How Real Estate and Insurance Connect:
Whether your job in real estate focuses on buying or selling, working with clients is at the heart of the industry. A real estate agent can easily interact with hundreds of clients during any given month, providing multiple types of services.
However, real estate agents possess specific insurance challenges that are wholly unique to the industry. Agents must deal with legal documents, private client information, travel and the risks that come with providing professional advice. Despite the many advantages that make this industry attractive, real estate agents have a duty to protect themselves and their clients.
There are any number of insurance policies that real estate agents might consider. We can help agents focus in on the most important and valuable types for this specific industry.
Read on to learn about the insurance best suited for real estate agents and their businesses.
Who Needs Real Estate Insurance?
Anyone who is a licensed professional working in real estate will need to purchase insurance. Individuals who will need to get insurance include:
- Licensed real estate agents
- Real estate brokers
- Dual agents
- Buyer’s agents
- Seller’s agents
Still not sure what you need?
CoverWallet's Insurance Checklist , you'll find a list of insurance types needed for your specific business or industry.
What Insurance Does a Real Estate Agent Need?
Real Estate Insurance needs will depend on whether you buy or sell homes for clients. This may be impacted by your specific duties within an agency you work for as well. However, the following insurance policies are useful, and in some cases required:
Business Owners Policy
A Useful Mixture of Necessary Policies
A Business Owners Policy, also known as a BOP, provides excellent coverage for real estate professionals. It has a useful combination of features from three of the most common and insurance products: General Liability, Professional Liability, and Property Insurance. All of these policies are useful for real estate professionals, especially those who run their agency..
You’ll Need This When…
You gain licensure to practice. Once you begin working as a real estate agent, there are any number of claims that could potentially arise against you or your agency. It is best to protect yourself, your business and your employees from the first day of operation. If you have not purchased a General Liability, Professional or Property Insurance policy, but need to buy them, you should consider getting a BOP.
For Example…
If a customer is injured while inside of your agency’s home office, he or she may file a claim against your agency. This bodily injury claim would be covered by the General Liability feature of a BOP.
Professional Liability
Insuring Real Estate Agents Against Professional Claims
Often referred to as an Errors & Omissions Insurance policy, Professional Liability is one of the most important policies a real estate professional can purchase. This policy helps insure against claims of errors or omissions in the advice and service you provide your clients. This could be anything from faulty advice on how to purchase a home, to things omitted while filing paperwork for a customer.
You’ll Need This When…
You are preparing to offer your services to clients. While you may not need this type of insurance for the entire time you are a real estate agent, you should consider purchasing this policy when, and if, you intend to interact directly and offer advice to potential home buyers or sellers.
For Example…
If you fail to sell a client’s home for the agreed upon value, that client may sue you for “breach of duty.” If a contract was signed, this could lead to you getting sued in court. A Professional Liability Insurance policy should help cover legal costs in this type of situation.
Workers Compensation
For When Employees Are Injured on the Job:
Workers Compensation is not just a common insurance policy for businesses; It is legally required in almost every state. Workers Compensation provides financial assistance to workers who were injured on the job while performing work-related duties. In most cases, Workers Compensation Insurance is managed by a state government, and claims are handled through a Workers Compensation Board. The purpose is to ensure that workers will be able to get the salary that they were earning and are not financially disadvantaged as a result of an injury that would otherwise not have occurred had they not been at that job.
You’ll Need This When…
Your state’s laws require you to purchase it. Laws vary between states. The law may require your agency to obtain Workers Compensation with as few as two employees. However, a Workers Compensation policy is an extremely advantageous policy whether required by law or not. It can protect both you and your company in the case of a workplace injury.
For Example…
If an agent hired by your company is injured while showing a house, he or she will likely qualify for Workers Compensation Insurance. Failure to purchase this insurance policy means that the worker may sue your agency directly, which is a much costlier ordeal than the cost of the policy.
Commercial Auto Insurance
Insurance for Company Vehicles:
Real estate professionals are no strangers to traveling by car. While many agents use their personal vehicles, many of those agencies have several cars specifically for agents working with the company to use. Commercial Auto Insurance is a necessary insurance type for real estate agents who use their vehicle for work or agencies that have vehicles that agents share.
You’ll Need This When…
Your agency has vehicles specifically dedicated to the company. Similarly, if you are an individual who uses a personal vehicle for real estate purposes a majority of the time (more than 50%), then you may want to classify your vehicle as a work vehicle, and obtain Commercial Auto Insurance for it.
For Example…
If you are in an accident while traveling to show a house, a Personal Auto Insurance policy may refuse to cover your claim. However, a Commercial Auto Insurance policy is designed to cover claims on vehicles used for business that are in accidents during business hours.
Cyber Liability Insurance
Insuring Against Modern Threats
If your company has its servers hacked, your business may be held liable for any damages. If customer data is stolen, this could be a nightmare scenario for an unprepared business. Cyber Liability Insurance mitigates the risk by insuring against this potential threat. Regardless of where your servers are located, your agency could still be held liable for stolen data.
You’ll Need This When…
You open your business. Real estate agents will begin collecting information from clients from the moment they get their very first client. That information is often required to be retained for years, increasing the risk of being stolen.
For Example…
If hackers break into a secure, on-site server and steal client social security numbers, you or your agency will be held liable. A Cyber Liability Insurance policy will insure against this and other similar situations.
How Much Does Insurance Cost?
Insurance costs can vary. Considering the type of insurance real estate agents may purchase, costs could be vastly different depending on the size and location of your agency. Obtain a professionally completed quote to get a good idea of how much your insurance will cost.
