As a real estate agent, you are responsible for a lot of valuable information. For example, you handle your clients’ financial and personal data, and if something were to happen to that information, you could be held liable.
That’s why having insurance as a real estate agent is important, says TrueNest Management. In this article, we will discuss some of the types of insurance that are essential for real estate agents. We will also talk about how insurance can help protect you and your business in the event of an accident or disaster.
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What Kind of Business Insurance Do Real Estate Agents Carry?
Real estate agents should carry several different types of business insurance. The first is professional liability insurance, which will cover you if you are sued for negligence. This policy will also pay for any damages you are found responsible for.
Another type of real estate insurance that real estate agents need to carry is errors and omissions insurance. This policy will protect you if you make a mistake in your work. For example, if you forget to disclose a material fact about a property, this policy will pay for any damages that result from your error.
You should also consider carrying a business interruption insurance policy. This type of policy will cover your lost income if your business is temporarily shut down due to an accident or disaster.
Lastly, it’s important to have a general liability insurance policy. This policy will protect you if someone is injured on your property or if you damage someone’s property. With that said, let’s discuss all the reasons why real estate agents need insurance.
Real Estate Insurance Can Protect You Against “Failure to Disclose” Lawsuits
As a real estate agent, you must disclose any material information about a property to potential buyers. If you fail to do so, the buyer suffers damages. As a result, you could be held liable in a “failure to disclose” lawsuit.
For example, let’s say you are selling a house with significant damage to foundations. If you fail to disclose this damage to the buyer, and they purchase the home without knowing about it, they could sue you for failing to disclose the issue.
If you have professional liability insurance, your policy will pay for your legal defense costs and any damages you are responsible for. Without this type of insurance, you would have to pay these costs out of your pocket, which could ruin your finances.
Real Estate Agents Need Insurance to Protect Their Businesses
In addition to protecting you from lawsuits, insurance can also help protect your business in the event of an accident or disaster. For example, if a fire damages your office, your business interruption insurance policy will cover your lost income while your office is being repaired.
Similarly, if you have to cancel a real estate transaction due to an unforeseen circumstance, your errors and omissions insurance will cover any damages you are liable for.
Lastly, if one of your properties is damaged by a natural disaster, your general liability insurance will pay for the repairs.
Real Estate Insurance Can Protect Against “Unkept Promise” Lawsuits
Another reason real estate agents need insurance is to protect against “unkept promise” lawsuits. These lawsuits arise when an agent promises to do something but fails to follow through.
For example, let’s say that you tell a buyer that you will find a property within their budget. However, if you cannot find such a property, the buyer could sue you for breaching your promise.
Believe it or not, lawsuits like this can happen to anyone. But unfortunately, even with the best intentions, things can sometimes go wrong. That’s why insurance is important to protect yourself against these types of lawsuits.
Real Estate Agents Need Insurance in Case of Injury
Another reason why real estate agents need insurance is to protect against injuries. Even if you are careful, accidents can happen. And if someone is injured on your property, you could be held liable.
For example, let’s say that a buyer slips and falls while viewing one of your properties if they suffer serious injuries. As a result, they could sue you for negligence.
If you have general liability insurance, your policy will pay for the buyer’s medical bills and any other damages you are responsible for.
Real Estate Insurance Protects Against Property Damage
Lastly, real estate agents need insurance to protect against property damage. Even if you are not responsible for the damage, you could be held liable if it occurs on your property.
For example, let’s say that a severe storm damages one of your properties. If the damage is severe enough, the buyer could cancel the purchase and sue you for breach of contract.
What Factors Should You Consider When Buying Real Estate Insurance?
When you are shopping for real estate insurance, there are a few factors that you should consider. First, you need to ensure that you are getting the right type and coverage.
Next, you need to make sure that your policy covers any potential risks that could arise. For example, if you are selling properties in an area prone to natural disasters, you will need to ensure that your policy covers these types of events.
Finally, you need to ensure that you get the best possible price for your insurance. To do this, it’s a good idea to compare quotes from multiple insurers.
Considering these factors, you can be sure that you are getting the best possible real estate insurance for your needs.
Don’t Neglect Real Estate Insurance Any Longer
As you can see, there are many reasons real estate agents need insurance. From protecting against lawsuits to property damage, insurance is an essential part of any real estate business.
So if you are a real estate agent, make sure that you have the right type and amount of coverage. It could save you a lot of money in the long run.