Errors and omissions insurance in South Dakota is required to cover which type of claim against a licensee?

Errors and omissions insurance (E&O insurance) is specifically designed to protect real estate licensees from claims arising out of their professional services. In South Dakota, E&O insurance typically covers unintentional mistakes or negligent actions that occur during the performance of their duties as licensees.

In this context, negligent failure to lock a client's house after a showing falls under situations that can be covered by E&O insurance. This is because it represents a lapse in the reasonable care expected of a real estate professional, which could potentially lead to liability if the client suffers harm, such as theft, because of this negligence.

On the other hand, while failure to disclose property defects, misrepresentation of property value, and fraudulent dealings are significant in the realm of real estate practice, they might not be classified as negligence in the same context. For instance, misrepresentation and fraudulent dealings generally pertain to intentional misconduct or dishonest actions, which are often excluded from E&O policies, as they do not fall under accidental errors made during professional conduct but rather suggest a willful violation of ethical standards.

Thus, the claim related to negligent failure to lock a client's house aligns with the unintended mistakes that E&O insurance is designed to address, making it the correct choice in this situation.