As a real estate professional, you face risks every day. The best plan of action is to take a proactive approach and manage that risk, rather than being reactive to liability issues that arise. Wouldn’t you rather prevent lawsuits before they happen?
What can you do to protect yourself from liability in your real estate business? To help keep you on track with risk management, here’s your Real Estate Insurance Checklist, covering exactly what you need and how to make the most of your insurance.
All real estate professionals need Errors and Omissions insurance to protect your business and your family. You may have E&O through your real estate broker, but that tends to be “bare bones” coverage that may not cover risks specific to real estate. You could still be sued and be on the hook for tens of thousands of dollars — or more — out of your own pocket. Here’s why you should consider individual real estate E&O.
E&O coverage varies greatly between insurers. Look for E&O designed specifically for real estate risks that can be tailored to suit your specific business needs. CRES customizes policies so you can have protection for the specific risks your business faces every day.
We also go one step further with CRES E&O + ClaimPrevent® policies — you’ll have access to legal advisory services 7 days a week. It’s not your typical legal hotline — you can speak to an experienced local real estate attorney who can help you to prevent lawsuits before they happen. They can also advise on contracts and documents, and write letters on your behalf. You’re guaranteed a response within 4 hours or next business day, with recommendations provided to you in writing.
You’ll also get more benefits for your CRES E&O investment with Seller’s E&O Protection, which can help you attract more listings. You also enjoy Building Permit History Reports (the first 25 are free) and access to unique Home Warranties. Your use of Building Permit History Reports and CRES Qualified Home Warranties can reduce your out-of-pocket claims costs.
If you’re not already with CRES, be sure to check what activities your E&O policy covers. Some policies only cover specific activities, such as real estate sales or property management. With CRES, you can have one policy covering everything you do, including real estate sales, mortgage brokering, appraising, property management, escrow, etc.
Cyber Liability Coverage
Cyber liability is an increasing threat around the world. Small businesses are particularly at risk without large IT departments to take care of their cyber security and IT systems. Every real estate agent and broker needs to be aware of phishing attempts via email, email attachments that plant viruses on your system, and more. CRES E&O can include cyber liability coverage for data breach incidents, but most firms should carry a separate Cyber policy to cover for Wire Fraud, Ransomware, Copyright Infringement, etc. We can help you find the right coverage for your firm..
Business Owners Policy
A Business Owners Policy is designed for: small to medium businesses that perform lower risk activities, for example, residential sales; and where you’re working in a reasonably new or updated building. This type of policy provides all-in-one coverage including general liability, buildings and property damage, loss of business income, equipment breakdown, personal and advertising injury and medical payments to people injured on your premises.
Commercial General Liability and Property Policies
Larger companies, or real estate businesses doing higher risk activities like property management, require a higher level of insurance. You will need one policy for liability coverage and another to cover your property.
Workers’ Compensation Policy
A Workers’ Compensation Policy will cover work-related injuries for your staff, including medical costs and a percentage of lost wages.
If you employ people as W-2 employees — even part-time — you may be required to have a Workers’ Compensation Policy depending on your state and industry. For example:
- California requires Workers Comp for all employees.
- California real estate agents who receive 1099s also need to be covered by their broker — not just W-2 employees. Failure to comply can result in hefty fines of up to $100,000.
- Texas does not have a Workers’ Compensation requirement
As you can see, laws across states differ so you should check your workers’ compensation obligations in your state: https://injury.findlaw.com/workers-compensation/workers-compensation-laws-by-state.html
Employment Practices Liability Insurance
This type of coverage will protect you against lawsuits from employees on the basis of wrongful termination, sexual harassment and discrimination based on sex, race, age or disability for example. This also can defend you in case of a claim that your website is not ADA compliant. Law firms are targeting real estate agents and firms for these violations.
Fidelity and Crime Bonds
When you have a team of real estate agents, you elevate your business risk exposure. Fidelity and crime bonds are an effective way to minimize your risk. Sometimes called “Dishonesty Bonds”, this form of protection provides compensation to your clients if a member of your team does something illegal or dishonest, causing your clients financial loss. This includes stealing at a client’s property, illegally benefitting from a transaction, credit card or bank account fraud and other illegal actions or misconduct which result in a loss for the client.
Get Protected & Review Your Insurance Regularly
To ensure you have the protection you need for your real estate business, contact CRES at 800-880-2747. Our experienced team can help determine what policies will best suit your business circumstances. CRES also specializes in customizing policies for our clients, because we know that every real estate business is different.
We know that your business needs will change over time, so we encourage our clients to review insurance coverage regularly (annually is recommended). Call us at 800-880-2747 and we’ll help.