Finding the right insurance for your real estate business is an important step in protecting your business and achieving long-term success.
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When you work as a real estate agent or broker, your clients rely on you to assist them with buying and selling property—and they could suffer significant financial losses if you make an unintentional error, which could lead to costly lawsuits. In addition, common risks such as clients injuring themselves on your property, unintentional property damage, or auto accidents could have a major impact on your business. It’s important to protect your business by purchasing a range of business insurance to provide financial support in the event of an expensive lawsuit or disaster.
What insurance coverage do I need as a real estate agent or broker?
While there are many types of coverage for companies to consider, these insurance policies are particularly important for real estate agents and brokers to consider:
A mistake made by a real estate agent or broker could cause clients to lose large amounts of money, which could lead to a major, costly lawsuit—and it’s important to remember that you could be sued for perceived negligence even if you did nothing wrong. Errors and omissions insurance (also called professional liability insurance) can step in to provide you with financial protection if you are sued with allegations of errors or negligence in your professional work or advice.
E&O insurance is one of the most important coverages for real estate agents and brokers. In the event of a lawsuit, E&O insurance can cover legal and defense costs, settlements, and any judgments against your company.
- After purchasing a home, a client realizes that the property is in an area with high flood risk. They sue you for failing to alert them to this information. Your errors and omissions insurance would cover the lawsuit and any resulting settlements.
As a real estate agent, if you are affiliated with a real estate firm where you are not the owner, you may have some insurance coverage through the firm. However, it may be wise to consider purchasing your own individual coverage, as a firm’s E&O plan may not be comprehensive enough to cover you in the event of a major lawsuit or multiple lawsuits against the firm.
General liability insurance provides funds to protect your company from claims of third-party bodily injury, property damage, and personal injury. If one of your clients slips and falls while visiting your office, or if you accidentally damage a valuable item at a client’s home while showing it to potential buyers, you could be held liable for damages. General liability insurance can cover medical fees, legal costs, and settlements if this occurs. General liability insurance also includes a personal and advertising injury component, which provides coverage for a number of risks, including libel, slander, and copyright infringement.
- Bodily injury: A client trips on an uneven carpet in your office and falls, breaking her wrist. Your general liability insurance would cover her medical costs as well as your legal fees if she decides to sue.
- Property damage: You’re at a client’s home to prepare it for showing when you accidentally knock over an expensive sculpture, shattering it. Your general liability insurance would cover the damages.
- Personal and advertising injury: You use a new slogan for your real estate company’s latest newspaper advertisements. The slogan is similar to another real estate company’s slogan, and the other company sues for copyright infringement. Your insurer would provide funds to defend the lawsuit and pay any settlements or judgments against you.
Real estate agents and brokers typically drive to many properties as part of their professional duties. If your employees drive company-owned vehicles, you’ll need commercial auto insurance to cover them. If your employees are involved in a car crash, commercial auto insurance can provide coverage for physical damage to vehicles, third-party bodily injury, and property damage.
In many cases, real estate agents or brokers drive their personal cars, but it’s important to note that personal auto insurance may not be sufficient if an employee is involved in a collision while driving a personal vehicle for work purposes. You will need to add hired and non-owned auto insurance to protect your company if an employee is at fault in an accident while driving a personal vehicle for work purposes.
- While driving to a client’s property to appraise it, a real estate agent becomes distracted and runs a red light, striking another vehicle and injuring its occupants. Commercial auto insurance would cover damages to both vehicles as well as medical costs for the occupants of the other vehicle.
Commercial property insurance can protect the value of your business property, including your office space, computers, furniture, and other items. Commercial property insurance can help provide funds to replace or repair business property if it’s damaged or destroyed by commonly covered perils including windstorms, hail, fire, vandalism, and water damage.
Commercial property insurance covers the following:
- Buildings belonging to or leased by your company
- Contents of the building, including furniture, computer equipment, and artwork
- Property of others while it is under your care, custody, or control
- A faulty microwave starts an electrical fire in your office kitchen. The fire damages the kitchen wall as well as furniture and other equipment. Your insurer will pay for repairs to the building and to replace the equipment.
Because they handle sensitive customer information and have access to customers’ homes, real estate agents and brokers can face high levels of risk of theft, fraud, and employee dishonesty. Although thorough background checks can reduce the likelihood of crime, it’s a good idea to purchase commercial crime insurance. Commercial crime insurance provides funds to reimburse you for losses caused by theft, robbery, fraud, forgery, burglary, and other crimes. This coverage applies both to crimes committed by outside parties and crimes committed by your own employees.
- You discover that one of your office’s employees has been charging clients for non-existent fees and pocketing the money. Your commercial crime insurance would provide funds to reimburse your clients.
Real estate agencies are often entrusted with clients’ personally identifiable information. If hackers breach your servers and steal sensitive customer data, your company could be held liable for damages. Although you can reduce the likelihood of this occurring by implementing strong cybersecurity protections, it’s impossible to be prepared for every new attack, and the costs of recovering from a cyberattack are high. Cyber liability insurance can provide financial protection for losses that result from data breaches, hacking, viruses, denial of service attacks, and other similar cyber incidents.
- Your company servers are hacked and criminals steal customer information, including Social Security numbers, bank account information, and other data. Your customers sue your business for failing to adequately protect their confidential data. Your insurer will pay for your legal fees and any settlements or judgments in the case.
- Business income insurance will reimburse you for lost income and operating expenses if your business is temporarily unable to operate due to a covered reason, such as fire, storm damage, or other property damage.
- Workers’ compensation insurance is legally required for companies with employees in almost all states. It covers the medical expenses and lost income of employees who are injured or fall ill while working. For real estate agents and brokers, there is a risk of repetitive strain injuries from office work as well as auto accidents or slip-and-fall injuries that could occur when agents travel to client properties.
- Employment practices liability insurance protects your business against lawsuits by employees who accuse your business of wrongful treatment, including discrimination, harassment, or other employment-related issues.
Pricing and Quotes
Pricing for real estate business insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:
- Business size
- Number of employees
- Claims history
Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a real estate agency with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.
In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for real estate agents and brokers:
|Provider||Business Interruption||Business Owner's Policy||Commercial Auto||Commercial Crime||Commercial Property||Cyber Liability||Employment Practices Liability||General Liability||Product Liability||Professional Liability||Workers' Compensation|
As you consider what types of business insurance to purchase, it’s essential to keep in mind the various major risks for which your real estate agency could be held liable. Business insurance can help your company cope with unexpected disasters, whether it’s a lawsuit brought by a client who believes you acted negligently, a client injury that happens on your property, or a disaster that damages your offices. Ensuring that your company has a wide range of insurance can help you better manage risks and give your clients confidence in your business.