During an open house, a real estate agent accidentally leaves a faucet running.

General liability insurance is the best answer because the loss is ordinary accidental property damage arising from the agent ' s physical activities at the premises. General commercial liability coverage commonly protects a brokerage against qualifying claims for third-party bodily injury and property damage caused by negligence in the conduct of business.

Errors and omissions insurance is conceptually different. E & O is professional liability protection and is primarily directed toward claims alleging mistakes, omissions, misrepresentations, or negligent performance of professional real estate services. Examples can include transaction-related professional errors. Physical water damage caused because an agent simply failed to turn off a faucet is not primarily a professional-advice or transactional error; it is a premises/property-damage event.

The distinction is examination-relevant because brokerages face both types of risk. A licensee could make an erroneous representation in a transaction—potentially an E & O issue—or accidentally break or damage property while showing a home—a general-liability issue.

The Massachusetts licensing framework also distinguishes insurance requirements applicable to certain brokerage business structures, reinforcing that licensees must understand business risk as distinct from professional-regulatory obligations.

Study Guide Reference: Practice of Real Estate — brokerage operations, professional responsibility and insurance risk.