TYPES OF INSURANCE FOR REALTORS®

There are different classes and types of insurance for Realtors® that they can take to protect themselves from risks and threats. The reason being, real estate agents are professionals and have a business entity of their own. Apart from their personal identity, they are owners of their real estate business. This separates their personal duties and professional duties from each other. They have to manage their professional duties and goals separate than that of their personal ones.

Now, when it comes to a business entity, it will obviously have its own needs and requirements along with its own risks. Just like we ensure the safety and well-being of our personal belongings and assets, we, as real estate agents need to ensure the safety of our business as well. Managing Professional Risk is the reason we have Business Insurance for our profession of Real Estate. Take a look at the video –

The Real Estate Business can have multiple types of risks involved at every stage. To cover all the stages, we have different types of Real Estate Insurances that agents can get covered with. This helps them manage their real estate business against various types of risks. There are 4 major types of Insurance for Realtors® involved with their own specific coverage limits –

1. Home-Owner’s Insurance

Home-Owner’s Insurance is the most basic insurance policy for your real estate business. Every business owner needs basic tools and equipment requirements to run a business. Thus, this insurance covers all those basic needs and necessities needed for a smooth and normal functioning of your real estate business. You, as a Real Estate Agent will require some common mechanisms to run your real estate business.  

This insurance is named as Home-Owner’s Insurance because as a Real Estate Agent, your own a business of Real Estate Agency. Thus, this insurance is the Home Insurance for your business.

The real estate business, like every other business will need common electronics and equipment on a day-to-day basis. This will include Laptop/Computer and related accessories, Cell Phones, Printers, Fax Machines, Scanners, etc. These tools are expensive and does require a good amount of capital. Thus, the home-owner’s insurance for real estate is necessary for a real estate business to protect these possessions against damage, theft, and other threats.

A Standard Policy of Home-Owner’s Insurance may not provide enough coverage for all the equipment that one may need as a Real Estate Agent. Thus, generally, agents consider insurance plans with additional features that covers all their belongings.  

2. Vehicle Insurance

The second and most common type of insurance for real estate agents is Vehicle’s Insurance. The Vehicle’s Insurance in Real Estate covers the vehicles of Real Estate Agents against threats during professional use. The most basic job role of a Realtor^® is to search for properties and showcase their research to clients as per their needs and requirements. Their role also includes dealing with clients and other parties involved in a property deal on a frequent and almost regular basis. This will need lots of transit for meetings and in-person communication, which in-turn will require means of transport.

There is a difference in insurance coverage for Personal vs Business use of a Vehicle. When you (a Real Estate Agent) have a vehicle and you use it for personal as well as business use, you will have to get an extended coverage for your vehicles to include the business use in addition to your personal use. If you fail to do so, your claims made during the business use of the vehicle (E.g., Going for a meeting with a lawyer in regard to a property deal for a client), it may be denied under your regular Personal Vehicle Insurance Policy.

A vehicle insurance is also crucial because it has a higher potential for claims as there can be multiple parties involved. For E.g., if you are taking your client in your vehicle to show a property and you get in a major accident, there will be multiple claims as your client is also involved in the accident.  

3. Comprehensive and General Liability Insurance

This insurance provides broad coverage for claims of bodily injury and damage to property of others, i.e., Civil Liability. While conducting business duties, if you damage or harm other parties or properties of other parties (third parties), this insurance will cover that.

As other parties are involved in such cases, there may be legal charges and costs that have to be incurred by law to complete the claim. This insurance, therefore, covers legal defense costs of the insured (Eg: Lawyer Fees), if the matter is within the scope of the policy.

Situations and Conditions that fall under the Comprehensive and General Liability Insurance Policy:

1. Slip and Fall: If the client gets in accident (like a slipping in or falling/injuring themselves in the location of a property site, it would fall under the Real Estate Business Insurance of Comprehensive and General Liability Insurance Policy). The reason being, it is an accident that took place in the location of a business deal and not a private property of either the real estate agent or the client.
2. Burglary or Vandalism: If there is a situation of burglary or vandalism in any of the properties that is shown by the agent to its client, that property is still not owned completely by any of the parties. So, the business insurance of comprehensive and general liability will cover that.
3. Fire or Smoke Damage: If the show property gets damaged by a fire accident, it will be covered by this policy.
4. Water Damage: If the show property is damaged by a water-related accident, then it is still under the coverage of this policy.

NOTE:
Civil Liability Errors from real estate agents in case of real estate transactions are situations that DO NOT FALL under Comprehensive and General Liability Insurance Policy. This includes errors and omissions from a Real Estate Agent, that resulted in damage to other parties (clients, lawyers, etc.) or their properties. These types of errors will be covered under a separate policy but do not fall under Comprehensive and General Liability Insurance Policy of the Real Estate Agents.

4. Professional Liability Insurance

As real estate agents, we can commit errors. Thus, this is the Errors and Omissions Insurance that covers errors of a Real Estate Agent while dealing with real estate transactions in the business. The Professional Liability Insurance in Real Estate is slightly different than the others because it is provided through REIX (Real Estate Insurance Exchange) which is ultimately governed by RECA (The Real Estate Council of Alberta). The dues of this insurance are payable yearly with RECA fees (charged to real estate agents) on Sept 30^th of every year.

So, theses are the various types of insurance policies that a Real Estate Agent can take to manage their risks as a Professional Real Estate Agent.

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