Real Estate Insurance: Secure Your Home
By and large, selling real estate is a lucrative business, but some risks can ruin your hard work. Without real estate agent insurance, your business might 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 blog
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. If you are engaged in the real estate sector, then 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%. In such cases, commercial real estate insurance companies might help with the legal costs.
What Policies Do You Need for Real Estate Insurance?
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, as well as 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, as well as 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
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. In this case, you are responsible for getting your agent out of the situation. E&O insurance for realtors comes to your rescue here.
Commercial Cyber Liability Insurance
Commercial cyber liability insurance covers losses arising from cyber risks as well as liabilities. Online data has a high risk of theft and misuse. This policy is for all businesses that deal with sensitive data online.
A 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?
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 usual exclusions from named perils are:
- Intentional damage or harm
- Nuclear hazard
- Power failure
How Much Will Real Estate Insurance Cost You?
Usually, 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. Real estate insurance is a step in the right direction. Thinking of buying property today? Find an agent to insure your real estate today.
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