Selling real estate is a lucrative business, but some risks can ruin your hard work. Without real estate insurance, your business might consequently succumb to the financial losses incurred by these common risks: 

• Misrepresentation lawsuits
• Conflicts of interest with the client
• Failing to disclose important information

But with real estate insurance in place, your business can keep afloat, regardless of the potential risks.

In this article

Do You Need Real Estate Insurance?

Real estate agents often work with multiple clients. Since clients invest a significant amount of money in real estate, they are more likely to file a lawsuit for any errors on their agent’s part. Similarly, as a real estate agency, you deal with multiple agents and are liable for all of your agents’ actions. Naturally, if you are engaged in the real estate sector, you might want to opt for: 

• Real estate broker insurance
• Real estate agent insurance

For example, Marketwatch reported a lawsuit in 2019 against a realtor in Chicago for charging more than the set commission rate of 6%. Hence, commercial real estate insurance companies might help with legal costs. 

What Policies Do You Need?

Business Owners Policy (BOP) 

A business owners policy protects businesses from losses due to damage to assets and third-party liabilities. A BOP is a bundle policy consisting of commercial property, business interruption, and general liability insurance. 

A real estate insurance agent will include a BOP in your insurance package to provide maximum coverage at a minimal price. A BOP will cover the following risks for your business:

• Lawsuits filed over loss or property damage
• Copyright infringement
• Damage to business property

Commercial Property Insurance

Commercial property insurance covers commercial property from damages due to listed perils such as theft, fire, and natural calamities.  

If your business owns or leases office buildings, then commercial property insurance is a must. For example, if your building catches fire, commercial property insurance will cover your losses.

General Liability Insurance

General liability insurance protects a business from third party liabilities arising due to the operations of the company. The coverages of this insurance include bodily injury, personal damage, and property damage.  

This policy is covered in realtor insurance to protect you from legal fees or loss due to client injury.  

Business Interruption (BI) Insurance  

As the name suggests, business interruption insurance helps to cover losses when your business needs to temporarily shut down.

This policy will cover losses and expenses—such as employee wages and lost business income—when your agency cannot function due to damage to the property. For example, if your building catches fire and your employees cannot conduct meetings with clients in the office, this might lead to loss of business income. BI insurance can help get businesses back on their feet. 

Errors and omissions (E&O) Insurance   

E&O insurance is a type of professional liability insurance that covers real estate agents against claims of negligence, bad advice, or insufficiency. 

Real estate E&O insurance is also crucial for real estate brokers. Agencies are liable for their agents’ actions. For example, an agent from your company could be sued for negligently failing to disclose that the property was the site of a widely-publicized murder. You are consequently responsible for getting your agent out of the situation. Indeed, E&O insurance for realtors comes to your rescue here. 

Cyber Liability Insurance    

Cyber liability insurance covers losses arising from cyber risks. Online data has an explicitly high risk of theft and misuse. This policy is for all businesses that generally deal with sensitive data online.    

A recent report by IBM shows that on average, companies lose approximately $3.86 million from a single data breach. Hence, cyber liability insurance is essential to indemnify the business from such huge losses. 

What Is Not Covered by Real Estate Insurance? 

Real estate agent insurance is designed to provide coverage for specific risks in the real estate sector. However, there are certain standard exclusions from the insurance package. 

The standard exclusions are:   

• Intentional non-disclosure of information related to properties. 
• Deliberately breaking the law for extra profit 
• Fraudulent acts on the agent’s end, which are not legally insurable.  

The standard exclusions are:   

• Depreciation   
• Intentional damage or harm 
• Nuclear hazard 
• Power failure  

How Much Will Real Estate Insurance Cost You?

Generally, the factors that affect the price of insurance for realtors are:

• Types of services offered (buying, selling, or construction)
• Business assets
• Expected profit
• Area of business operation
• Size of the business

Real estate is a promising career, but there are risks involved that could jeopardize your growth. Get Real estate insurance quotes.