Mortgage Errors and Omissions Insurance
To view the current list of RECA-approved insurance providers for Alberta mortgage brokerages, click here. Only insurers that are authorized by the Superintendent of Insurance in Alberta are eligible to become RECA-approved providers.
Effective September 1, 2011, all Alberta mortgage brokerages are required to have insurance against liability for errors and omissions, and additional coverage for loss resulting from fraudulent acts in the carrying on of the business of a mortgage broker in accordance with the Real Estate Act Rules.
The minimum coverage for a single occurrence is $500,000 and $1,000,000 for all occurrences in a 365-day period for both the liability insurance and the fraud coverage.
In order for an insurance provider to provide insurance for Alberta mortgage brokerages, they must enter into an agreement with the Real Estate Council of Alberta vis a vis RECA’s Errors and Omissions Insurance Guidelines (Guidelines). Please note that the Guidelines do not set the premiums payable by Alberta mortgage brokerages, rather, premiums will be set at the discretion of the insurers.
By execution of the Guidelines, the insurer acknowledges it has a form of policy that meets the requirements and that it agrees to the undertakings provided within them. Upon receipt of an executed copy of the Guidelines, the Executive Director may approve the Policy for use by Alberta mortgage brokerages.
The word “insured” used in the Guidelines includes all persons engaged by the insured in connection with the work performed for the insured, including licensed brokers and associates who the brokerage authorizes to deal in mortgages on the brokerage’s behalf, employees and former industry members and former employees. Policies must cover insured brokerages for all acts arising from the business of a mortgage broker and dealing in mortgages as defined in the Real Estate Act.
Policies for Alberta mortgage brokerages will include provisions that the insurer will undertake to provide a defence for all claims covered by the policy, including groundless allegations; that the insurer is the first payer on claims to injured third parties and will collect any applicable deductible directly from the insured; and, that the insured is responsible for notifying the insurers of every incident that might lead to a claim during the policy term.
To read the complete Guidelines, click here.
According to the Guidelines, approved insurers are to immediately notify the Executive Director upon the placement of a new policy and all Policies in effect as of September 1, 2011. RECA will not authorize an entity as an Alberta mortgage brokerage without proof of errors and omissions insurance, and an additional fraud endorsement from an approved insurance provider.
Brokerages are able to obtain their coverage from an insurance provider of their choosing from a list of approved suppliers that have entered into an agreement with RECA. To view the current list of approved insurance providers for Alberta mortgage brokerages, click here.For more information about the errors and omissions insurance requirements for Alberta mortgage brokerages, read the Frequently Asked Questions.