissions: Traditional splits, 100% concept and/or associated fees, desk fee and transaction costs, other creative programs

• What Might the Real Estate Agent’s Personal Expenses Be, including:

  
  

  • Licensing Fees
  • Insurance Requirements/discounts
  • Association Memberships – Local, State, National Dues, MLS membership fees/books
  • Monthly computer access fees
  • Office supplies & equipment (Palm pilot, Day timer, organizer, computer, Top producer software, calculator, cell phone, etc.)
  • Marketing Materials (Farming, Promotion)
  • Business Stationary & Cards
  • Signs, Riders, Lock-boxes, Key-Pads
  • Training – Continuing Education, Graduate REALTOR® Institute programs, Seminars
  • Personal Appearance and Image
  • Vehicle
  • Other? _____

  
  

   

Don’t exclude any question – remember, take charge of your interview and you will find the perfect fit when selecting a company to start your new career with.

Wondering what to do in the first few weeks? Go through the Getting Started and Staying on Track real estate continuing education course online. All VanEd pre-license students are given this course for free so that they can get off on the right foot! It’s online in your new CE Account so you can see exactly what steps need to be taken in the first five weeks as a real estate professional.

Have a question you would like VanEd to answer? eMail us at info@vaned.com or post it on one of our social media channels!

Written and Published by: VanEd

VanEd, a highly rated online real estate school, is offering a money back pass guarantee to all Colorado Real Estate Pre-License students who register for the 168-Credit Hour Real Estate Licensing Package. Students can rest assured that VanEd Colorado real estate courses will prepare them not only to pass the state exam but also to be successful in their new career. Students will still get the Free Exam Prep and Free Getting Started and Staying on Track courses as well!

VanEd is the oldest and most trusted online education provider in Colorado, and is the first provider in Colorado to offer a full 100% money back guarantee. Program requirements can be found online and prospective students may still enroll for a Free 5-day trial of the program with no obligation. Want to learn more about our money back guarantee program? Check out our CO Pre-License course.

Take a look and find out why the most successful people in real estate choose VanEd.

Written and Published by: VanEd