Real Estate Agents Insurance
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Litigation is both costly and time consuming, and realtors are increasingly the targets of lawsuits. Lawsuits against realtors involve claims for failure to diagnose some material defect, claims that the realtor misrepresented the property in some way, or that a property inspection was handled inappropriately.
Real Estate Agents’ Professional Liability Insurance is a specific variation of Professional Liability Insurance (often called “Errors & Omissions Insurance” or “Malpractice Insurance“) designed specifically for professionals in the real estate industry.
This product protects the assets of real estate agencies, brokers, and individuals from claims of wrongful acts (errors, omissions, or negligence) that result from the performance of their professional duties.
Policies cover financial losses and expenses (including legal fees) that result from a claim. Some policies also protect against slander, libel, and breach of contract. As with other types of professional liability insurance, the insured is generally protected against all lawsuits, even frivolous ones.
Real Estate Agents’ Professional Liability Insurance isn’t the same as Commercial General Liability Insurance, Employment Practices Liability Insurance, or Directors’ & Officers’ Liability Insurance. It’s a very specific form of insurance that covers any losses that might result to others from the exercise of professional judgment in real estate.
This product probably won’t cover damages from dishonest or criminal acts. Most policies specifically exclude claims involving polluted property. In addition, most policies do not cover punitive damages arising from a professional liability claim, or claims involving damage to property or bodily injury to another person.
All real estate professionals can have claims brought against them from disgruntled clients, regulatory agencies, and professional boards.
Professional liability insurance is recommended for residential and commercial agents and brokers (firms and individuals), title companies, escrow agents, appraisers, mortgage brokers, property managers, real estate consultants, and the like. Larger clients will often require that a real estate partner carry such coverage as a condition of employment. Those who also serve as notary publics and title agents may be able to purchase additional coverage against associated risks.
Agents who work for a real estate or brokerage firm will want to find out if their employer’s professional liability coverage extends to individuals within the firm, the amount of coverage, and the amount of the deductible. Additional individual coverage may be warranted to help offset the cost of a high deductible, or to set a higher liability limit.
Ask about ways to bring down the cost of your premium. Some possibilities include attending risk management/loss control seminars, using standard contracts, not having prior claims, and using disclosure forms and waiver forms with clients.
You’ll want to explore options like prior acts coverage, environmental hazards coverage, fair housing coverage, lock box coverage, and others that may be important to your practice.
Some policies may provide optional coverage to include transactions with mortgage brokers and insurance agents that realtors use.
It’s possible that your policy may include two deductibles: one for damages, and one for defense fees.
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