What types of insurance are relevant to a real estate agency?

As a real estate agent, you have a range of responsibilities to take care of, so it’s essential to be appropriately insured. In your role, you are likely to work within and outside of your business premises, attend off-site home inspections, provide advice to clients, and have a duty to adhere to industry regulations. You face risks that include dealing with allegations from clients of negligence, providing incorrect advice, misrepresentation and mismanagement. In addition, the usual risks of operating a business also apply, including risks related to property damage, cyber-attacks, members of the public being injured on your premises, and more.

That’s why it’s worth spending time with an insurance broker who can assist you in understanding the risks you face in your real estate agency and help ensure you have sufficient cover.

In this article, we’ll look at what types of insurance you’ll likely need as a real estate agent working in Australia. Note that not all types of cover will necessarily apply in your particular situation; however, most are applicable to most real estate agents.

Types of real estate insurance for agents

What types of real estate insurance do you need when working as an agent or running your own agency? There are numerous types you could need. Firstly, there are compulsory forms of insurance that you need to operate as a real estate agent employer. Then there are the extras that fall under a general business insurance umbrella, which covers business infrastructure and assets. Then there are types of cover that protect you if you are found liable for mismanagement of your agency.

Whilst you may not need every type of insurance we discuss below, it’s important to know what’s available, what’s applicable to you, and what support that cover offers. It’s also important to consider the impacts of not being covered.

So let’s cover the main types of real estate insurance for estate agents, starting with those that are compulsory if you want to work as a real estate agent in Australia.

Professional Indemnity Insurance

Professional Indemnity Insurance is compulsory in most states and territories in Australia for corporate and individual real estate licence holders. If you want to operate as a real estate agent legally, you need Professional Indemnity Insurance (PI Insurance), which should include Professional Negligence cover.

Professional Indemnity Insurance covers you in circumstances where a client is dissatisfied with some aspect of your service and brings a claim against you or against employees you’re deemed legally liable for (agents, contractors or subcontractors). There are a wide variety of events where Professional Indemnity Insurance would cover you. Here are a few examples.

• A client claims you lied to them, misrepresented information, or omitted important information before a sale.
• A client claims that you gave them incorrect advice and that they faced financial loss as a result.
• A client alleges you mismanaged their property entirely or your management failed to meet their expectations.
• A client or other person alleges you breached statutory provisions under a particular law.
• A client claims you were negligent in your role and brings a civil liability claim against your business for breach of contract.

In addition to covering you against claims, Professional Indemnity Insurance may:

• Cover you for costs incurred while a claim is investigated
• Cover public relations costs incurred as part of reducing reputational damage following a claim
• Cover you for a claim made against you for an error, omission or act made in the past (even if you’ve left the profession), which you’re found to be legally responsible for.

(For more on PI Insurance, see How Real Estate Agents Can Get The Best Deal And Fit For Professional Indemnity Insurance.)

Workers’ Compensation Insurance

Workers’ Compensation Insurance is required if you employ a real estate business staff. Why? Your employees face various risks while showing properties to clients. They may suffer injury at an inspection, at your business premises, on the street or in transit. In the event that an unexpected event occurs while they’re working for you and they become sick or injured, worker’s compensation insurance will help to cover their wages while they aren’t fit for work and assist with covering the costs of their medical bills and rehabilitation.

Public Liability Insurance

Public Liability Insurance covers you if you are liable to pay claims arising from personal injury or property damage caused by your actions or those of your staff whilst operating your business. Naturally, this is a highly recommended type of real estate insurance, as unexpected events may occur when you or your employees meet with the public on your business premises or at property inspections and auctions.

If you’re required to pay damages, this insurance will cover you for the claimant’s medical expenses due to bodily injury, their lost income during recovery, and their legal fees.

Damages might also cover property repair and replacement costs if their property is damaged.

Whilst this insurance isn’t compulsory, you’ll find it indispensable, as many clients will require evidence that you have Public Liability Insurance before allowing you to inspect their property.

Management Liability

If you, as an individual, or your company, are found by a regulator to have breached a statute, you may face fines or penalties. Management Liability Insurance can help protect you, or managers, directors or officers in your real estate business if you/they are sued or named in an investigation. Risks covered with this type of insurance are:

• Data breaches
• Unfair dismissal claims by staff
• Financial mistakes when managing company finances
• Director liability, if someone believes them responsible for losses due to mismanagement.

Whilst you hope no such breaches occur within your business, the implications to your reputation and personal reputational and financial standing may be significant, so Management Liability Insurance is worth considering.

General Business Insurance

In addition to insurance that covers you when dealing with clients and managing a business and employees, there are some additional insurance types worth considering. The following are types of General Business Insurance that cover the physical aspects of your business.

Business Interruption Insurance

Certain unexpected events could stop your business in its tracks and cause downtime. For example, if there were a fire or flood at your business premises, you may experience a loss in profits while you wait for your business to resume operations. Business Interruption Insurance is a type of real estate insurance many agency owners consider, as it can help to cover the cost of repairs or replacement of equipment, as well as cover loss of profits while you wait to resume operating your business and other expenses.

Property Damage Insurance

This type of real estate insurance covers your office, stock, contents, and equipment against loss due to fire/wind/water damage, malicious damage, or similar. This coverage can help you repair or replace damaged property, cover the costs of a temporary relocation, and compensate for lost income if your real estate agency is forced to close due to a covered event. Property insurance is worth considering whether or not you own or lease premises.

General Property Insurance

These days, digital devices are intrinsic to a real estate agent’s work; hence agency owners will often supply staff with digital equipment such as phones and iPads to be used away from the business premises. General property insurance covers you for loss, damage or theft of these business items that are used in transit or at property inspections, etc.

Burglary Insurance

Though a real estate agency wouldn’t be the first place you would expect to be burgled, it does happen. Cash is at times held on-premises, as well as keys and customer documentation. So in the event that your locked premises are burgled, Burglary insurance can help cover the costs of repairs and lost property.

Glass Insurance

For real estate agents who lease premises, Glass insurance covers you for damage to internal panes of glass, signage, and external windows. Windows and signage are generally very important for a real estate agency, as the public spend time viewing these assets as they pass your premises. It’s essential that if the glass is damaged, you know you’re covered for the damage and can have expensive repair or replacement work done quickly.

Cyber Insurance

At times you may need to store client data, including bank account details, ID documents and personal data like addresses and phone numbers. If this information is exposed in a cyberattack, having insurance to cover your business against significant financial loss is beneficial. A Cyber Insurance policy helps to protect your real estate business against data theft that could be committed through hacking, social engineering, or privacy errors.

In Summary…

A variety of types of insurance are relevant to workers in the real estate industry. What you need will vary, depending on whether or not you are a corporate or individual real estate agent, whether you own or lease premises, and the position you hold, amongst other things. In addition, the measures you take to protect your business and its assets from fire, theft, and other forms of damage or loss will also play a part in determining what insurance protection you need and the cost of your premiums. It’s important that you have a particular type of cover and the right level of cover as if you are underinsured, you may be at risk.

Sorting out your insurance yourself is challenging, and there’s the possibility of missing something important. For peace of mind, working with insurance brokers with an understanding of the risks faced by those working in the real estate industry is recommended.

If you would like further advice, Steadfast Eastern Insurance Brokers are here to assist you with risk assessments and find comprehensive and competitive deals on Real Estate Agent Insurance, Contact Us today.

Related posts:

• Real Estate Agent Insurance: The Ultimate Guide
• How Real Estate Agents Can Get The Best Deal And Fit For Professional Indemnity Insurance