Q: What kind of realtor insurance should an independent agent buy?
A. It's hard to generalize which insurance policies real estate agents should have because agencies come in many different sizes and each has different needs. But let's start with the basic insurance that most agents should consider:
- Errors and Omissions Insurance (aka Professional Liability Insurance). Real estate E&O Insurance can cover lawsuit costs when buyers, sellers, lenders, and other third parties claim you made a mistake in your work, bungled a sale, or made oversights.
- General Liability Insurance. GL can cover injury, property damage, and accident lawsuits when non-employees sue you.
- Hired and Non-Owned Auto Insurance. While you might have Personal Auto Insurance, many personal policies don't cover accidents that happen while you're driving for work. HNOA can cover these accidents. If you or your employees are driving personal cars or rental cars, a HNOA may offer important protection.
These three policies can offer basic coverage for real estate agents. But depending on the size of your business and other risk factors, there might be more policies you should consider, including…
- Cyber Liability Insurance (Data Breach Insurance). Given that 84 percent of real estate agents use a smartphone (see our By the Numbers analysis), Cyber Liability Insurance could be crucial for your business. By paying for the cost to clean up and respond to cyber attacks, Cyber Liability Insurance can protect insurance agents whose mobile devices, computers, or other technology are compromised. Cyber coverage can sometimes be bundled with General Liability, so be sure to ask your agent about this option.
- Business Owners Policy. BOPs bundle General Liability with Property Insurance, getting you two policies at a discount. The typical independent real estate agent might not have much business property, but if your business wants coverage for its equipment, signage, computers, and other items, a BOP can reimburse you for damages from theft, fires, vandalism, and other covered claims.
- Workers' Comp Insurance. This insurance policy can pay for employee injuries and work-related accidents. Many realtors don't have any employees, which means that they probably don't need Workers' Comp. However, if you hire outside help, you might need Workers' Comp in order to meet your state's legal requirements for employers.
Because every real estate business is different and unique, it's always smart to talk to an insurance agent who can make sure you're getting the coverage you need.