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Everything You Need to Know About Business Owner’s Policies in Real Estate

When Does a Real Estate Professional Need a Business Owner’s Policy?

Real estate professionals face a multitude of risks every day. A Business Owner’s Policy protects your real estate business against the unexpected. It combines your coverage into one convenient insurance package, so you’ll have peace of mind that your business will be covered. 

A Business Owner’s Policy is suitable for real estate professionals of all kinds. Whether you are a real estate broker, a licensee running your own independent business, or your business centers around another real estate speciality, a Business Owner’s Policy will provide you with essential coverage. This includes property management firms, appraisal companies, mortgage brokers, escrow services, as well as transaction coordination businesses. 

A Business Owner’s Policy is useful whether you have employees and/or independent contractors or not. Many also cover buildings and property coverage. However, if you don’t have a physical premises, ask your insurer for a customized Business Owner’s Policy package that combines only the things you need. 

How Does a Business Owner’s Policy Differ from Real Estate E&O?

Real estate Errors & Omissions (E&O) insurance is a form of professional liability insurance for people working in the real estate industry. It protects you against legal claims on the basis of alleged or actual errors, mistakes, or negligence in your real estate business. Even an experienced real estate professional can make an innocent mistake that can turn into a lawsuit. And defending yourself from even a frivolous lawsuit can be costly. E&O insurance can help you defend a claim or lawsuit, and cover legal costs and any damages, should something happen.

However, while E&O insurance is an important part of any real estate professional’s risk management strategy, it’s only part of the strategy. A Business Owner’s Policy provides you with additional coverage you need that E&O insurance does not. 

Vehicles for Business – Who Is Responsible?

The specifics of a Business Owner’s Policy will vary between insurers. If you need coverage for your business vehicles, ensure you work with an insurer that can customize your policy to include coverage for this. 

For real estate brokers with a team of licensees using their own vehicles for your business, the lines between where their auto insurance stops and your business insurance starts can be blurry. Things to consider are:

  • The limitations on your licensees’ personal vehicle insurance policies when it comes to business use. 
  • Your liability exposure as a business owner if one of your team is involved in an accident in their own vehicle while working for your real estate business.
  • The gaps in protection that exist when looking at your business insurance and your team’s personal vehicle coverage. Consider whether you should seek out additional coverage to bridge the gaps as part of your Business Owner’s Policy insurance package.

To mitigate the risks of licensees using their own vehicles for work purposes, business owners should implement best practice measures to minimize the risks. This includes:

  • Obtaining proof of vehicle insurance from your licensees and periodically checking it’s still adequate and active. 
  • Write a ‘Vehicle Use Policy’ that communicates clearly the expectations and requirements for the use of vehicles in your business. This could cover the use of personal vehicles for business purposes and also the use of any company vehicles in the course of your business (if applicable). 
  • Provide education and training to your team to encourage safe driving practices. 
  • Ensure you have procedures in place to monitor vehicle usage for business use. This will ensure there isn’t any ambiguity if an accident occurs involving a licensee’s vehicle. It will allow you to quickly identify whether the travel was for work or personal use so you can respond effectively.

What a Business Owner’s Policy Covers

A Business Owner’s Policy covers all of the essential types of coverage you need in your real estate business into one convenient package. 

A Business Owner’s Policy from CRES includes:

  • General liability coverage (protecting you if others are injured or if their property is damaged during a covered activity)
  • Buildings and Property Coverage (including coverage for a temporary office so you can keep your business running)
  • Loss of Business Income coverage to pay ongoing expenses if you cannot use your office
  • Equipment Breakdown coverage if something iss damaged from power surges, mechanical breakdown, burnout, or operator error
  • Personal and Advertising Injury coverage to help you defend against claims of slander, libel or copyright infringement
  • Medical payments to cover the medical expenses of others who have been injured on your property (whether you own or rent it)

CRES can tailor your policy to suit you and your real estate niche. You can also add additional coverage, such as  separate Cyber Liability insurance or a Workers’ Compensation Policy. 

Keep in mind that not all Business Owner’s Policies offer the same level of coverage — you will notice variations when comparing policies from different insurers. Review the policy inclusions and exclusions thoroughly to ensure you have a clear understanding of what coverage you will receive.

Is Your Business Protected?

CRES is a real estate insurance specialist with more than 25 years of experience. Our team can customize a Business Owner’s Policy to specifically meet the unique needs of your real estate business, no matter what your niche is. As part of one of the largest insurance brokers in the world, we have unparalleled access to more Business Owner’s Policy options than just about anyone (especially compared to small insurance brokers whose access is limited). Let us find the right coverage at the right price for you and your real estate business.

Contact the CRES team at 800-880-2747 for a confidential discussion today.

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