Real Estate Agent Insurance

Why Do Real Estate Agents Need Insurance?

Individual real estate agents or those who work as a part of a larger firm both carry similar risks. That said, those risks may vary in degree of severity. If you work within a brokerage, that firm may carry its own business insurance. In that case, you may be protected under current plans. 

If you’re an independent agent, however, you must ensure that you protect your business with all of the insurance you need. While it might save you some money in the short run, fully protecting yourself and your clients may save your business from harsh financial penalties down the road.

The flexibility of real estate work comes with its own set of risks. As a real estate firm, you handle sensitive client information such as financial records, identification, Social Security numbers, and more. 

By protecting yourself, you’re also ensuring that your current and past clients know that their information is safe with you. And, keep in mind: Insurance works for you even if the worst doesn’t happen. Real estate agent insurance can provide ongoing peace of mind and offer reassurance to prospective clients. In a flooded market like real estate, this can make all the difference.

Carrying the proper coverage validates your business and allows you and your employees to focus on what’s important, instead of wasting time worrying about things that are out of your control.

What Insurance Policies Do Real Estate Agents Need?

Depending on the size of your real estate business, different types of insurance may make more or less sense for you to have. For this article, we’ve listed the real estate insurance policies we believe are foundational, in order of importance. Here are the coverage types we recommend for your line of work:  

Professional Liability: Also referred to as Errors and Omissions (E&O) insurance, this coverage will help if a client alleges you were negligent as their real estate agent. You could be sued for honest mistakes, unintentional omissions in your services, or accidental misrepresentation on behalf of your client, potential client, or another brokerage. Even a top-selling agent can make a simple mistake that could cost them in more ways than one. Professional Liability insurance can help you cover legal fees and potential settlement costs in the event of a claim.

Cyber Insurance: As a real estate agent, you conduct so much business in person. For instance, you have showings, closings, networking events — the list goes on. But no one can deny the digital footprint that comes along with your line of work. You deal with a lot of sensitive client information including proof of financials, Social Security numbers, home key codes, and more. Cyber Insurance will help cover you in the case of a cyber-related security breach that could put all of that personal information at risk — and put your business at risk of a consequential lawsuit. These include things like ransomware attacks, phishing scams, and other nefarious digital activities.

Business Owners Policy Insurance: Not to be confused with Professional Liability, Business Owners Policies (BOP) often combine a few essential business coverages, rather than covering just one risk area. In most cases, business owners insurance for real estate agents will include some sort of General Liability Insurance, Commercial Property Insurance, and Business Interruption Insurance. Ultimately, depending on your firm, you may need to purchase individual policies for each of these areas. For smaller firms, though, Business Owners Insurance tends to cover most of your bases.

Additional Real Estate Agent Insurance Policies to Consider

Your coverage needs can vary — and that may mean that you’ll want to look into additional policies like these: 

General Liability Insurance: If you don’t go forward with a BOP that includes General Liability coverage, you’ll want to obtain it separately. This plan will cover things like third-party slip-and-fall injuries, legal fees and defense costs, and medical payments. 

Workers Compensation: This is essential for firms or businesses with employees. In the event of an accident while your employees are on the job, they will be covered for a period of time while unable to work as a result of the injury. For real estate firms, these injuries could range from slips and falls at a property an agent is showing, to that same agent getting carpal tunnel syndrome from emailing all of their clients. Things happen.

Commercial Auto Insurance: A policy like this makes a lot of sense for real estate agents, as you are often driving from home to home — and may even have your clients as passengers. Whether you or an employee is at fault in an accident involving injury to people or property, you’ll have the coverage you need in case the car is totaled and more. Further, it also protects your vehicles from losses resulting from theft, vandalism, and certain weather events.

How Much Does Real Estate Agent Insurance Cost?

The cost of real estate agent insurance can vary. A big factor in how much it will cost you has a little something to do with the age-old real estate mantra, “Location, location, location.” 

Depending on where your business is located, insurance can run as little as $20 to $200 per month. Heavily populated cities may be considered higher-risk areas compared to quiet towns, the suburbs, or up-and-coming areas. 

The size of your business and its annual revenue will also factor into the total insurance cost. Further, the longer you have been in the real estate biz, the better it may be for your rate, and demonstrating a low-claim or claim-free history will help reduce the total cost. 

What can help reduce the cost of real estate agent insurance? 

While there are some factors like the above-mentioned that you can’t always control, there are other things that you can do to bring your total cost down a bit: 

• You’ve invested in (or plan to invest in) risk management practices, including cyber security software or consultancy. 
• Bundling insurance or purchasing a package of policies tailored to your needs can reduce the cost of those policies by reducing overall liability. 
• Having unnecessary coverage that doesn’t benefit your business adds unnecessary cost, so investigate “Only Buy What You Need” plans.
• Paying your insurance premiums in advance can reduce the cost, as most insurers offer discounts when you pay upfront rather than month-to-month.

Also, you’ll want to make an annual reminder to review your coverage every year. As new insurance products and bundles may become available and your business needs evolve, your insurance plan will need to be adjusted as well. And those adjustments could come with unexpected and very welcome savings. 

A bit of a risky move, but another viable way to reduce costs upfront would be to raise your deductible. This isn’t a first-choice recommendation — as you see, we’ve included it at the very bottom of this list — because increasing your deductible will mean having higher expenses to cover if a claim is filed. If you choose to go this route just make sure you don’t select a deductible you won’t be able to pay in the event that a worst case scenario does occur.