Insurance for Real Estate Agent

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Contributor, Benzinga
February 17, 2022

Some real estate agents might assume that they don’t need business insurance because their line of employment doesn’t involve heavy machinery or dangerous chemicals. The truth is that real estate agents open themselves to a range of legal liabilities when they advertise or show clients potential homes. From negligence to using your personal vehicle for work-related purposes, a comprehensive business insurance policy helps you safeguard your income from unexpected lawsuits and other types of liabilities.

Before you purchase a policy, be sure to read our guide to real estate agent insurance options. We’ll review some of the most common types of coverages that real estate agents choose to protect their businesses and a few of our favorite companies offering the policies you need. 

Best Real Estate Agent Insurance

As a real estate agent, you’ll have your choice between multiple insurance providers offering many types of coverage. This can be overwhelming when you start comparing insurance options because it can be tough to determine which company best fits your needs.

Begin your hunt by collecting a few quotes from our most highly recommended business insurance providers below to get a better sense of how much you can expect to pay for your coverage.  

Types of Real Estate Agent Insurance

A range of coverages makes up real estate agent insurance. Let’s take a look at a few of the most common protections you might choose to protect your business based on how you conduct client showings.   

Errors and Omissions Insurance 

Errors and omissions insurance, sometimes referred to as “professional liability insurance,” is a type of insurance coverage that protects you against lawsuits where a client sues you for negligence. Imagine that a client hires you to submit an offer letter to a homeowner whose property they want to purchase. You make a mistake in the letter, which causes the client to lose out on the property. If the client decides to sue you for negligence, your errors and omissions insurance would help you cover the cost of legal representation and court-awarded judgments made against you.

Buying a home can be a very stressful and expensive process — and even the most experienced and professional agent can make a mistake. We recommend that all real estate agents carry some form of errors and omissions coverage to protect themselves against the high costs associated with legal action.

Commercial Auto Insurance

If you use a vehicle to show clients properties, you should invest in a commercial auto insurance policy. A commercial auto insurance policy is almost identical to personal auto insurance, but it extends to instances when you use your vehicle for work-related purposes. Many personal auto insurance policies don’t provide coverage when you use your vehicle as a commercial vehicle, so this is essential coverage to consider.

Like personal auto insurance, there are many types of commercial auto insurance that offer coverage under specific circumstances. Some of the most common types of auto insurance coverage include:

  • Liability coverage: Liability coverage compensates anyone who you injure or whose property you damage during an accident. This coverage is required to legally operate a motor vehicle in most states.
  • Collision coverage: Collision coverage compensates you for damage to your own vehicle after an accident.
  • Comprehensive coverage: Comprehensive coverage compensates you if your vehicle is damaged in a non-accident context. For example, if your vehicle is vandalized or stolen, your comprehensive coverage will come into play.

Auto insurance requirements vary by state. Speak with a commercial auto insurance representative to learn more about the level of coverage you need. 

General Liability Insurance

General liability insurance is a type of umbrella coverage that compensates you if a client sues you for damages. Most general liability insurance coverages include 3 types of protections:

  • 3rd-party bodily injury: If a client is injured on your property (for example, by tripping over a power cord and spraining their ankle) and sues you for medical bills, 3rd-party bodily injury coverage would help you pay for judgments and legal expenses.
  • 3rd-party property damage: If you or an employee damages a customer’s property, the client might sue you for the cost of a repair or replacement. This property damage helps cover legal expenses and judgments awarded if a client sues you for the cost of lost property.
  • Advertising injuries: If you accidentally copy a competing real estate agent’s slogan or commit an act of defamation, you might receive a summons for a lawsuit. Advertising injuries protection helps you defend your business in court and court-awarded judgments.

General liability insurance is good protection for most real estate agents, especially if you work from a commercial space where you regularly invite clients. 

Commercial Property Insurance

If you own a commercial space where you operate your business, be sure to purchase a commercial property insurance policy. Commercial insurance is similar to homeowners insurance — your policy protects you from damage from a list of covered perils, which usually includes everything from fires to burglaries. If you suffer damages from a covered peril, you can file an insurance claim to receive assistance paying for a repair for your building or replacements for merchandise or equipment that was stolen.  

Business Owners Policy (BOP)

If you think your business would benefit from both general liability insurance and commercial property insurance, you might want to consider a business owners policy (BOP). A BOP combines both of these coverages together under 1 policy option with 1 insurance provider. Most business owners who purchase general liability and commercial property insurance elect to purchase a BOP instead of individual coverages because it’s usually the more affordable option.

Like your commercial property insurance, you can also extend your coverages to included additional natural hazards and perils on a BOP. Consult with your insurance provider to learn more about available coverage options. 

Cost of Real Estate Agent Insurance

The specific price that you can expect to pay for your real estate agent insurance will vary depending on a number of factors, including:

  • Your business size and revenue: As your payroll and revenue increase, so do the risks that your insurance provider takes on when they agree to extend a policy to your business. Expect your insurance costs to rise as your business expands.
  • Number of years of experience: More experienced real estate agents are less likely to make a costly mistake when conducting their business and showing clients potential properties. The more years of experience you have in your industry, the less you’ll pay for business insurance.
  • Your location: Property crimes and natural disasters are more likely to occur in certain areas. If you operate your business from an area where incidents like these are common, you’ll pay more for your insurance because you’re more likely to need to file a claim.
  • Your auto insurance record: Have you ever been involved in a car accident? Even if the accident occurred in your personal vehicle, having a mark on your driving record may increase the price you pay for commercial auto insurance.

As a general rule, you can expect to pay about $520 per year for a business owner’s policy, $390 per year for a policy that only includes general liability insurance and $665 for errors and omissions coverage. 

The best way to learn more about what you’ll actually pay for coverage is to get a quote from a few competing insurance providers offering policies in your area. 

How Real Estate Agent Insurance Works

Real estate agent insurance isn’t a singular type of insurance coverage. Instead, it encompasses a range of coverages and policies that real estate agents usually choose to protect themselves against the unique liabilities of their industry.

We recommend that all real estate agents purchase errors and omissions coverage as their base insurance, as this provides an umbrella of coverages against misrepresentations. If you use a vehicle to transport clients to showings, you should also purchase a commercial auto insurance policy, as your personal insurance might not cover you when using your vehicle for work-related purposes.

If you’re considering a general liability insurance policy and a commercial property insurance policy, you might want to combine both coverages together using a singular BOP. BOPs provide you with a more convenient monthly premium option, and most insurance companies offer discounts on both coverages when you purchase both types of insurance through a singular provider. 

Protecting Your Business

Working to safeguard your income and protect yourself against costly lawsuits doesn’t need to be time-consuming or expensive. Simply enter your ZIP code above to get started learning more about coverage options and prices in your area from some of our favorite business insurance providers. Don’t be afraid to collect multiple quotes before you decide which policy to go with — you have no idea how much you could save before you know all of your options.  

About Melinda Sineriz

Melinda specializes in writing about mortgages. student loans, personal loans, insurance, managing credit and debt, and credit cards.