The real estate industry generated over $200 billion in revenues in 2018. Such a sizeable industry provides many growth options for real estate agents.
While there’s room to grow your business in this lucrative industry, there are also many reasons that cause real estate agents to fail.
Key among these reasons is legal liability arising from real estate transactions.
To remedy this downside, it is important to understand the different types of business insurance policies available and how they can help your business.
Types of Business Insurance
Entrepreneurs experience exposure to liability risks at varied stages. For the real estate agent, the threat can come from internal or external operations. Here are some insurance plans you need to consider to better protect your business.
1. Workers Compensation Insurance
Many real estate agents do not have employees on their roster. But if you do employ a staff member, you need to comply with the workers’ compensation act.
Workers compensation is a business insurance policy that covers your staff in case of injury, disability or death while working. It provides for wage replacement during injury and disability as well as medical benefits.
In the unfortunate event of a worker’s death, it will compensate their dependents and cover the funeral expenses.
The employee in return agrees not to sue you should a work-related injury occur. While state laws vary on the implementation of workers compensation, it is essential you obtain it to avoid undue legal exposure.
2. General Liability Insurance
General liability insurance, also known as business liability insurance, is an essential policy for every business to have.
As a real estate agent, you interact with clients daily. While they are within your premises they might suffer an accident.
For example, if a walk in client slips and falls in your office, they can decide to sue you for damages. You will need liability business insurance to help you foot any successful claims.
A general liability policy will help you not pay out of pocket up to its stipulated limit.
The policy will also provide protection should you allegedly damage another person’s property.
3. Professional Liability Insurance
Part of your role as a real estate agent is to provide advice and guidance to clients. What you may not know is that this exposes you to liability in case you make a mistake that results in adverse outcomes for a client.
Personal liability insurance, also known as errors and omissions insurance, steps in to help you in such instances. Some reasons a client could sue you include:
- Delay or cancellation of a sale
- Failure to disclose a material issue
An important point to note is that general liability insurance does not cover such instances. It only covers physical injury or damages.
You therefore need a customized professional liability policy to help you go through any client claims.
4. Business Interruption Insurance
Your business as a real estate agent faces similar risks that other types of firms are exposed to. These risks are unpredictable and hold the capacity to paralyze your operations.
If your premises burn down, for example, it can lead to the suspension of activities. You may lose clients and income at such a time since you are unable to serve their needs.
Such a company insurance policy will help replace the lost income. Your provider will determine the compensation figure based on your real estate business’ records on profits earned.
Compensation will be capped to a predetermined limit set by the provider.
When shopping for this policy ensure that it clearly defines ‘suspension of operations’. If it is not clearly defined, some insurers might deny you compensation if you do not suffer a total shutdown of operations.
5. Data Compromise Coverage
Today’s real estate agents rely a lot on technology to run their operations. From advertising through online platforms to collecting or storing data, you need technology to get ahead.
That need for data is the same attraction for malicious actors. When attacks on your data system lead to compromised client information, you become exposed to liability.
The Federal Trade Commission (FTC) in many states now requires firms to notify their clients when such a breach occurs. The disclosure can potentially result in substantial expenses.
The data compromise coverage insurance policy ensures that you get compensated for validated expenses relating to the disclosure process.
The policy doesn’t cover any damage to your computers and other property as a result of the breach. You will need to get a cyber liability policy for that.
6. Commercial Auto Insurance
If your real estate agent business operates one or more vehicles, then business insurances that cover cars are imperative.
Commercial auto insurance protects company vehicles carrying equipment, employees or products. The policy also insures the company’s car against damage and collisions.
If your firm owns and operates a trailer with a gross vehicle weight of fewer than 2,000 pounds, it automatically falls under this policy. If the weight stands at more than 2,000 pounds, you will have to add it to the plan for its coverage.
You can cover employees driving their vehicles on company business under non-owned auto liability. That will help you protect against employees not having sufficient or any auto insurance while on official duty.
7. Property Insurance
If your real estate agent business occupies any physical working space you need to make property insurance a priority. Whether you are renting or own the property, you are operating out of you need to protect from fire, theft, etc.
The contents of your workplace also receive coverage. These can include inventory, signage, computers, etc. If you own the property, this policy will help you avoid draining all the rental income on rebuilding.
The real estate industry is an exciting sector with many possibilities but also many potential liabilities. Several types of business insurance can help shield you from outsized liability exposure.
To get the best value, you need to assess your business holistically. From the operating space to the people, you need to consider all the risks that can befall your company.
Getting the right policies can give your business the legal protection it deserves to flourish.
If you’re looking to sharpen your skills in running your real estate business we’ve got just the thing for you. Contact us today to learn more about growing your real estate agent business.