California Real Estate Practice Exam

What type of insurance coverage must a real estate brokerage maintain for each salesperson?

1. General liability insurance

2. Property insurance

3. Errors and omissions insurance

4. Health insurance

The correct answer is: Errors and omissions insurance

A) General liability insurance typically covers injuries or damages to third parties, such as clients or visitors, but it does not cover professional liability or errors and omissions. B) Property insurance typically covers damage to the physical property, but does not cover professional mistakes or errors. D) Health insurance is not relevant to the type of insurance coverage that a real estate brokerage must maintain for its salespeople. Errors and omissions insurance is specifically designed to cover any potential mistakes or errors made by a professional, such as a salesperson in a real estate brokerage. As the brokerage is responsible for the actions of its salespeople, having this type of insurance coverage is crucial for protection against potential lawsuits or claims. It is a standard requirement for real estate brokerages in order to maintain professionalism and financial security.