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Real Estate Agent Insurance Risk Summary

Real Estate Agent Insurance

For Your Insurance Agent:

SIC Code: 6531 Real Estate Agents & Managers

NAICS Codes:

531210 Offices of Real Estate Agents & Brokers

531311 Residential Property Managers

531212 Nonresidential Property Managers

Suggested ISO Codes: 47050, 60010, 61226

Suggested WC Codes: 8721, 8810, 9012, 9015

Description of operations

Real estate agents are the ultimate matchmakers, connecting sellers with buyers or helping buyers find their dream property. They’re skilled negotiators who can help facilitate the sale of a property by arranging price and conditions that work for everyone involved.

Compensation for real estate agents can come in the form of a commission based on the sale price of a property or a flat fee. Agents enter into a contractual relationship with either a buyer or seller and, in some cases, can represent both parties in a transaction.

When it comes to the employment of real estate agents, the status of each employee or independent contractor must be determined to ensure appropriate coverages apply.

Beyond their matchmaking and negotiation skills, real estate agents can offer other valuable services, such as insurance sales, mortgages, or property valuations. However, it’s worth noting that real estate agents must pass an exam and maintain a license in most states, with many states offering reciprocal agreements that allow agents to work across state lines.

Property Risks

What is commercial property insurance?

As a business owner, protecting your physical assets is paramount. That’s where commercial property insurance comes in. This type of insurance policy provides coverage for a variety of assets, including buildings, equipment, inventory, and furniture, safeguarding them against unforeseen events that could cause damage or loss.

Whether it’s a fire, theft, vandalism, natural disaster, or another covered peril, commercial property insurance can provide peace of mind knowing that you’re financially protected. Coverage typically includes the cost of repairs or replacement of the damaged property, as well as any income lost due to business interruptions.

Having commercial property insurance is essential for businesses of all sizes to minimize the impact of unexpected events on their bottom line. This coverage can be purchased as part of a Business Owner’s Policy, included in a commercial package, or obtained individually, depending on your specific needs. 

Risk assessment for real estate professionals

Real estate agencies or brokerages typically face property risks that are limited to their office space. These risks often include the possibility of fire, water damage, and theft.

When it comes to fire risk, potential ignition sources can include wiring and the wear and overheating of equipment like HVAC systems. And while computers, audio and visual electronic equipment can be valuable tools for these businesses, they can also make tempting targets for theft.

That’s why it’s important for real estate agencies to take steps to protect their physical assets and minimize potential risks. Implementing safety measures such as regular equipment maintenance, fire suppression systems, and security protocols can help safeguard against unexpected events that could cause damage or loss.

General Liability Risks

What is general liability insurance?

As a business owner, protecting your assets and reputation is crucial. That’s where general liability insurance comes in. This type of insurance policy provides coverage for claims of bodily injury, property damage, and advertising injury, covering the costs of legal defense and any settlements or judgments against your business.

General liability insurance typically covers accidents or incidents that occur on your business premises, as well as products or services sold by your business. And in today’s digital age, it’s also worth noting that this coverage provides protection against claims of slander, libel, and copyright infringement.

Having general liability insurance is an essential component of any business’s risk management plan, safeguarding against unexpected incidents that could result in costly legal expenses and damage to your reputation. This coverage can be purchased as part of a Business Owner’s Policy, included in a commercial package, or obtained individually, depending on your specific needs.

Risk assessment for real estate professionals

When it comes to real estate agencies and brokerages, the premises liability exposure is usually low if most client contact is conducted electronically or by mail. However, if clients do visit the office, it’s important to ensure they are kept in designated areas that are well-maintained with flooring in good condition. The office must have sufficient exits that are clearly marked, with backup lighting in case of a power outage. Additionally, parking lots and sidewalks must be in good repair, with snow and ice removed, and free from any potential slip and fall hazards.

Off-premises liability exposures arise from various activities, such as sales visits, inspections, and open houses. Since different realtors may represent both the buyer and the seller, disputes over damages that occur during open house showings can arise. Hazards increase in the absence of controls regarding keys, the use of lockboxes, or other devices that permit easy entry. It’s also important to keep detailed records regarding access and visits by agents from other realty firms.

Personal injury exposures include allegations of assault, battery, breach of confidentiality, discrimination, invasion of privacy, libel, and slander. It’s crucial to consider the status of employees vs. subcontractors, as the relationships and contracts can vary by agency. Contracts should clearly outline the services the agency provides to the subcontractors and what expectations the agency has of the subcontractor. If agents are independent contractors, any injuries they incur on premises are part of the premises liability exposure instead of workers’ compensation.

Professional Liability Risks (E&O)

What is professional liability insurance?

If you’re a professional, you know that mistakes happen – even to the best of us. That’s where professional liability insurance, or E&O insurance, comes in.

Think of it as protection against claims of negligence, errors, or omissions in the services you provide. If someone accuses you of making a mistake that causes them financial loss, professional liability insurance can cover the costs of legal defense, settlements, or judgments against you.

Professionals like real estate agents, lawyers, accountants, and insurance agents, need to have professional liability insurance. It’s a smart way to protect against unexpected claims that could result in costly legal expenses and damage to your business.

It’s important to note that professional liability insurance is typically purchased as a stand-alone policy and isn’t part of a BOP coverage. Moreover, if you’re a real estate professional, you need a policy specifically designed for your industry. A miscellaneous professional liability policy may not provide the proper protection you need.

Risk assessment for real estate professionals

The professional liability risk for real estate agents is extremely high – it’s no joke.

Here’s the deal: if your agency doesn’t conduct thorough background checks to verify your employees’ credentials, education, and licensing, or if you let clerical workers handle tasks that should only be done by professionals, your exposure increases. And if you don’t have proper error-checking procedures in place, that exposure only gets worse.

And if you think that’s bad, failure to document decisions and actions or to secure client approval can lead to some seriously damaging losses.

For services like property management, you have a fiduciary responsibility to act in the best interests of your clients. That’s why it’s so important to have the right kind of insurance protection. Professional liability coverage is one of the most vital protection for a real estate professional.

Worker’s Compensation Risk

What is worker’s compensation insurance?

Let’s talk about workers’ compensation insurance – an important policy that every business owner needs to know about.

Workers’ compensation insurance is a type of policy that provides benefits to employees who are injured or become ill on the job. It covers medical expenses, lost wages, and rehabilitation costs for employees who are injured while carrying out their duties. Plus, if the worst happens and an employee is killed while on the job, workers’ compensation insurance provides death benefits to their family.

Now, here’s something you need to know: in most states, workers’ compensation insurance is mandated by law. And for good reason – it’s designed to protect both the employee and the employer from the financial impact of workplace injuries or illnesses.

So if you’re a business owner, it’s crucial to have workers’ compensation insurance. Not only does it ensure that your employees are protected, but it also helps you comply with legal requirements.

It’s important to note that workers’ compensation insurance is typically purchased as a stand-alone policy and isn’t part of a BOP. So if you want to make sure your business is fully covered, be sure to get the right policy in place.

Risk assessment for real estate professionals

Let’s talk about risk exposure in the workplace.

Now, the good news is that the risk exposure for most office-based work is moderate. However, that doesn’t mean there aren’t potential injuries to watch out for. Common issues include eyestrain, neck strain, carpal tunnel syndrome, and other cumulative trauma injuries. But don’t worry – these can often be addressed through ergonomically designed workstations.

Off-site and travel exposures are another story. Workers who travel off-site for work may be at risk of slips and falls, attacks by pets, falling objects, foreign objects in the eye, or automobile accidents. And for real estate agents, there’s an added risk: showing properties at unusual hours to prospective customers whom they may not know personally. This can pose a potentially serious risk of assault.

Now, the contractual relationship between the agency and any independent contractors helps determine the workers’ compensation exposure. But it’s important to note that regulatory definitions of “employee” may supersede the contract terms.

Commercial Auto Risk

What is commercial auto insurance?

Commercial auto insurance provides protection for cars, trucks, and vans used to transport goods, employees, or clients. This type of insurance covers damages and injuries caused by the insured vehicle in the event of an accident, as well as theft, vandalism, and other covered perils.

The coverage typically includes liability, collision, and comprehensive insurance. Liability insurance covers damages and injuries caused to others in an accident, while collision insurance covers damages to the insured vehicle. Comprehensive insurance covers damages caused by non-collision events, such as theft or fire.

Having commercial auto insurance is crucial for businesses to protect their vehicles and minimize the financial impact of unexpected events. Whether you have a single vehicle or an entire fleet, you need to make sure you have the right coverage in place to protect your business.

Remember, if your business owns vehicles, then you’ll need to purchase a stand-alone commercial auto policy. This type of insurance is not typically included in a BOP, so it’s important to work with an experienced insurance agent to find the coverage that’s right for your business.

Risk assessment for real estate professionals

The driving risk for real estate agencies may be limited to hired and non-owned vehicles, but it still poses a potential exposure. This exposure increases if clients are transported to showings, making it important for businesses to have appropriate procedures in place.

If vehicles are supplied to employees, written guidelines should be established for personal use by employees and their family members. All drivers must have valid licenses and acceptable MVRs, and regular maintenance should be conducted on vehicles, with records kept in a central location. By taking these precautions, businesses can minimize their driving risk exposure and ensure the safety of their employees and clients on the road.

Crime Insurance Risk

What is crime insurance?

Commercial crime insurance provides businesses with protection against financial losses resulting from criminal activity. This includes theft, fraud, forgery, and embezzlement, whether committed by employees or outsiders. With this type of policy, businesses can be covered for the loss of money, securities, and other property, as well as the costs associated with investigating and resolving the crime. It can even extend to losses due to computer fraud and social engineering schemes.

This coverage is crucial for all types of businesses, especially small businesses, which can be particularly vulnerable to financial losses from criminal activity. Commercial crime insurance can be purchased as a stand-alone policy or added to a BOP, providing added peace of mind for business owners.

Risk assessment for real estate professionals

As a real estate professional, you have a duty to protect your client’s assets and information. Unfortunately, employee dishonesty can put them at risk, leading to the theft of property and financial data. That’s why it’s crucial to implement proper background checks, monitoring procedures, and record-keeping practices to prevent unauthorized access.

To mitigate these risks, it’s essential to establish a clear separation of duties between employees who handle deposits, disbursements, and reconciling bank statements. By doing so, you can minimize the potential for errors or fraud.

Additionally, it’s highly recommended to conduct regular audits to identify any vulnerabilities or irregularities. This will not only help you catch any issues early on but also demonstrate your commitment to transparency and accountability.

Remember: your clients trust you with their most valuable assets. By taking proactive steps to safeguard their interests, you can build long-term relationships based on trust and mutual respect.

Real Estate Agent Insurance Quote

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You can start a quote online, or request a meeting with an agent to discuss your business insurance.

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Recommended coverage

Minimum recommended

  • Commercial Property*

  • General Liability*
  • Business Income & Expense *

  • Accounts Receivable*
  • Employee Dishonesty*
  • Money & Securities*

  • Professional Liability
  • Worker’s Compensation
  • Hired & Nonowned Auto*

Coverage to consider

  • Cyber Liabilty
  • EPLI – Employers Practices Liability
  • Employee Benefits
  • Commercial Auto
  • Real Property Legal Liability
*If your business qualifies for a Business Owner’s Policy (BOP), then these coverages may come include in the BOP coverages. You should reviewthe individual limits to see if they offer the protection your business will require. If you don’t qualify for a BOP, you’ll want to discuss adding this coverage as part of a commercial package or purchasing the coverage stand-alone.