$100K for antitrust: NAR explains new MLS insurance coverage
Cyber liability? Crime loss? Antitrust allegations? New insurance offerings aim to protect associations and MLSs from these concerns and others, NAR said.
Key points:
- NAR has new insurance protections for state and local Realtor associations and their MLSs, the trade group explained at last month’s Realtors Legislative Meetings.
- Claims involving errors and omissions, crime loss, cyber liability and patent infringement are among those now covered.
- Directors and officers, committee members and employees can also get coverage — but only when they are “acting within the scope of their duties on behalf of the insured entity,” according to NAR’s director of risk management and insurance.
Realtor associations and multiple listing services have faced all kinds of legal issues: antitrust and patent infringement allegations, ransomware attacks, sexual harassment and discrimination claims, employee theft and more.
Those that follow National Association of Realtors policies, however, get some measure of protection at no added cost through NAR's insurance coverage.
At a closed meeting of the NAR Multiple Listing Service Issues and Policies Committee at last month's Realtors Legislative Meetings, the trade group laid out exactly how much protection that adds up to. Amounts vary depending on the claim type, with antitrust allegations capped at $100,000 per claim — far less than NAR's previous coverage.
Though the committee meeting was closed to the press for the second year in a row, Real Estate News was able to obtain a recording of the session.
NAR's old policy
NAR's previous liability insurance had a coverage limit of $1 million for claims related to the antitrust commissions lawsuits, which NAR fought for five years before settling for $418 million.
But the trade group likely reached that limit in 2021 — years before Sitzer/Burnett went to trial — and no funds were left over to pay for the defense of dozens of associations and MLSs sued in commissions suits nationwide.
At last month's MLS committee meeting, NAR provided new insurance information as staffers attempted to reassure MLS executives that the trade group is not abandoning them but offering support in multiple ways.
Who is covered
According to NAR Director of Risk Management and Insurance Rashaan Evans, NAR's insurance program now covers:
NAR Institutes, Societies and Councils, including state and local chapters and subsidiaries
State, territorial and local Realtor associations
MLSs, charitable foundations, political committees and educational endeavors that are wholly owned by Realtor associations
The coverage also extends to directors, officers, committee members and employees while "acting within the scope of their duties on behalf of the insured entity," Evans noted.
What is being offered
Six types of insurance are included in the program:
errors and omissions (E&O)
directors and officers (D&O)
employment practices liability (EPL)
crime loss
cyber liability, media, tech E&O
patent infringement
Errors and omissions: Per-claim limit is $1 million, with an aggregate claim limit of $5 million. Deductible starts at $50,000.
Coverage extends to claims arising from professional standards or MLS disciplinary hearings, which NAR and several local associations have faced in recent years.
It covers "things like negligence, misrepresentation … say a member's membership is erroneously terminated, and they file suit," Evans explained.
D&O, EPL, crime loss: Per-claim limits are $100,000 for entity antitrust and $25,000 for crime loss, with an aggregate claim limit of $3 million. Deductibles are based on an association's size and range from $5,000 to $50,000.
D&O claims can include governance issues, antitrust and breach of fiduciary duty.
EPL claims can include complaints that fall under the Equal Employment Opportunity Commission and sexual harassment and discrimination claims.
Crime loss covers theft of money or property by an employee, including personal expenses on a company credit card, forgery, fake invoices and "social engineering," or the use of manipulation to trick someone into providing sensitive information or access.
Cyber liability, media, tech E&O: "Cyber is a big happening issue" as association operations become more technologically dependent, Evans noted. The per-claim limit is $1 million, with an aggregate limit of $10 million. Deductibles "are based on the cyber controls that your association has in place," Evans said, pointing to a list on NAR's website. With controls in place, deductibles range from $10,000 to $25,000; without, the range is $25,000 to $75,000.
Media liability covers the electronic distribution of any kind of media, including podcasts, social media and websites. It also covers copyright and trademark infringement, defamation, libel, slander and invasion of the right of privacy.
Tech E&O covers "errors and omissions from that cyber perspective, specifically dealing with things like lockbox programs, third-party technology and any kind of technological platforms that the association is using," Evans said.
Patent infringement: Per-claim limit is $500,000 and shared by co-defendants in the same action. The aggregate limit is $5 million and the deductible is $25,000.
"This is going to address non-practicing entity claims — things like patent trolls — and it's going to address competitor claims as well," Evans said.