4 Important Coverages for Real Estate Professionals to consider...
Updated: Mar 25, 2022
As real estate professionals, a lot of what you learn in real estate school is basically how not to be sued!!! It's laws and regulations, do's and don'ts. Even with the best intentions, stuff happens. Here are four important insurance plans for real estate professionals to consider:
1. E & O Insurance
This is probably the one policy most real estate agents are somewhat familiar with, and hope to never have to use! E&O protects you from client accusations, whether or not you're to blame. It is one of the most important coverages you should carry as an agent and is required in most states.
Again, even with the best intentions you could be accused of negligence or failing to uphold professional standards with regards to ethics and such. As a real estate agent or broker property here are some of the things that can be challenged on disclosures or listings legally:
Yes, the client hires inspectors and an appraiser and that is not your speciality. If a buyer client believes you omitted information that might have deterred them from buying a property, you could be sued and held liable.
Other negligence claims could involve:
Breach of fiduciary duty
E&O can help pay legal expenses related to allegations of professional negligence, whether or not you are at fault. As real estate agents and brokers, you all work hard to do what is right by your client and your reputation, sometimes someone will walk away from a transaction questioning that, have the right coverage in place to protect your business when it needs it most.
2. General Liability Insurance
General liability insurance covers common business risks like customer injury, customer property damage, and advertising injury. It protects your real estate business from the crazy costs of lawsuits.
Any business that works with the public should have general liability insurance, and real estate professionals are no different. General liability insurance provides coverage for covering expenses in the event of property damage or injury claims.
General Liability Insurance typically covers three types of third-party claims:
Property loss or damage
Let's break it down a bit...
Having clients come to your office is great right? The more prospective buyers and sellers that come through your doors, means more potential closings right? This also means more exposure for someone being injured at your office or a property. If a client or visitor sues, you could find yourself responsible for legal and medical expenses. General liability insurance can help cover:
Funeral expenses in fatal incidents
Property loss or damage
General liability insurance can cover damage to client or customer property, including the cost of repairing or replacing an item. If you break an expensive light fixture, a window or anything else during a showing at a client’s property, it could cover the cost of the items– or legal fees if the client sues. This coverage applies to incidents both at your office and off-site.
If you advertise or use social media for business purposes, your real estate business could be exposed to advertising injury claims. General liability insurance covers accidental advertising injuries, such as a lawsuit over a logo that looks similar to that of a competitor. It can pay legal fees related to:
Defamation, both libel (written) and slander (spoken)
Copyright / brand infringement
3. Commercial Auto Insurance (for business owned vehicles)
Commercial auto insurance protects the vehicles you depend on whether meeting with clients, scouting properties, or driving prospective buyers to showings, real estate professionals drive… a lot! Driving creates a huge risk for small businesses. Commercial auto insurance can help cover accidental damage or bodily injury caused while driving a business-owned vehicle.
This policy can help pay for:
Auto liability coverage
Physical damage and collision coverage
Uninsured motorist coverage
***Personal vehicles may need additional coverage***
Personal auto policies almost always exclude coverage for business use. There is a business use class. It is important to be honest with your insurance agent about how you use your vehicle. Hired and non-owned auto insurance provides liability coverage for real estate professionals who get into an accident while driving their personal vehicle to conduct company business. It also covers leased and rented vehicles.
4. Cyber Liability Insurance
There is a lot of sensitive data and as a real estate professional, you deal with important sensitive information on some pretty large-dollar transactions over the course of your career. This does open you up to cyber-attack exposure. If their data is stolen or compromised it creates a world of headaches for them and potentially you as their real estate professional.
As a real estate professional with cyber liability insurance, this coverage pays for expenses associated with data breaches. If a cybersecurity breach occurs at your business, a cyber liability policy could provide coverage for:
Notifying clients or customers about the breach
Good-faith advertising or PR campaigns to restore reputation
Credit monitoring services for affected clients
Cyber extortion demands
Settlements or judgments
Hopefully, by now you have a better understanding of the risks and exposures that you can protect yourself from as a real estate professional. If you have more questions or would like a free no-obligation quote on any of these types of coverages, let's talk!