FREQUENTLY ASKED QUESTIONS Administration What is the insurance program? Can I apply for non-active status so I don t have to make an insurance payment or take the mandatory continuing education courses? Is the invoice payment date the same as my insurance policy term renewal date? Can I get a refund on my insurance payment if I leave the business for any reason? Payment What is the annual insurance fee and Master Insurance Policy Number for the current insurance term? Where do I find an application for participation in the insurance program administered by RECO? How do I make an insurance payment online? What is the advantage of making my insurance payment in MyWeb? Can I make a payment or access my receipt when using Firefox or Safari? Why has my premium increased this year? New & Reinstating Applicants / Reviving Registrants How do I make an insurance payment online? How is the insurance amount calculated for new and reinstating applicants? How do I complete the registration process? Why do some new and reinstating applicants receive two invoices? What is the advantage of making my insurance payment in MyWeb? My registration has been suspended due to non-payment of insurance amounts. How do I revive my registration? Graduated Deductible - Errors & Omissions Insurance (E&O) Coverage What is a graduated deductible under the E&O coverage? Has the insurer changed the criteria used to determine when a deductible is payable by a registrant with the implementation of the graduated deductible under the E&O coverage? How does the graduated deductible under the E&O coverage for claims reported after September 1, 2009 work? Under what circumstances would a brokerage be required to pay a deductible under the E&O coverage? When was the graduated deductible implemented under the E&O coverage? Does reporting a claim, incident or circumstance mean a registrant automatically becomes responsible for a deductible under the E&O coverage? Is a deductible or graduated deductible applicable to defence costs? Does the graduated deductible apply to commission protection and consumer deposit insurance coverages? Who should I contact for more information related to the graduated deductible? Coverage What are the policy sub-limits related to the Commission Protection coverage under the insurance program?
How can I find out whether or not I have coverage for a particular incident? Are brokers covered for the actions of their salespersons? Is an unregistered assistant covered under the RECO Errors and Omissions insurance when acting on behalf of a registrant? Is my brokerage firm covered under my E&O insurance? E&O insurance policy covers "negligence". What happens if the claim results from fraudulent activities? Are all real estate services covered, including appraisal work? Are mortgage services covered by the policy? Are property management services covered by the policy? What if there is a claim after I have retired or left the business? Can I purchase Extended Reporting Period coverage in addition to the two year retirement provision already available under the RECO insurance policy? Does the insurance cover out of province services performed by RECO registrants? Can I purchase additional insurance coverage such as excess insurance or coverage for situations not covered by the RECO insurance policy? Does a brokerage have to maintain a commission trust account? What does a registered employee of a brokerage need to know about a commission trust account? Note: For further details on the insurance coverages please review the Insurance Policy document on this website. Administration What is the insurance program? Under the Real Estate and Business Brokers Act, 2002 (REBBA 2002) and associated regulations, RECO's insurance program consists of Errors & Omissions insurance, Commission Protection insurance (which provide protection for RECO registrants) and Consumer Deposit insurance (which provides protection for the public). Participation in the program is a requirement of registration with RECO. Can I apply for non-active status so I don t have to make an insurance payment or take the mandatory continuing education courses? No. There is no provision in REBBA 2002 that allows a registrant to maintain non-active status. All registrants are entitled to trade in real estate (i.e. active ) and must participate in the insurance program. Is the invoice payment date the same as my insurance policy term renewal date? No. Insurance payments are due in August of each year. The annual policy term is effective from September 1 to September 1 of the following year. RECO is responsible for coordinating payment to the insurer on behalf of over 54,000 registrants for the policy period commencing each September 1. Can I get a refund on my insurance payment if I leave the business for any reason? No. Insurance payments are non-refundable in whole or in part. Your insurance payment is your minimum payment regardless of the term of your insurance. This ensures the most cost effective insurance program for all registrants, keeping individual premiums and administration costs as low as possible. Your Errors & Omissions insurance policy continues to cover you, at
no additional cost, for a period of two years from your date of leaving the business for claims resulting from activities while you were registered (subject to the terms of the insurance policy). Payment What is the annual insurance fee and Master Insurance Policy Number for the current insurance term? The total annual amount for the current insurance term (September 1, 2010 September 1, 2011) is $335. including applicable taxes. The Master Insurance Policy Number for the current insurance term (September 1, 2010 September 1, 2011) is: RECO09201001. Where do I find an application for participation in the insurance program administered by RECO? The insurer, Lloyd's, does not require registrants to complete a specific application for participation in the insurance program administered by RECO. Upon review of your registration application by the office of the Registrar and receipt of your insurance payment, you become a participant in the insurance program. How do I make an insurance payment online? You may make your insurance payment by Visa or MasterCard on RECO's web site. Log in to MyWeb, click on the Insurance tab located on the left side of the screen, under Insurance Payment Status click on "Pay Insurance Now". To create your MyWeb account, visit https://myweb.reco.on.ca. What is the advantage of making my insurance payment in MyWeb? You can make your payment when it's convenient for you with 24-hour internet access. You will receive confirmation of your payment promptly by e-mail. Your receipt for income tax and certificate of insurance for the current insurance term will be available in your MyWeb account located on RECO's website within five business days after your payment has been made. MyWeb also allows you to access free online services, track the status of your application, update your profile and view important information. Contact MyWeb@reco.on.ca if you require assistance with MyWeb. Can I make a payment or access my receipt when using Firefox or Safari? Yes, however some features of MyWeb may not be accessible when using Firefox or Safari. Please contact MyWeb@reco.on.ca. Why has my premium increased this year? The insurance premium increase is related to the overall program performance of all three coverages. The majority of the costs and settlements relate to the errors and omissions insurance coverage. The loss ratio of the insurance program is currently in excess of 119%. This means that the insurers have paid out $1.19 for every $1.00 of premium. Essentially, this means the Insurance Program is running at a significant loss. It is not possible to maintain a stable Insurance Program without an increase in premium. New & Reinstating Applicants
How do I make an insurance payment online? You may make your insurance payment by Visa or MasterCard on RECO's web site. Log in to MyWeb, click on the Insurance tab located on the left side of the screen, under Insurance Payment Status click on "Pay Insurance Now". To create your MyWeb account, visit https://myweb.reco.on.ca. What is the advantage of making my insurance payment in MyWeb? You can make your payment when it's convenient for you with 24-hour internet access. You will receive confirmation of your payment promptly by e-mail. Your receipt for income tax and certificate of insurance related to the current insurance term will be available in your MyWeb account located on RECO's web site within five business days after your payment has been made. MyWeb also allows you to access free online services, track the status of your application, update your profile and view important information. Contact MyWeb@reco.on.ca if you require assistance with MyWeb. How is the insurance amount calculated for new and reinstating applicants? How do I complete the registration process? Once your registration application has been reviewed, an insurance invoice will be sent to your attention requesting payment for the period from the date of your registration application review until the following September 1. Your registration application will receive final approval upon receipt of payment of your insurance amount plus applicable taxes. Only one insurance invoice is issued per reviewed application; the amount due is calculated with the date the application has been reviewed. The annual insurance amount including applicable taxes for the September 1, 2010 - September 1, 2011 insurance term is $335. Insurance payments are non-refundable in whole or in part. New and reinstating applicants joining the insurance program between September 2, 2010 and June 2011 will be required to pay the pro-rated insurance amount applicable to the remainder of the September 1, 2010 - September 1, 2011 insurance term (approximately $0.92 per day). New and reinstating applicants joining the insurance program in July or August will be required to pay the pro-rated insurance amount applicable to the remainder of the September 1, 2009 - September 1, 2010 insurance term (approximately $0.71 per day) plus the annual insurance amount for the following September 1, 2010 - September 1, 2011 insurance term of $335. The cycle of a registration with the Real Estate Council of Ontario is two years commencing from the date of approval of your registration application. The insurance term is a one-year cycle commencing each September 1, until the following September 1. Why do some new and reinstating applicants receive two invoices for insurance payments?
New and reinstating applicants may receive two invoices; one in a pro-rated amount for the remainder of the September 1, 2009 September 1, 2010 term and one for the annual insurance term from September 1, 2010 September 1, 2011. Insurance is a requirement of registration under REBBA 2002. Your application for registration cannot be completed until all insurance amounts due have been paid. This prevents new/reinstating applicants from being suspended for non-payment of insurance amounts during the insurance renewal process. My registration has been suspended due to non-payment of insurance amounts. How do I revive my registration? To revive your suspended registration, you will be required to pay the outstanding insurance amount. Upon payment, your registration will be revived for the unexpired balance of your registration cycle. Your registration renewal date will not change. A notice of the revival of your registration will be sent to your attention and the attention of your Broker of Record by regular mail. Registrants wishing to revive their registrations in the months of July and August will be required to pay the insurance amount owing for the insurance policy term ending midnight August 31 plus the annual renewal premium for the following September 1 to September 1 insurance term. This prevents reviving registrants from being suspended for non-payment of insurance premium during the insurance renewal process. Graduated Deductible - Errors & Omissions Insurance (E&O) Coverage What is a graduated deductible under the E&O coverage? A deductible is an amount a registrant is responsible to pay towards a claim settlement. Effective September 1, 2009, the deductible amount will gradually increase with each claim settlement made on behalf of the same registrant over a three-year period. This means registrants with more than one claim will contribute more towards the cost of each additional claim settled on their behalf. Has the insurer changed the criteria used to determine when a deductible is payable by a registrant with the implementation of the graduated deductible under the E&O coverage? No. The criteria used to determine when a deductible is required has not changed. What has changed is the method used to calculate the amount of the deductible when settlements are paid. How does the graduated deductible under the E&O coverage for claims reported after September 1, 2009 work? Under the graduated deductible, the first claim resulting in a settlement paid under the policy on behalf of an individual registrant will remain unchanged at $2,500. Each additional claim resulting in a settlement paid under the policy on behalf of the same registrant will result in an additional surcharge of $2,500. This means the deductible for a second claim will total $5,000, a third claim will total $7,500. There is no maximum deductible surcharge. The insurer will establish a claims paid history for each registrant. When a claim is due to be
settled, the insurer will review the total number of settlements paid under the policy on behalf of the same registrant during the previous three-year period. If, for example, a claim is due to be settled October 31, 2009, the insurer will review the registrant's claim history back to September 1, 2009 - the implementation date of the graduated deductible to the insurance program. If a claim is due to be settled on January 10, 2013, the insurer will review the registrant's claim history back to January 10, 2010. A registrant will become eligible to return to the minimum deductible of $2,500 upon the third year anniversary of the last claim settlement paid under the policy on their behalf. This means that a registrant would need to be claims free for three years before his or her deductible was reduced to $2,500. The claims history of a registrant remains part of the registrant's profile with the insurer regardless of where the registrant is employed. Under what circumstances would a brokerage be required to pay a deductible under the E&O coverage? Brokerages are rarely responsible for payment of a deductible because individual registrants actually conduct the trades in real estate. In general, a single deductible is required by the insurer for each claim settlement. The payment of the deductible is usually the responsibility of the individual registrant that conducted the trade. This has not changed with the implementation of the graduated deductible effective September 1, 2009. In the unusual event where a brokerage's act or error results in a settlement paid under the policy by the insurer on behalf of the brokerage, the application of a deductible or graduated deductible would be similar to that of an individual registrant. If, for example, the brokerage entered into an agreement in connection with a trade that required the brokerage to deliver a deposit or documents, and the brokerage did not complete the action resulting in a settlement paid under the policy by the insurer on behalf of the brokerage, the brokerage would be responsible for paying a deductible. In rare circumstances - such as an individual registrant not having coverage under the policy - the insurer may make a payment on behalf of the brokerage. A brokerage may be required to pay the deductible or a portion of the deductible resulting from the brokerage's responsibility for the actions of their employee(s). If, for example, a registered employee sells his or her own property and has not complied with Section 18 "Disclosure of Interest" of the Code of Ethics and the insurer denies coverage to the individual registrant, the insurer may be obligated to make a payment on behalf of the brokerage. A brokerage may be required to contribute a deductible or portion of a deductible resulting from the brokerage's responsibility for the actions of their employee. The application of the graduated deductible would be similar to that of an individual registrant. Brokerages, and the brokers of record that represent them, do not automatically become responsible for a deductible simply because they are named in a law suit in addition to an individual registrant, or because they are responsible for the actions of their employee(s). The
criteria used to determine when a deductible is required has not changed. What has changed is the method used to calculate the amount of the deductible when settlements are paid. When was the graduated deductible implemented under the E&O coverage? The graduated deductible was implemented effective September 1, 2009 under the Errors & Omissions insurance coverage. Every registrant began with a clear claims history effective September 1, 2009. Does reporting a claim, incident or circumstance mean a registrant automatically becomes responsible for a deductible under the E&O coverage? No. Many incidents reported do not develop into claims. Many successfully defended claims do not result in settlements. Deductibles are only required from a registrant when a settlement is paid under the policy by the insurer on behalf of the registrant. Is a deductible or graduated deductible applicable to defence costs? No. A deductible is not applicable to defence costs. Defence costs will continue to be paid by the insurer. Does the graduated deductible apply to commission protection and consumer deposit insurance coverages? No. The graduated deductible is only applicable to coverage under the Errors & Omissions insurance. Who should I contact for more information related to the graduated deductible? Alternative Risk Services Tel: 416-408-5344 250 Yonge Street, Suite 2900 Toll Free: 1-866-426-1666 Toronto, ON M5B 2L7 E-mail: recoinfo@ar-services.ca Fax: 416-408-3721 Coverage What are the policy sub-limits related to the Commission Protection coverage under the insurance program? Commission Protection insurance offers protection in the event of fraud, insolvency or misappropriation of funds by a registrant (e.g. a broker of record). There is a $250 deductible per individual claim under this coverage. However, the insurance policy contains clauses, which may limit the amount payable if there is a loss. The insurance provides coverage up to a maximum of $100,000 per individual claim. In the event the sum of all claims made by all registrants against a particular registrant related to an Occurrence (e.g. a brokerage becomes bankrupt) exceeds $1million, the amount recoverable by each registrant may be pro-rated and limited to a portion of the maximum amount of $1million of coverage, subject to the terms and conditions of the September 1, 2010 September 1, 2011 insurance policy. For additional information contact the program insurance broker, Alternative Risk Services at 416-408-5344 or 1-866-426-1666 or by e-mail at recoinfo@ar-services.ca How can I find out whether or not I have coverage for a particular incident? If you wish to discuss a particular situation, you may contact the program's claims adjuster, McLarens Canada at 1-877-740-1913 or by e-mail at claims@reco-claims.ca
For general questions relating to the policy wording, please contact the insurance broker Alternative Risk Services at 416-408-5344 or 1-866-426-1666, or by e-mail at recoinfo@arservices.ca Are brokers covered for the actions of their salespersons? Yes, the program would cover the real estate broker, for whom the salesperson works, including any franchisee or franchisor. Is an unregistered assistant covered under the RECO Errors and Omissions Insurance when acting on behalf of a registrant? Under the Act REBBA 2002, unregistered assistants are not permitted to participate in activities that are considered "trading". As such, they are not covered by RECO's Errors and Omissions insurance policy for claims that arise out of prohibited activities such as phone solicitations, showing properties, participating in presenting offers or being on site at open houses. However, the insurance policy may provide coverage for claims against an unregistered assistant (and/or the registrant who may be liable for certain actions of the employee) for activities that are directly or indirectly related to a registrant's real estate trading activities. For example, if the unregistered assistant makes a typographical error in preparing an Agreement of Purchase and Sale and the error leads to a claim, the insurer may provide coverage directly to the unregistered assistant and/or the registrant, subject to the terms and conditions of the insurance policy. For a copy of RECO's Errors and Omissions insurance policy please refer to the Insurance Policy document which you can view and download on this website. Is my brokerage firm covered under my E&O insurance? Yes. An "Insured Firm" includes any real estate broker, partnership or company, and any franchisor, with which the broker is associated, as well as their respective subsidiaries or parent companies. Your firm is covered with respect to the rendering of "Professional Services" by a broker or salesperson. E&O insurance covers "negligence". What happens if the claim results from fraudulent activities? Fraudulent or dishonest acts are excluded. However, if such allegations are proven false, then the insurance program will pay for defense costs. Further, a lawsuit could name a salesperson, the broker of record, and or brokerage for whom the salesperson works. If the broker and/or brokerage were neither the author nor the accomplice of the fraudulent or dishonest act, the insurance program would cover the broker of record and or brokerage. Are all real estate services covered, including appraisal work? The insurance program's coverage for appraisal services are limited to the following definition: "Real Estate Appraisal Services" means the provision of a market value opinion by an Insured in the course of providing "Professional Services" provided that a registrant is either the author of the said opinion or has reviewed and approved the opinion but does not include an opinion
that is done for the purpose of financing, whether secured or unsecured, or an opinion that is done in the usual course of business by anyone with Accredited Appraiser Canadian Institute (AACI), Canadian Residential Appraiser (CRA), Professional Appraiser (P.App), Professional Valuator (P.Val), or Canadian National Association of Real Estate Appraisers (CNAREA) designations. Note: Any registrant who provides market value opinions for the purpose of financing and who wishes coverage for this service must purchase a separate policy from his or her own insurance broker or from Alternative Risk Services. Are mortgage services covered by the policy? Insureds acting as mortgage brokers are not covered. However, this exclusion does not apply to insureds who direct a borrower to a source of funding for a fee. Are property management services covered by the policy? Claims arising from property management services are not covered where the revenue due to property management services of the insured or insured firm exceeds 35 per cent of the total gross revenue. If total gross revenue for property management exceeds 35 per cent, you may wish to purchase specialty insurance coverage to cover this exposure. Registrants may wish to purchase a separate policy from their own insurance broker or from Alternative Risk Services. What if there is a claim after I have retired or left the business? Can I purchase Extended Reporting Period coverage in addition to the two year retirement provision already available under the RECO policy? The RECO insurance policy provides automatic coverage for Errors and Omissions claims for two years following the date of retirement or leaving the business for any reason, other than by reason of disciplinary action by RECO, at no additional cost to the registrant. The program's insurer, Lloyd s, provides an option to purchase an Extending Reporting Period for an additional three years of coverage at a cost of 30 per cent of your last annual premium. To exercise this option to extend the coverage for the three additional years you must make this request in writing to Alternative Risk Services by the next August 31 following your retirement date. The premium charge will be 30 per cent of the last annual premium you were charged. (e.g. $230 X.30 = $69 plus applicable taxes). Does the insurance cover out of province services performed by RECO registrants? You have insurance coverage for "Professional Services" as defined by the insurance policy for activities that are permissible under the REBBA 2002. If "Professional Services" have been performed outside the province of Ontario then you likely do not have any coverage. If "Professional Services" are performed in the province of Ontario subject to the terms and conditions of the policy you likely have coverage. Each claim will be evaluated on its own facts. Can I purchase additional insurance coverage such as excess insurance or to cover a situation not covered by the RECO policy? The program offers policy limits of $1 million per claim for Errors and Omissions claims. While this may be sufficient for most registrants, higher limits are available if a registrant feels that additional protection is required.
Alternative Risk Services can assist registrants with obtaining optional excess insurance which is available to individual sole proprietors or brokerages upon review and acceptance of an application. An excess policy may "drop down" to become primary insurance in some situations to provide coverage for some activities that are excluded under the RECO insurance program (e.g. property management Errors and Omissions where a registrant's percentage of revenue exceeds the permissible 35 per cent). Premiums for this excess insurance start at $1,500 per policy and increase depending on the scope of services and size of the brokerage. Does a brokerage have to maintain a commission trust account? What does a registered employee of a brokerage need to know about a commission trust account? Some real estate boards require brokerages to operate a commission trust account. You may wish to contact your real estate board to determine its requirements. RECO does not require brokerages to maintain commission trust accounts. RECO does not prevent the operation of a commission trust account. The insurer encourages the use of commission trust accounts as it provides a source of information during a claims investigation. The insurer requires that salespersons and brokers make an inquiry to determine if their brokerage operates or does not operate a commission trust account. Regardless of whether a brokerage operates a commission trust account or not, salespersons and brokers are encouraged to contact RECO or McLarens Canada (the insurance program claims adjuster) in the event they experience difficulties receiving their commission payments from their brokerages. Each claim event is evaluated individually and subject to the insurance program policy wording. A copy of the policy wording is available on RECO's website at www.reco.on.ca.