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Real Estate Business Insurance

Real Estate Business Insurance

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The real estate industry can be filled with unexpected risks for business owners. From unsatisfied clients who sue you to accidents that may befall your employees or customers, sometimes things don’t go quite as planned. Finding the right commercial insurance coverage is an important step in setting up your business for success.

Real Estate Business Insurance Types

Professional liability insurance (also known as errors and omissions insurance) is designed to protect your business in cases of alleged negligence. Whether you believe it to be fair or not, a real estate business deals with so many customers that, inevitably, some customers may feel that they received inadequate or improper service. If those individuals feel they came into significant financial loss as a result of your service, they may choose to sue. Liability insurance covers financial losses from legal fees and damages that may arise from claims brought against you in court.

Errors and omissions insurance provides coverage if you or your employees are sued as individuals for mistakes you made while working, and it also provides coverage for the company itself. Perhaps you’re thinking: I’m part of a business, so at least my personal assets will be safe, even if they come after the company. Not true! If you’re the subject of a malpractice suit, and your company fails to hold enough assets to compensate for a judgment made in favor of the plaintiff, your own assets are liable to be put on the line to make up for the rest. Due to the associated risks, some states require professional liability insurance for real estate professionals.


General liability insurance provides protection for your real estate business if someone is injured or if their property is damaged when you are conducting your business. Really, it’s the sort of insurance any business owner in any field should have.


Commercial property insurance covers real estate businesses that rent or own office space. Commercial property insurance can provide compensation in the event of physical damage to property stored at your workspace, such as furniture, computers, and artwork, caused by anything from fires to windstorms to broken water pipes. Additionally, if you own your building or office, this insurance can provide coverage for damage to the structure.


A business owner’s policy (BOP) bundles general liability and commercial property together for qualified small businesses into a single plan, allowing you a discount on the cost of your premiums.

Workers’ compensation insurance is mandatory for businesses that hire employees in most U.S. states. Its function is to provide coverage for employees of a business in cases of work-related injury or illness. The policy will cover a portion of employees’ lost wages while he or she is unable to work, as well as the medical costs associated with their rehabilitation.


Additional Insurance Coverage

In addition to those most common forms of insurance for real estate professionals listed above, there is a suite of other insurance options that can provide further coverage for you and your business. The following options may or may not be applicable to your real estate business, depending on your particular circumstances.

Insurance Coverage for Your Employees

If you’re an employer at a small to large real estate business, your company has the option of providing group insurance plans for all your employees. Here are some of the options available:

Group health insurance provides coverage when your employees encounter medical and health care-related costs. Health insurance can cover everything from visits to a primary care physician all the way to hospitalizations. Offering health insurance to workers is a no-brainer: it keeps people happy, keeps them at work, and attracts better talent to your organization.

Group life insurance distributes financial compensation to an employee’s near relatives in the event of an unexpected passing, whether work-related or not. Life insurance is available to individuals, but group policies generally offer better rates.

Group disability insurance provides income to employees who cannot work as a result of non-work-related injuries.

What real estate businesses need insurance?

Every real estate professional should have insurance coverage, whether you’re on your own or part of a larger organization. Not only does insurance protect you against financial loss in unexpected circumstances, but it can also demonstrate to clients that you’re serious about your work. All of the following factors can open you up to the problems that insurance accounts for:

Commercial insurance can cover a wide variety of real estate businesses. Some common businesses and professions that need insurance include:

Choosing an Insurance Company

Selecting the right provider for you is a vital first step in your effort to insure you or your company. As such, there are some important factors to take into consideration. We’ve highlighted below a few items to consider when purchasing commercial insurance, as well as a few trusted insurance providers from whom you can compare quotes.

ProviderGeneral LiabilityProfessional LiabilityBusiness Owner's Policy

Financial strength. Perhaps getting the most adequate, lowest-price policy is your first goal in choosing your insurance plan. However, if there is a second most important consideration in your decision-making process, it should be the financial health of the insurer you choose. Note that any insurance claims you may file in the future will be paid directly from the pockets of the company providing your insurance. Therefore, if the company you chose runs into financial problems of their own, you may be on the chopping block right alongside them.

It is quite a rare occurrence that an insurer goes under, but because the stakes are so high, you should make sure to buy your policy from a reputable company with a big wallet to draw from.

Now, you might be thinking: how can I know whether my insurance company is financially stable? You may assume the largest companies are the least subject to failure, but that’s not always the case—even insurance giants experience periods of financial instability. Instead, it’s worth checking out the rating agencies that grade companies based on their financial strength. The most reputable of these agencies include: Standard & Poor’s, Moody’s, Fitch, and AM Best.

Price. This one you probably didn’t need reminding about. As with any purchase your business has to make, you’ll want to find the lowest-cost policy that fits your needs.

Each insurer has its own method for determining how much you should pay for your premium, but there are certain industry standards they all share. Essentially, the math for an insurance provider is to calculate the risk involved with taking on your business and weighing that risk against how much money they’d reasonably expect to need from you and other real estate professionals and businesses like yours in order to turn a profit in aggregate. Insurance companies are, after all, money-making businesses.

The best way to find the right plan for you is to weigh all the options available. Speak to insurance agents and brokers, try online quote estimates, and see what the market is like and find that golden deal.

Customer service. Beyond shopping for the best policy deal, calling up insurance agents is a great way to gauge the customer service of a particular provider. Because insurance is a long-term business arrangement, you’ll want to be associated with a company that can provide prompt and comprehensive service ad hoc. You don’t want to be dealing with below-average customer service every time you need to file a claim, update your account information, or change the specifications to your policy.

Type of provider. It’s not just a good policy you’ll want to look out for when shopping for insurance—it’s the individual who delivers on that policy that will also affect your experience with your insurer. There are three main categories of insurance providers:

Final Word

Finding the right insurance coverage types for your business may seem like a daunting task, but it’s the right move if you want to make sure your business is setup with a solid financial safety net. Unexpected disasters and accidents occur all the time, and dealing with client lawsuits are an unfortunate but common part of doing business in the real estate industry. Making sure you’ve got the right risk management tools at your disposal will help provide the financial assistance when your company needs it and also give you and your team greater peace of mind.

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