Real estate insurance claims stories: Why you need insurance?

Real estate agents face a wide range of risks in their day-to-day work, from tenant injuries and workplace disputes to cyber attacks, property damage and tax audits. While no two claims are the same, the financial impact can be significant if something goes wrong. That’s why having the right insurance in place can be an important part of protecting your business, reputation and livelihood. Here are some common types of insurance real estate agents may wish to consider, along with real-life examples of how these policies have responded to claims.

Cyber Liability insurance

Cyber Liability insurance is designed to help protect businesses from claims and support their profitability in the event of a cyber breach or attack. Costs associated with defending a cyber claim are generally also covered. Examples of the types of risks Cyber Liability insurance can assist with are unintended loss or release of customer personal information, cyber crime, cyber extortion/ransomware and business interruption due to a cyber event. You also have the option to add cover for Social Engineering, Phishing or Cyber Fraud, Engineering, Phishing or Cyber Fraud.

Some other examples of the kind of Cyber Liability claims real estate agents may face include:

• Customer data breaches.
• Business interruption from a cyberattack.
• Malware or virus infections.
• Unauthorised system access.

The claim event

What started as a routine login turned into the beginning of a major disruption when a real estate agent suddenly found themselves locked out of their own website and unable to access their admin account or log into WordPress.

Not knowing what else to do, the agent reached out to their software provider. The software provider told the agent that a data breach had occurred and the hackers had managed to gain access to the agent’s system using valid login credentials. Because the agency was still using an outdated, legacy system, the software company acknowledged they couldn’t completely defend against this type of access.

But wait – it gets worse.

Clients were locked out of the agency’s online platform, new customers couldn’t create listings, and the integrity of the site itself had been compromised. Around 200 listings had been deleted, replaced by a flood of outdated entries seemingly imported by the threat actors. With no administrative control remaining, the insured was left with little choice but to post a public notice declaring the site “under maintenance.”

Notably, no ransom or demands were made. But the damage was already done.

Facing the imminent shutdown of their existing platform, the real estate agency turned to a software development firm to rebuild the website entirely from scratch. This process was estimated to cost approximately $40,000.

The outcome

Because the real estate agency held Cyber Liability insurance, they were able to claim a total amount of $51,000 from their insurer. This included the cost for the website rebuild as well as cyber forensics to investigate the origin of the attack.

Professional Indemnity insurance

Professional Indemnity insurance is a legal requirement for real estate agents in some states and territories in Australia, making it one of the more common types of cover considered. Make sure you double check your local area’s legal requirements on Professional Indemnity to make sure you understand your obligations.

Professional Indemnity generally protects businesses against losses claimed by a third party due to alleged or actual negligence in their professional services or advice. Subject to applicable limits, Professional Indemnity insurance could meet the associated compensation payable to a third party together with the businesses defence costs (which can include legal costs, investigator costs and expert fees).

Some examples of the kind of Professional Indemnity claims real estate agents may face include:

• Failing to disclose key property information.
• Providing incorrect property advice.
• Errors in contracts or lease documents.
• Misrepresenting a property’s features.
• Incorrect property appraisals.
• Missing important deadlines.
• Failing to follow client instructions.
• Mistakes in property management services.
• Errors in tenant screening.
• Mishandling trust account funds.

The claim event

A tenant stepped onto a section of the deck only for it to give way beneath her, sending her falling through the structure.

The tenant sustained serious bruising to her leg and was taken to hospital for further examination. Multiple scans later confirmed extensive soft tissue damage, leaving her unable to return to work.

What made the incident more serious was that it wasn’t entirely unforeseen. Earlier in the year, during a routine inspection, the tenant had raised concerns about the condition of the deck to the real estate agent. The issue had been passed on to the property owners, but no repairs were carried out.

Because the concerns about the deck had already been raised by the tenant, the real estate was the one who was found liable for the incident.

The outcome

Fortunately, the real estate agent held Professional Indemnity insurance. The claim was finalised and the insurance provider paid a whopping $238,248. If the agent had not held adequate insurance, they would have had to foot the bill for this amount themselves.

Management Liability insurance

Management Liability insurance is designed to help protect business owners and managers against claims arising from the management of their business. This can include claims involving wrongful acts, employment practices issues, discrimination, harassment and workplace disputes. Cover can also assist with legal defence costs, settlements and compensation payments associated with covered claims.

Some examples of the kind of Management Liability claims real estate agents may face include:

• Employee unfair dismissal claims.
• Breaches of employment laws.
• Claims of wrongful management decisions.
• Regulatory investigations.
• Misuse of company funds.
• Breaches of directors’ duties.
• Shareholder or stakeholder disputes.

The claim event

A real estate management business found itself facing serious allegations after a former employee lodged claims relating to workplace discrimination and victimisation.

The employee alleged they had been subjected to offensive, humiliating and intimidating behaviour in the workplace on the basis of their disability. In addition, the business was accused of victimising the employee after concerns were raised internally.

As the matter escalated, the real estate management business was required to respond to the allegations and participate in a formal mediation process. Legal representation was needed to help navigate the dispute, prepare a defence and manage the risks associated with the claim.

The outcome

The business held Management Liability insurance, so their insurer appointed legal advisors to assist throughout the mediation process and help defend the serious allegations made against the business.

In the end, the total amount incurred for the claim was $19,383, including $10,000 in settlement costs and $9,383 in defence expenses.

Building and Contents insurance

Building and Contents insurance is designed to help protect business premises and the items they rely on to operate day to day. Depending on the cover selected, this can include protection for office contents such as furniture, computers, flooring, carpets and important business records against insured events like storms, fire, theft and water damage is designed to help protect your business premises and the items you rely on to operate day to day. Depending on the cover selected, this can include protection for office contents such as furniture, computers, flooring, carpets and important business records against insured events like storms, fire, theft and water damage.

Some other examples of the kind of Buidings and Contents claims real estate agents may face include:

• Vandalism to business property.
• Water damage from burst pipes.
• Damage from severe weather events.
• Broken office windows or signage.
• Accidental damage to office contents.
• Loss of computers and technology equipment.
• Damage to furniture and office fit-outs.

The claim event

A real estate agency arrived at work one morning to discover significant water damage throughout their office.

The source of the problem was a burst water pipe in the unit above the agency’s premises. Water had flooded through the ceiling and poured directly into the office below, damaging large sections of the business.

Carpets and flooring were heavily affected, while office furniture, computers, files and important paperwork were also damaged by the flooding. With essential equipment impacted and the workspace left in disarray, the incident caused major disruption to the agency’s day-to-day operations.

The outcome

The real estate agency held Building and Contents insurance, which meant their insurer paid a settlement of $34,932 to assist with the damage caused by the flooding event.

Tax Audit insurance

Tax Audit insurance is designed to help protect businesses against the professional costs associated with responding to an audit, investigation or review by the Australian Taxation Office (ATO) or other government revenue agencies. Depending on the policy, cover can assist with accountant fees, professional advisor costs and other expenses incurred while managing the audit process.

Some other examples of the kind of Tax Audit claims real estate agents may face include:

• An audit of GST reporting.
• A payroll tax investigation.
• A superannuation compliance audit.
• A review of contractor classifications.
• An audit of employee PAYG obligations.
• A land tax assessment dispute.
• A review of fringe benefits tax records.
• Responding to ATO information requests.
• Defending the business during a tax investigation.

The claim event

A real estate agency received a tax audit request from the Australian Taxation Office (ATO) in April 2025.

As the audit process commenced, the business was required to work closely with professional advisors to respond to the ATO’s requests and provide the necessary financial documentation and records. Because the audit was ongoing, the matter could not immediately be finalised and the business faced months of uncertainty while the investigation continued.

The outcome

The real estate agency held Tax Audit insurance, so once the audit matter had progressed, the insurer paid $5,461.00 (net of GST and excess) towards the costs associated with the audit.

If the business had not held adequate insurance, they would have needed to absorb these professional expenses themselves while also managing the ongoing demands of the audit process.

Lowering your insurance risk as a real estate agent

While insurance can help protect your business financially, taking proactive steps to reduce your risk exposure is just as important. Real estate agents can help minimise the likelihood of claims by:

• Maintaining accurate records.
• Conducting regular property inspections.
• Communicating clearly with clients and tenants.
• Ensuring all complaints or maintenance concerns are followed up promptly.
• Upholding strong cybersecurity measures.
• Providing staff training on compliance, workplace conduct and privacy obligations.
• Staying up to date with relevant real estate legislation and regulatory requirements.

Types of real estate agent insurance to consider

While there is no specific product known as ‘real estate agent insurance’, there are a number of different cover types that are often considered by real estate agents to help them manage potential claims.

These include:

• Public Liability insurance
• Theft insurance
• Electronic Equipment insurance
• Employment Practices Liability insurance
• And more.

For more help understanding what your insurance needs may be, get in touch with the friendly team at BizCover today.