Errors and Omissions insurers are experiencing shock waves of change. One of the largest carriers, Legion, went into receivership, while mold lawsuits and other disclosure-related suits are pressuring the companies that are left. Dozens of carriers are discontinuing their E&O products because the risk of exposure simply outweighs the profits generated by current pricing levels.

What's putting pressure on the insurers? Rising claims stemming in large part from accusations by buyers that mold found in their homes is a preexisting condition and therefore not covered under their homeowner's policies. So they shift the liability to the seller and As homeowner's insurers bail out of mold coverage, buyers have one place left to turn for financial relief in worst-case infestations - real estate brokers.

Yet, one company sees opportunity where others see disaster. Fidelity National Insurance Company, (FNIC) a subsidiary of Fidelity National Financial, is getting into the E&O business just as others are bailing out. Why take the chance?

"Some recent market activity has led to a hardening of pricing and withdrawal of several carriers," explains Mark Davey, president and CEO of Fidelity National Insurance Company, "the expertise of Fidelity in the real estate transaction arena and the availability of our carrier to agents, makes it a good time to introduce the product."

Mold will continue to spook the market, believes Davey. "One of the driving factors is the exposure to mold, and agents and brokers are being held liable," he continues. "In traditional markets, the big Property and Casualty insurers have had a difficult time managing mold exposure. Mold wasn't contemplated in traditional homeowners' policies. Let's say the homeowner discovers a pipe leaking under a vanity. They open up the wall to fix the leak and find that the whole wall and attic and subfloor is covered with mold. What is the next place to seek coverage? We are in a disclosure question. As one side tightens up, they will seek coverage from the prior owner and the brokers' E&O."

Why make agents responsible? Because they can't prove they didn't know. It's a vicious Catch 22 - you pay insurance to be covered for liability on things you can't possibly know because you can say you didn't know if you did know. Clear as mud?

It is buyers, many unrepresented by a Realtor at the closing table, who are the most enthusiastic to bring suits against brokers.

"It's common sense," says Davey. "I've disposed of property through a sale, and the incidence of seller's remorse is less frequent than buyer's remorse. A buyer buys a property and looks for a way to get out."

What can brokers do to reduce their liability and rising E&O premiums?

"Your common business practices," says Davey. "Diligence in disclosure and the documentation of the process. If you are disclosing throughout the process, and do better paperwork over time, the more diligent you are, the less E&O claims you should have. Less E&O claims will lead to better premiums over time."

Are certain business models more subject to E&O claims than others? Like single agency? "We are not thinking of segregating pricing," replies Davey. "Most brokers will represent buyers and sellers, and I'm not familiar with any agencies that represent one side or the other. Putting together the program we are looking to insure the entity. That may change a couple of years down the road."

While waiting for approval of their filing in California, Fidelity won't be ready to present its E&O products to brokers and agents for several more months.

If you are having trouble getting E&O insurance, check with your local Realtor association to find out if there are carriers endorsed by the association, or check with insurance carriers in your area.