According to the U.S. Bureau of Labor Statistics, in 2019 there were 477,200 real estate agents or brokers in the US. The job outlook for realtors is expected to remain steady through 2029 as the demand for real estate agents and brokers will continue to grow. Finding somewhere to live can be difficult and stressful. The paperwork and contracts alone are enough to overwhelm anyone. As a real estate agent, you solve this problem with your expertise in the housing market. We understand that the protection of your business is extremely important, and we want to help you find the business insurance you need as part of your risk management strategy.
Why Do Real Estate Agents Need Insurance?
Real estate agents can face many risks such as lawsuits from unhappy clients who are claiming alleged negligence. It could be due to missed information, failure to disclose defects, misrepresentation of property, or even damage to a client's property. Think of all the risks you face that could arise during the sale or purchase of a home. Buying a home is an emotional journey for buyers—one that comes with a high ticket price. Unhappy clients will do anything they can to recoup lost money if they feel wronged or that you put them at risk.
Insurance Coverage for Real Estate Agents
These are some of the coverages that real estate professionals should consider to protect their business.
Business Owners’ Policy
A business owners' insurance policy (or BOP) is dual coverage that includes commercial property insurance, general liability insurance, and business interruption insurance. It is an affordable insurance package designed for a small business to help you protect your company. Most insurance companies offer a multitude of additional coverage options and endorsements—but this is a great place to start. So what do they cover?
- General Liability Insurance: A general liability insurance policy will protect your business from a variety of claims, including claims of third party bodily injury, personal/advertising injury, and property damage that can occur. It's often referred to as "slip and fall" insurance.
- Business Interruption Insurance: If you’re unable to operate your business due to unforeseen circumstances, business income insurance can help cover your operating costs, lost profit, temporary location to work, etc.
- Care, Custody, or Control Property Damage Coverage: Many real estate agents don’t own or operate out of an office or their own building. If they do, it’s often leased or rented space. But you will need property insurance to cover you in your client’s home. This provides coverage if you’re showing a home and something is accidentally damaged by you or another third-party.
Professional Liability Insurance
Professional liability insurance—also referred to as Errors and Omissions Insurance—is essential for anyone in real estate. You make your living giving your professional opinion, whether it’s on the right price to offer a home or writing the proper contracts. If you miss important details that cost your clients money, you’re at risk of a lawsuit. Even if you don’t make a mistake, an unhappy client can accuse you of negligence. A professional liability policy protects you if you're accused of professional negligence or errors and omissions in your work. Your insurance company will provide you legal counsel and pay settlements when necessary.
Example #1: You write up a contract with your client’s official offer on a home for the agreed-upon price. Your client signs and approves the document. However, they claim you made an error with the paperwork after the fact and the incorrect offer was made. They claim that you were negligent and are suing you for damages. Professional liability insurance can help cover legal costs and potential settlements.
Example #2: One of your clients claims that you misrepresented the property lines on a home you looked at. The client purchased the home and realized that the waterfront property they were led to believe was going to be theirs wasn't included in the purchase. They were furious and are suing you for misrepresentation. Another example of errors and omissions coverage coming to your rescue.
Example #3: One of your clients didn’t end up purchasing a home through you and ended the process early, presumably going with another realtor. You later find out that they’re suing you, claiming that you discriminated against them. They’re claiming that because of their race you refused to show them certain properties. Whether it’s true or not, professional liability insurance steps in to protect you.
Other Insurance Policies Real Estate Agents Need
What other insurance coverage options do real estate agents need to consider?
- Commercial Auto Insurance: Real estate agents typically drive their personal vehicles to and from showings. However, if your auto insurance finds out you’re using the vehicle for work, claims may be denied. That’s why it’s imperative you purchase commercial auto coverage.
- Workers' Compensation Insurance: Whether you’re a broker who hires a real estate agent or an agent who needs personal assistant, in almost every state you’re required to obtain workers' compensation insurance. If one of your employees is injured while working, this insurance will cover their lost wages and medical expenses. Requirements vary state to state so be sure to check with an agent to verify.
- Cyber Liability Insurance: Most real estate agents work closely with their client's personal information when drafting contracts for a home offer. They often store client information on personal laptops. If you’re hacked or your client's information is jeopardized, that can leave you open to lawsuits. Cyber liability can cover the potential legal costs and settlements, pay for client credit monitoring, and potentially pay any ransom demanded.
These are just a few of the risks that real estate professionals may face. We recommend speaking to an experienced insurance agent to help determine your insurance needs.
How Much Does Real Estate Agent Insurance Cost
How much can a general liability policy cost your company? The average cost for a real estate agent for general liability insurance is around $400 annually but some insurance companies offer comprehensive plans starting around $350 a year ($37–$35 a month). Other variables that may impact what you pay for coverage include:
- The types of insurance you choose
- Deductibles and limits of the policies
- Whether or not you hire employees
- How much revenue your business brings in
- Whether or not you use company vehicles
- The services your real estate agency offers
- Whether or not you've had a claim filed against you
These are just a few examples of what may be taken into consideration. We recommend being prepared to answer some basic questions about your business to get a quote from an agent.
Real Estate Agents and Brokers: Get a Free Insurance Quote
Whether you're a real estate agent or a broker, our goal at CommercialInsurance.Net is to get you an affordable commercial insurance quote. We know your lives are busy, so we've made the process fast and easy. To learn more, simply complete the form at the top of the page and an agent will contact you. Or, give us a call at 877-907-5267 to get your free quote.
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