The Essential Guide to Insurance for Real Estate Agents

Did you know that the average real estate agent in the US has about 8 years of experience? 93% of real estate agents prefer communicating with their clients through text and 89% communicate via email.

You can do your best work and find a dream home for your clients with these methods of communication, but you are still vulnerable to lawsuits. Anytime you give advice even by email or text, you are opening the door to clients suing you. For example, if they bought a house based on your advice that turned out to have significant structural damage.

Are you wondering how insurance for real estate agents can protect you from third-party claims? Keep on reading to learn how insurance can give you peace of mind and cover any unexpected expenses that arise.

Why Do You Need Protection?

Real estate agents are usually independent contractors who help negotiate and advise on contracts. The list of paperwork involved in closing is staggering, and everything needs to run on time to ensure you have a successful closing. A closing agent helps the buyer, seller, and lender complete the closing of a real estate transaction.

Like any other professional, you are vulnerable to issues such as client disputes and transaction errors. With the average listing price for a home in the US of $374,900, a lawsuit can get expensive. Getting insurance ensures that you don’t have to pay out of pocket for any third-party claims.

Breach of Contract

The biggest issue that you may run into is client disputes where the client claims that you have not met the obligations of your contract. A client can claim breach of contract if you fail to meet specific obligations in your contract, such as failure to meet the timelines in the contract. This type of dispute is usually associated with a negligence claim.

Breach of Duty and Failing to Disclose a Property Defect

Even if you didn’t breach a particular term in the contract, you can be held responsible for breaching your duty as a real estate agent to advise and identify issues. If you fail to disclose a property defect, your client will have to deal with repairs and renovations that they did not account for. They can sue you for the total expenses that they have to pay for repairs and any other transaction errors during the real estate transfer.

Giving Legal Advice

A real estate agent cannot give legal advice. You need to make sure that any advice you give is based on your expertise as a real estate agent, and get a lawyer to provide legal advice. Where you gave incorrect advice that the client relied upon, they could sue you for breach of duty and negligence.

Failing to Keep Client Data Safe

If you have a client’s financial information and the information is stolen or hacked, the client can sue you for failing to keep their data safe. You may have saved a lot of time and money by emailing documents, electronic signatures, and saving documents on the cloud. These are vulnerable to being hacked, so you need to take extra precautions to protect your client’s information.

What Type of Insurance for Real Estate Agents Should You Get?

Now that you know the common issues that a real estate agent faces, you need to understand how you can protect yourself. The right insurance can cover the cost of litigation and settlements, so you don’t have to pay out of pocket. A real estate agent should consider getting these types of insurance.

General Liability Insurance

You may have an office where you invite your clients to come in and sign paperwork. If your client slips and injures themselves or their property, they can sue you for their medical expenses, and any loss of wages. General liability insurance protects you from any third-party claim, especially in a commercial lease situation.

Errors and Omissions Insurance

One of the most important types of insurance you will need is errors and omissions insurance that protects you from lawsuits for breaching a contract or providing incorrect advice. You don’t want to be stressed out and not provide the best advice because of fear of being sued. This insurance will cover any costs of litigation and settlement regardless of fault if you are sued for providing advice that the client relied on.

Commercial Auto Insurance

You may be driving clients around in your car to various listings. No matter how careful you are, you could end up in a car accident.

This type of business insurance covers you for the cost of any property damage caused by your car in the accident, and the medical expenses associated with any bodily injury. Without your car, running your business will be difficult, so you can also protect yourself from any vandalism and theft of your car.

Cyber Liability Insurance

You will need to keep financial and personal information about your client on your personal laptop or cloud software. Unfortunately, there is a risk that this information could be hacked, and your client can sue you for any damages they suffer. Cyber liability insurance can cover you for the cost of those claims, including settling any ransomware demands.

What Should You Look for in an Insurance Company?

You need an insurance company that is right for you. Look for areas of specialization of the insurance company. Every business is different and there are nuances that your insurance company needs to understand so they can offer the best coverage at the lowest price.

You want to make sure you understand what is covered under your policy and get the most affordable premiums for you. Your insurance company should be able to communicate this complex information to you clearly and honestly.

Get Insurance for Real Estate Agents Today

As a professional, you face certain risks in your daily operations including getting sued for breach of duty, negligence, or fraud, and the cost of legal fees and settlements can be very high. Insurance for real estate agents can protect you from these expenses, so you don’t have to pay out of pocket, and you can continue to provide the best service.

Speak to an agent at our NJ based insurance agency today. We have two offices in Eatontown and Medford for your convenience. With our 50 years of experience, we can work with you to get the best coverage for your needs.