E&O Risks of Providing Advice on Real Estate Named Insureds

• By: The Big "I" Virtual University
• August 21, 2026

An agency frequently insures rental properties where the ownership structure is not straightforward. For example, the title may be in an LLC while the mortgage remains in an individual’s name. In many cases, the client does not have an attorney or CPA they can consult, or they are unsure how the ownership and insurance should be structured.

From an errors & omissions standpoint, how much guidance should an insurance agent provide in these situations? Is it appropriate for the agent to explain the insurance implications of different ownership structures and recommend how the named insureds should be listed? Or should the agent avoid making those recommendations and instead require the client to decide who should be listed as the named insured or insureds and any additional named insureds?

Q: If the client is uncertain and asks, “How should this policy be written?” what is considered the best practice for an agent to minimize E&O exposure while still fulfilling the agent’s professional responsibility? Where is the line between providing insurance guidance and venturing into legal or ownership advice?

Response 1: This is a common issue for many clients with large real estate portfolios. Some clients routinely have one or more entities for each property. Each piece of land, building and contents can be owned by different LLCs, and there may be separate holding companies, operating companies and management companies. For clients with 50 locations, I have had over 100 named insureds. To avoid E&O issues and protect the client, here is what I recommend:

• Every year with your renewal, include: the complete list of named insureds, noting their full legal name, purpose and operations, the ownership of that entity, and the entities’ ownership interest in other entities or assets and operations. Spend some time reviewing this list in detail with the client, and have the client confirm that the list is complete.  
• Review a matrix of all named insureds versus policies in force. This is an excellent and visual way to review potential coverage gaps with a client. If any entity is not included on a specific policy, note that in your proposal. For example, if a client says that an entity is dormant or otherwise has no employees and no direct labor, note that it might not be included in a workers compensation policy.  
• Explicitly schedule all named insureds. Do not rely exclusively on omnibus named insured wording that automatically covers majority-owned subsidiaries. When you map out the ownership, real estate clients often do not fit into neat family trees with a single corporate parent that you can name as the parent company.
• Assume that every new location includes a new named insured and specifically request that detail.

Response 2: Any client that does not have an attorney or CPA is in that position because they do not want to pay the proper professional for professional advice. Please do not let that become your E&O claim. In my opinion, it is never appropriate for an insurance agent to advise on how ownership should be structured. You can explain the insurance implications, but the client should make those decisions with an attorney and CPA. Once they’ve made those decisions, you can get to work on putting together an insurance program.

An agent has two choices when a client asks, “How should this policy be written?” If they want to operate as an order taker, the answer is “You tell me.” If they want to operate as an insurance professional, the agent will discuss the options and the pros and cons of each with the client to help the client make a decision on how various people and entities should be covered.

I don’t consider it reasonable to expect most insureds to understand how an insurance policy should be written. That is why they come to an insurance agent.  Keep in mind, too, that the standard of care required of an agent is dependent, in part, on the state where the insured is located and how the agent presents itself.

Response 3: I believe an agent has the obligation to ask the client for the legal name of the titled property owner. If the client asks how the policy should be written, the answer is the same: The named insured should be the legal name of the property owner.

If the client doesn’t know or is unsure, it’s best to tell them the policy cannot be written without that information. It is not your job to do this research or navigate the client through this process. It needs to come from the client.

Response 4: I’m sure your E&O insurer will recommend that you do not make recommendations concerning how property or business ownership should be structured. That’s lawyer work for the legal aspects and accountant work for the financial and tax aspects. An agent needs to gather information about ownership and structure and recommend insurance to cover the various interests.

It’s your responsibility to know enough about businesses and policies to recommend the appropriate coverages. It’s the client’s responsibility to seek the advice of their attorney and accountant to set everything up correctly.

Most importantly, the client’s responsibility is to answer the agent’s questions—a process the agent should carefully document.

This question was originally submitted by an agent through the Big “I” Virtual University’s (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

This article is intended for general informational purposes only, and any opinions expressed are solely those of the author(s). The article is provided “as is” with no warranties or representations of any kind, and any liability is disclaimed that is in any way connected to reliance on or use of the information contained therein. The article is not intended to constitute and should not be considered legal or other professional advice, nor shall it serve as a substitute for obtaining such advice. If specific expert advice is required or desired, the services of an appropriate, competent professional, such as an attorney or accountant, should be sought.