Whether you work in commercial or residential property, in a large company or as a lone agent, if you’re a real estate agent you need to have the right real estate agent insurance.
Many of your clients will have decided to work with a real estate agent to help them with the time consuming and complex processes of buying and selling a home – they are looking to you to help to make things easy for them.
Acting as an intermediary (between those buying and those selling various properties), you’ll need to be entirely responsible, reliable and organised – that includes always making sure your insurance is appropriate for your work and updated annually.
Table of Contents
- Why Real Estate Agents Need Insurance
- When Would You Need Insurance as a Real Estate Agent
- What Type of Insurance Do Real Estate Agents Need?
- Professional Indemnity Insurance for Real Estate Agents
- How To Find The Right Insurance Company
- How Much Cover Do Real Estate Agents Need?
- Why Getting The Right Type of Real Estate Insurance Is So Important
Why Real Estate Agents Need Insurance?
As a real estate agent, you will have a variety of responsibilities and duties.
Some of the key parts of your job will most likely include;
- Acting as an intermediary between buyers and sellers who are in negotiations regarding property.
- Representing and looking out for the best interests of one party involved in the negotiations
- Helping to determine the market price of a property by using experience, knowledge of the area and property type and gaining access to information to enable you to compare prices of similar properties, currently or recently, on the market
- Preparation of documents including contracts, purchase agreements, deeds and leases
- Arrange property viewings with potential buyers and be able to explain the features of them, answering any questions they may have.
- Advise sellers on the best ways to make their homes appealing to potential buyers and to help them get the best price for their property
- Maintain an up to date knowledge of property and the general market by attending seminars, associations and reviewing trade journals and property listing.
Those are just a few of the things you’ll be do on a daily basis as a real estate agent – that’s quite a bit of responsibility. Sadly, even with the very best intentions and an excellent level of skill and attention to detail, mistakes can happen.
If you’re perceived as negligent in any of your duties as a real estate agent, you could face serious financial loss with claims bought against you by clients wanting to take legal action.
If you have the appropriate real estate agent insurance, you’ll be protected – knowing that any legal defence costs and damages will be covered.
It’s impossible to stress highly enough the peace of mind that insurance cover can offer you.
We have seen over the years a large number of real estate agents who have skipped the (relatively small) cost of insuring themselves adequately, only to find (huge) long term costs further down the line when things have gone wrong and they are left with no money to cover legal fees or damages.
The emotional stress of this can be crippling and the time and effort required to sort out the complex procedures will not be worth it.
When would you need Real Estate Agent insurance?
There are all sorts of circumstances when you’ll be grateful that you’re fully covered by real estate agent insurance, however some specific instances include:
- Your client claims that you have not provided proper advice to them
- You are unable to prove the authenticity of your work
- You are seen as negligent in promoting a property or organising buyer or seller schedules
- You have used incorrect information or data to produce and prepare reports
- You have failed to follow all legal laws or company guidelines
- You have not arranged sales orders and proposals for clients
One of the most common claims to Real Estate Agents is that they have failed to forecast market trends therefore leading their client into incorrect decision making.
This is often due to the ever-changing nature of the property market which can be incredibly unpredictable. Always ensure that you’re covered to avoid any claims of this kind having a negative effect on your business.
Any professional who gives advice or offers a service is at risk of having claims made against them if their client feels they have caused them financial loss or injury by their actions, either directly or indirectly.
You really must cover yourself and your reputation by making sure you have full insurance coverage to protect you financially against such claims.
What type of insurance do real estate agents need?
So hopefully we’ve convinced you that insurance is absolutely necessary as a Real Estate Agent.
Fortunately, getting insurance for real estate agents is quite simple – the first step is determine what type of insurance you need, and how much cover you need.
There are a number of different types including business interruption, personal accident and illness cover, management liability and buildings and contents insurance.
The most important insurance for you to consider is professional indemnity insurance.
Professional Indemnity Insurance for Real Estate Agents
Professional Indemnity Insurance is used in most industries and is specifically designed for professionals who provide advice or a service to their customers.
It’s aim is to protect you against legal costs and any claims for damages to third parties which could arise from an act, omission or breach of professional duty in the course of your business.
This type of insurance will prove invaluable if a mistake or omission occurs in your work which the client perceives as causing them financial loss or injury and leads them to take legal action in order to recover losses.
Remember it’s not just your assets you need to protect but also your reputation.
You should also consider Public Liability Insurance as this will cover any claims made as a result of property damage. Public Liability Insurance covers some aspects that won’t be covered by a Professional Indemnity Insurance policy therefore you need to ensure you’re covered across the board.
Whilst it may seem a large expense at the time of purchasing such coverage, you won’t regret it and it could in fact save your business if you do end up facing a claim.
How to find the right insurer when looking for Real Estate Agent Insurance:
The best way to find a good insurer within your industry is to ask other Real Estate Agents.
First hand experience of a company is priceless so word of mouth recommendations should always be your first point of research when deciding which insurance company to choose.
Research how long the company has been operating for, which Real Estate Agents they have worked with and the type of experience they have.
Many companies offer testimonials from clients they have worked with and will be happy to talk you through case studies of the type of work they have done.
If you use an insurance broker, you should always be offered multiple quotes and ensure that these are the best prices available. Don’t be afraid to ask questions and request assistance if there’s anything you feel needs further explanation.
As a real estate agent, you may not have experience in the field of insurance so let the experts take it off your hands so you can focus on doing what you do best.
How much cover do you need as a real estate agent?
Generally this is decided by the state in which you operate however it’s fairly likely that most companies, contracts and licensing departments will require you to have professional indemnity insurance.
In addition to this, it’s usually highly recommended that you have public liability insurance.
Both of these should offer you coverage of at least $1,000,000 to ensure that you will always be fully covered for any event that could lead to high legal fees and the possibility that you will have to pay substantial amounts in damages if they are awarded to your client.
Try to spend as much as your budget will allow on insurance cover.
Offers that may look cheaper in the short term often lead to you being left with costs in the long term as they may not offer cover on certain aspects and you may end up paying out part of the fees or damages yourself.
It’s worth noting that if you’re looking to gain registration or licenses of any type, you may need more than just insurance. Many government departments require that real estate agents partake in Continuing Professional Development to keep you and your knowledge up to date and relevant to your work.
This can also help to lower insurance premiums so always keep your insurer up to date with any additional courses or qualifications you have attended or gained.
Why Getting The Right Insurance Cover Is So Important
Don’t bury your head in the sand.
Get your real estate insurance sorted out as soon as possible to ensure that you’re fully covered for any eventuality.
You’ll have the peace of mind that you won’t have financial and emotional stress if anything goes wrong and you’re accused of negligence or failure to carry out your duties adequately.
Financial cover in these situations helps to save huge amounts of time, money and stress so invest now.
Once you’re fully covered with the best insurance for your needs, you can get back to fulfilling your role to the best of your ability.