Just like many other professionals, as a real estate agent you’re subject to lawsuits
and claims filed against you in performing your real estate duties. From a customer
losing a money on a transaction due to a negligent real estate broker error to a
delay or cancellation in a sale as a result of a agent-made closing document mistake
to a mishandled property inspection, blunders in real estate transactions can and
do happen. That’s why insurance for real estate agents provides protection against
the potential financial burden that accompanies a lawsuit.
To avoid putting your professional and personal financial future on the line, consider
general liability, errors and omissions (E&O), and commercial auto insurance for
real estate agents.
General Liability insurance provides the real estate professional with protection
from injury claims, advertising claims, and property damage claims. Typically, a
general liability policy also covers slander, libel, and infringement on intellectual
property, such as copyrights and trademarks. A general liability policy provides
compensation for defense costs in a lawsuit brought against you, including court
costs, witness fees, and attorney fees, in addition to judgment or settlement monies.
This coverage can be written on a stand-alone basis or as part of a BOP.
As a realtor, you may already have general liability insurance, which covers losses
relating to injury, property damage, and advertising. But general business liability
insurance doesn’t generally protect you against lawsuit claims arising from a customer’s
lawsuit for errors, omission, or failure to perform during a real estate transaction
that caused the customer a loss. Examples include a real estate agent misrepresenting
a property. An E&O policy shields the realtor’s assets and pays legal costs, should
a suit be brought against him. Just like doctors need malpractice insurance, realtors
need E&O insurance.
Unless you’re able to take the subway or bus to show your properties, most real
estate agents must use a vehicle to carry out the day-to-day operations in order
to land a real estate sale. Coverage for damage to your vehicle from a traffic accident
along with liability damages that arise from a collision can be purchased in a commercial
auto insurance policy.
Real Estate Agents Additional Coverages
In addition to general liability, E&O, and commercial auto insurance, there are
a few other recommended types of insurance for real estate agents.
Real Estate Agents Workers Compensation Insurance – For instance,
if you have employees working for your real estate business, you’ll need workers
compensation insurance, which provides your employees protection against job-related
medical illnesses and workplace injuries
the rise in employment-related litigation, it’s wise to have employment practice
liability insurance (EPLI), which provides protection against harassment, wrongful
termination, and discrimination claims among others.
Real Estate Agents Business Owner Policy –A business owner policy,
or BOP, is an insurance policy package that assembles basic coverages needed for
the real estate agent business owner in one bundle. A typical BOP includes business
interruption insurance, property insurance, business liability, and crime insurance,
to name a few. However, depending on the specific risks that the real estate agent
faces, additional components can be included in the bundle.
Real Estate Agents Certificate of Insurance – Any time you’re considering
hiring a independent contractor to help you in your real estate business, it’s important
to verify that the contractor is covered with general liability insurance, which
will cover damages if the contractor’s error or accident causes property damage.
Ask your contractor to give you a copy of his Certificate of Insurance, which is
a document insured by an insurance company and certifies that an insurance policy
has been purchased. A certificate of insurance shouldn’t be substituted for the
actual insurance policy, it’s generally reliable proof of insurance coverage.
No matter how seasoned a realtor you are or how careful you are in your real estate
transaction duties, you are at risk for losses, damages, and lawsuits, whether unfounded
or not simply by doing your job. Mitigate these risks by purchasing the proper insurance
for real estate agents.