Business Insurance for Real Estate Agents and Brokers
Why is insurance a must for real estate agents and brokers?
Given the size of real estate transactions, a simple mistake can have tremendous repercussions. Business insurance covers legal costs if a client sues over an error, or if someone is injured while touring a home. Insurance may be required by your agency or brokerage, or the laws in your state.
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6 insurance policies every real estate agent and broker should consider
These insurance products defend against the most common risks faced by real estate agents and brokers.
Errors and omissions insurance
Real estate E&O insurance covers lawsuits related to your work performance, such as an error in an MLS sheet that harms a client financially. It's also called professional liability insurance.
- Errors and oversights
- Failure to disclose
- Other instances of professional negligence
General liability insurance
This policy covers legal fees related to third-party accidents, such as a slip-and-fall injury that happens during an open house. It's often required by contracts and commercial leases.
- Accidental client injuries
- Accidental damage to client property
- Libel, defamation, and copyright lawsuits
Workers' comp insurance
Workers' compensation insurance protects real estate businesses from work-related medical bills that health insurance won't cover. Most states require coverage for employees.
- Medical expenses from workplace accidents
- Disability benefits for injured workers
- Legal costs from work injuries
Business owner's policy
A business owner's policy, or BOP, combines general liability coverage and commercial property insurance at a discount. Low-risk agencies and brokerages are often eligible for this bundle.
- Slip-and-fall injuries
- Client property damage
- Business property damage
Commercial auto insurance
Almost every state requires commercial auto coverage for vehicles owned by a real estate agency. It covers financial losses in the event of an accident involving your business vehicle.
- Injuries caused by a business vehicle
- Property damaged by a business vehicle
- Vehicle theft and vandalism
Cyber insurance
Cyber liability insurance helps businesses recover from cyberattacks and data breaches. It's recommended for any agency or brokerage that stores email addresses or other personal information.
- Client notification costs
- Data breach investigations
- Ransomware payments
Real estate agency and brokerage insurance costs
From our customer data, here's a quick look at average real estate agent insurance costs:
General liability: $33 per month
Business owner's policy: $58 per month
Workers' comp: $41 per month
The following factors can affect your premiums:
- Professional services offered, such as appraisals or property management
- Number of employees
- Value of your business property
- Types of insurance products purchased
- Coverage limits and deductibles
- Claims history
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FAQs about real estate agent and broker insurance
Review answers to frequently asked questions about real estate insurance requirements and licensing.
Are real estate agencies and brokerages required to carry E&O coverage?
Yes, real estate firms and individuals often must carry errors and omissions insurance to comply with state laws and contracts. Here are a few examples of entities that may require coverage:
- Your state. For example, Rhode Island requires E&O insurance for all active real estate brokers and salespeople, though it's not required in California, Florida, or Texas.
- Your agency or brokerage. Realtors and other real estate professionals may need E&O coverage in order to work for a particular agency or brokerage.
- Local boards and professional organizations. These often mandate or recommend E&O insurance for their members. For instance, the National Association of Realtors (NAR) strongly recommends insurance and offers access to several options.
Even when it's not required, errors and omissions insurance provides crucial protection against lawsuits from dissatisfied clients.
Are real estate agents and brokers required to have a real estate license?
Yes, real estate agents and brokers usually need a salesperson or broker license from their state licensing board. A license allows you to represent buyers and sellers, manage properties, and perform related tasks. You may need a separate business license, depending on your local jurisdiction.
To get a real estate license, you'll likely need to take relevant coursework, pass an exam, undergo a background check, and pay an application fee. Applicants usually must be age 18 or older, though the specifics depend on the laws in your state.
It's harder to get a broker's license than a salesperson's license. You'll typically need an advanced education, prior experience as a salesperson, and the exam will be more difficult.
What other types of insurance policies do real estate agents and brokers need?
To protect against other losses, real estate agents and brokers often buy the following insurance policies:
- Business interruption insurance: Also called business income coverage, this policy covers lost income and financial losses tied to a covered property claim, such as damage from a fire or storm.
- Commercial umbrella insurance: Umbrella insurance provides protection when your general liability, commercial auto, or employer's liability insurance coverage reaches its limit.
- Hired and non-owned auto (HNOA) insurance: This policy provides coverage if a real estate professional gets into an accident while driving a personal, rented, or leased vehicle for business purposes.
What is a hold harmless agreement and why is it important for real estate agencies and brokerages?
Real estate agents and brokers sometimes employ hold harmless agreements to reduce their liabilities. This is common in situations where clients take on additional risks, such as:
- Relying on a third-party provider to inspect a home
- Hiring a third-party contractor to perform repairs
- Visiting a vacant property
- Touring a property with known risks
When a client signs a hold harmless contract, they cannot hold you responsible for any harm that arises from the above actions. This helps protect agents and brokers when your clients take on risks against your advice or in situations outside of your control.
How can you save money on real estate broker and agent insurance?
Small business owners can save money when shopping for insurance in several ways:
- Shop around. By filling out TechInsurance's easy online application, you can compare quotes from top-rated insurance providers to find a policy that fits your budget.
- Bundle policies. When you buy policies from the same provider, you can often combine them in a cost-saving package. The most common example is a business owner's policy.
- Pay the full annual premium. It's often cheaper to pay the full annual amount rather than smaller monthly installments on your premium.
- Choose lower limits or a higher deductible. Though you'll want enough coverage for a potential claim, you can opt for lower policy limits or a higher deductible as an easy way to reduce your premium.
Our licensed agents can help find you the best insurance for real estate agents and brokers without breaking the bank, giving you financial protection and peace of mind.