As a real estate agent, you’re busy with lots of work to juggle, places to be, people to see and most importantly, houses to buy and sell. With all this work, comes a lot of responsibility. And with this responsibility, comes some very important needs.
One of these needs is of course insurance.
Today, Frans Du Plessis and the Grace Insurance Team talk all things insurance for real estate agents.
So, if you’re a real estate agent and you don’t have your insurance sorted, you really need to read this – think of this as your real estate insurance bible, if you will.
Why do Real Estate Agents need insurance?
Real estate is serious business. Think about it. You are the intermediary between those buying and selling properties, you prepare important documents and contracts, you help determine the price of a property, you advise on selling and buying property, you manage rental properties and this is just the beginning.
As a real estate agent, you are dealing with people’s money and livelihood on a regular basis and whether you like it or not, this equates to risk. With this in mind, you need to be responsible, reliable and organised and this includes your insurance.
Whilst you can’t foresee what’s going to happen in the future for your business or the housing market, you can at least ensure you and your real estate business are protected.
When would a Real Estate Agent need to make a claim?
Still can’t understand quite why you would require insurance?
Here are some real estate claim examples to help:
- A client claims that you provided them with incorrect or bad advice
- A tenant is injured in an accident in a rental property you manage
- You failed to follow legal requirements or company guidelines
- You neglected to inform a client of important information
- Poor decisions were made due to failing to forecast the market trends correctly
Whilst you may not have actually committed any of the above or at least intended to, this doesn’t stop anyone from making a claim against you and your business or employer. And claims like this could cost you or your employer thousands and thousands, or in some cases, millions of dollars.
Could you afford to pay for all the legal expenses? (that could just be the beginning).
Real Estate Agent Insurance claim
Management of rental properties is one of the common activities which real estate agents are involved -These properties may be commercial properties or residential.
What you may not know, is that if a tenant is injured in an accident on the premises of a rental property, it’s common for them to take legal action against the managing agent.
The Courts have held that a claim against a real estate agent arising from the management of a rental property is a professional indemnity claim: see Suncorp Metway Insurance Ltd v Land ridge Pty Ltd (2005)
This is why it’s so important to make sure that your policy is established by an experienced insurance broker, so they can ensure your policy is set up correctly and does not contain an exclusion for personal injury or property damage. Otherwise, you may not be covered.
What type of insurance do Real Estate Agents need?
Now can you see why insurance is so important?
With so many different types of insurance available though, it can be confusing and difficult to know which type of insurance you need. That’s where we come in.
Here’s a quick and easy guide to insurances for real estate agents.
The most important insurance for real estate agents is Professional Indemnity.
This insurance provides essential financial protection against potential losses arising from acts, errors and omissions by professional services, including:
- Breach of duty of care
- Negligence in rendering professional services
- Allegations of misrepresentation or of creating a misleading impression
- Breach of statutory provisions in various laws
- Poor property management
Have an office in which your clients visit you, as well as visiting their properties?
What if a third party were to have an accident or injury resulting from you going about your business?
Public Liability insurance will protect you from financial losses arising from a claim by a third party.
If you have an office and rely on computing equipment and servers, or anything else to run your business, then you may need to consider business insurance too.
Business insurance may cover you if your business is rendered out of action temporarily due to an insurable event, such as a fire. Business insurance will ensure your business expenses are covered during this time.
Not only are you being provided important and highly confidential information by your clients, but you’re also storing it too.
What if something were to happen to all this data? What if there was a breach of privacy and it was all stolen?
Cyber insurance will ensure your business is covered against the expenses and legal costs associated with such an event.
Management Liability Insurance offers cover for a range of managerial risks including staff exposure, allegations of mismanagement, employment-related claims, crime losses, statutory fines, and more.
Is Insurance for Real Estate Agents a legal requirement?
Each state in Australia has different legal requirements. In Western Australia, the requirements for Professional Indemnity Insurance for real estate agents are as follows:
- Legislative: Real Estate and Business Agents Act 1978 – No requirement
- Professional Association: REIWA Membership – Minimum of $1 million
Although it’s not a legal requirement for every real estate agent, we still don’t recommend going without it.
Any professional who gives advice or offers a service is at risk of having claims made against them if their client feels they have caused them financial loss or injury by their actions, either directly or indirectly.
How much does insurance for real estate agents cost?
The cost of your insurance will depend on your needs and requirements, level of cover, insurer, payment frequency and more.
You can request a quotation here.
How do I obtain insurance?
When obtaining insurance such as these, it’s vital they are set up correctly to suit you, your business and your requirements.
This is why we recommend talking to a professional insurance broker for assistance. Not only will they ensure you have the right insurance policies in place, but they will also be there to advise and support you, should a claim ever arise.
Real estate is serious business. Don’t risk it. Protect yourself financially and safeguard your reputation with the right insurance.
At Grace Insurance in Joondalup, north of Perth, we have many years of experience in providing the right insurance for real estate agents.
Contact Grace Insurance to find out how we can help you today.