It’s not easy to run a profitable estate and letting agency. Both buyers and sellers want you to be an expert, and you will be most of the time. However, no one is flawless, and even the most conscientious estate or letting agents can make mistakes. Fortunately, by purchasing professional indemnity insurance, you can protect your company from any mishaps that may occur. We’ll look at what Estate agent insurance is and why your company needs it.
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 up-to date knowledge of property and the general market by attending seminars, joining associations, and reviewing publications and property listings.
As a Real Estate Agent, those are only a few of the things you’ll be doing on a daily basis – that’s a lot of responsibility. Unfortunately, even with the best of intentions, exceptional expertise, and attention to detail, mistakes can occur.
If you are negligent in any of your duties as a Real Estate Agent, you may risk significant financial damage as a result of claims against you by clients seeking legal action.
You’ll be covered if you have the right insurance in place since any legal defence expenses and damages will be covered.
It’s impossible to overstate the value of insurance coverage in terms of providing peace of mind.
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
- Seen as negligent in promoting a property or organising buyer or seller forms/contracts/documents
- You have used incorrect information or data to produce and prepare reports
- You have failed to follow all legal requirements or company guidelines
One of the most prevalent allegations levelled against real estate agents is that they failed to predict market trends, leading their clients to make poor decisions.
This is frequently owing to the property market’s ever-changing nature, which may be extremely unexpected. To avoid any accusations of this nature having a detrimental impact on your organisation, always make sure you’re protected.
Any professional who gives advice or provides a service faces claims from clients who believe they have caused them financial loss or injury. Either directly or indirectly, as a result of their activities.
Once again, having the right insurance coverage will secure you financially and defend your reputation.
What type of insurance do Eeal Estate Agents need?
We hope we’ve persuaded you that insurance is a must-have for any Real Estate Agent.
Fortunately, obtaining insurance for Real Estate Agents is rather straightforward; the first step is to identify what type of insurance you require and how much coverage you require.
Business interruption, personal accident, illness, management liability Building, contents, and general property insurance are all available to protect various areas of your business operation.
Professional Indemnity insurance, on the other hand, is the most crucial insurance to consider.
Professional Indemnity Insurance for Real Estate Agents
This is a type of insurance that is found in almost every industry and is expressly for professionals who provide advice or services to their clients.
Its purpose is to shield you from legal fees and third-party claims for damages arising from an act. omission or breach of professional responsibility in the course of your business.
This type of insurance will come in handy if you make a mistake or omission in your work that the client perceives as causing them financial loss or injury. Prompting them to file a lawsuit to recoup their losses.
Remember that you must safeguard not only your money but also your reputation.
You should also think about purchasing Public Liability Insurance. Which will cover any claims made as a result of harm to people or property. A Professional Indemnity Insurance policy provides coverage across the board. However, Public Liability Insurance covers some components not covered by that insurance.
While getting the correct insurance may seem like a big investment at first. The peace of mind and safety it provides will far exceed it, and it may even save your business in the event of a claim.
How to find the right insurer when looking for Real Estate Agent Insurance:
Asking other Real Estate Agents is one of the finest methods to get a good Insurer in your field.
Because first-hand experience with a firm is invaluable, you should always rely on recommendations from friends and family when determining which insurance company to choose.
Examine the company’s history, including how long they’ve been in business. Whose Real Estate agents have they worked with, and what kind of experience do they have.
Many organizations will gladly provide you with testimonials from clients with whom they have worked. As well as case studies of the type of work they have done.
If you use an insurance broker, you should always get many estimates and compare them to make sure you’re getting the best deal. If you need more information, don’t be hesitant to ask questions and request support.
Any insurer must abide by current regulations and be regulated by the Real Estate Institute of Australia and state-based regulatory agencies.
Because you may not have prior insurance experience as a Real Estate Agent. Let the pros handle the details so you can focus on what you do best.
How much cover do you need as a real estate agent?
In most cases, the state in which you operate will determine this; nevertheless, most companies/individuals will almost certainly be to acquire Professional Indemnity Insurance.
You should also consider purchasing Public Liability insurance.
Both professional indemnity and Public Liability insurance have a minimum limit of $1,000,000.
This will cover any claim that could result in hefty legal bills and the prospect of you having to pay substantial damages if your client is successful.
Your insurance budget should be based on the size of your company and its risk exposure.
Make sure the insurance you choose provides the optimum coverage for your needs. Something that appears to be ‘cheap’ in the short term may result in far higher out-of-pocket costs in the long run.
It’s worth mentioning that obtaining registration or licences of any kind may necessitate more than just insurance. Many government agencies need Real Estate Agents to enrol in Continuing Professional Development in order to keep you and your company current on industry knowledge and activities.
Keep your insurer informed of any new courses or certifications you have taken or obtained. This may help you save money on your insurance costs.
Why Getting The Right Insurance Cover Is So Important
Keep your head out of the sand.
Get your Real Estate Insurance in order as soon as possible to guarantee that you are fully covered in the event of a disaster.
You’ll have peace of mind knowing that if something goes wrong and you’re careless or fail to carry out your responsibilities correctly. You’ll be protected from financial and/or emotional harm.
Financial protection given by the correct insurance policy can save you a lot of time, money, and stress, so start saving now.
You can get back to doing what you do best being a great Real Estate agent, after you’re got the best insurance for your needs.
Liability insurance
When you’re responsible for anything you did (or didn’t do) that hurts someone else or damages their property, liability insurance protects you. It covers your legal bills in the event of a lawsuit, as well as any settlement or judgement obtained against you, up to the policy amount. The medical expenses of an injured person are also covered by liability insurance. In our litigious age, such insurance is frequently required.
Liability insurance is divided into two categories:
- General liability insurance
- Professional liability insurance
You need both types of coverage.
#1. General liability insurance
General liability insurance protects a business owner from the various types of lawsuits that may arise. For example, if a client visiting your office slips on the freshly mopped floor and fractures an arm. Or if you knock over and shatter a priceless vase while conducting an open house, this form of insurance will cover you.
Don’t assume you’re covered for these types of claims if you already have a homeowners’ or renters’ insurance policy. Unless you receive and pay for a special endorsement, such insurance usually does not cover accidents involving business visitors.
Fortunately, general liability insurance is reasonably priced. It is typically available for a few hundred dollars per year. Coverage is available as part of a package policy, such as a BOP, or as a standalone general liability insurance policy. Known as a “commercial general liability” (CGL) plan. The CGL plan is the most expensive, but it provides the most coverage.
#2. Professional liability insurance
Professional negligence claims, which are claims for damages caused by a mistake you committed or something you neglected to do while performing professional services, are not covered by general liability insurance. “Errors and omissions”, also known as professional liability insurance or E & O coverage, is required. This form of insurance is required in several states for real estate licensees.
Your E&O insurance will defend you and pay any damages or settlements up to the policy limits. However, keep in mind that most policies only cover negligent, non-intentional conduct, not deliberate, knowing, or intentional wrongdoings. As a result, you would be unprotected against charges of premeditated deception or criminal activities, for example.
For complete coverage, consider two types of E&O insurance. To begin, the real estate broker or brokerage business should have its own policy that protects it from claims filed against the broker’s real estate agents. Individual agents should have their own insurance as well.
Alternatively, the broker could offer group insurance in which the agents can enrol. With the cost shared among all the brokers’ agents. Individual coverage is not accessible to real estate agents in many areas. Therefore they must rely on a group policy bought through the broker.
The cost of such insurance might range from a few hundred to several thousand dollars per year. The cost is determined by a number of criteria, including the deductible amount, policy limitations, and the size and claims history of the company.
FAQs
Can you sue an estate agent?
In tort, they can be liable in professional negligence if a duty of care is owed to you which is breached and causes you (financial) loss. This is can be pursued in tandem with a breach of contract claim.
Can you sue estate agents for lying?
Whilst it’s not strictly legal for an estate agent to lie to a buyer or seller about offers, it’s unlikely that you will catch an estate agent going to jail for lying about an offer, but it does go against the code of conduct which legitimate estate agents should follow.
Can an estate agent refuse to pass on an offer?
Can an estate agent refuse an offer? Yes, an estate agent can refuse an offer if they have been instructed to refuse offers below a certain price.
