The ultimate guide to business insurance for real estate agents

Being a real estate agent is an exciting and ever-changing career. You’re there to help your clients find and sell their properties, a job that certainly doesn’t come without its risks. From providing professional advice to storing sensitive client details online, it’s important to consider the appropriate kinds of insurance you may require to keep your business safe. Let us guide you through the nitty gritty of how business insurance can protect your real estate business.

What is real estate agent insurance?

Real estate agent insurance are the cover options designed to protect your agency, business assets, and finances. It helps protect your business from common industry risks related to the advice you give, interacting with members of the public, and running a small business (depending on the options you choose).

Why should real estate agents consider insurance?

Real estate agents work in a high-stakes industry, where minor mistakes or delays can have a huge financial impact. Insurance helps real estate agents protect their personal and business finances should they have a claim made against them.

What are the risks for real estate agents?

Real estate agents face many potential risks, such as:

• Overlooked details in a contract
• A miscommunication with a buyer
• A potential buyer is injured at an open house
• A cyberattack exposes buyer and seller information
• Business equipment, such as a laptop or printer, is stolen or damaged

Issues like these and others can lead to lawsuits, claims, and unplanned bills. Business insurance helps agents manage these types of costs, so you’re not left paying them out of pocket.

What types of insurance should  real estate agents consider?

Real estate agents may need different types of insurance to protect their business, including:

Professional Indemnity

Professional Indemnity insurance covers you for losses claimed by a third party and defence costs due to alleged or actual negligence in your professional services or advice.

It is required for real estate agents and/or other real estate occupations in New South Wales, Tasmania, Victoria and Western Australia. Depending on this state, this includes real estate agents, conveyancers, and settlement agents. Minimum levels of Professional Indemnity are required to receive and maintain real estate and property licences.

Public Liability

Public Liability insurance covers you if a third-party claims that your negligent business activities caused them injury or property damage. This includes defence costs cover.

“Trip and fall” injuries and accidental property damage claims can easily happen during an open house. But they could also happen when clients visit your offices or while meeting with other property professionals in public spaces. Public Liability insurance may also be required to lease commercial office space for your agency.

Business Insurance Package

A Business Insurance Package is a customisable insurance bundle that can include different types of cover to protect your business stock, revenue, tools and equipment, owned buildings and more.

Real estate agents may add several cover options to their Business Insurance Package, including:

• Business Interruption – Cover for financial loss as a result of an interruption to your business caused by an insured event. This can include fire, storm, or other property damage that keeps you from working as normal.
• Glass – Covers damage to glass and signage, both internal and external, at an insured business location. Glass cover may be required to lease commercial premises.
• Portable Equipment – Can help repair or replace items like tools, business equipment, electronic items, and stock that are lost or damaged due to theft, fire, and other events. This can help real estate agents repair or replace damaged laptops, mobile phones, and printers.
• Theft – Covers you against loss of contents and stock, as well as damage to your business premises, as a result of theft or attempted theft involving forcible or violent entry from your business premises.

Cyber Liability

Cyber insurance covers losses from claims arising from data breaches, business interruption and remediation costs following an actual or threatened cyberattack or data breach.

Real estate agents are a popular target of cyber criminals, because they facilitate high-value transactions and store sensitive client information. A Cyber Liability policy can help you mitigate the damage of an attack, pay costs associated with a breach, and rehab your professional reputation following a cyber incident.

Management Liability

Management Liability insurance covers claims of wrongful acts in the management of the insured business and can include directors’ and officers’ liability, employment practices liability, crime, statutory liability and tax audit.

If you run an agency with employees, you may want to consider a Management Liability policy to help cover unfair dismissal claims, allegations of discrimination, OHS breaches, and other workplace incidents.

Workers’ compensation

Workers’ compensation insurance covers employee injuries and illness that are caused by their work. It is mandatory for all businesses in Australia that have employees.

Please note: BizCover does not offer workers’ compensation insurance at this time.

Real life claim scenarios

Here’s an example of how insurance helped an Australian real estate agent*:

A real estate agent received an infringement notice from the government that they had breached section 15(3) of the Building Energy Efficiency Disclosure Act 2010. The notice alleged that the agent failed to include a valid energy efficiency rating when they advertised the building for rent. The agent was required to pay a penalty of $42,500 for this breach.

Fortunately, the real estate agent had Management Liability insurance. The penalty was covered under the Statutory Liability section of the policy, meaning the agent did not have to pay the penalty from their own pocket.

How can real estate agents manage risk?

Business insurance can be a key part of risk management for real estate agents. However, preventing claims is preferable to making one. Here are some tips for managing risk and avoiding claims:

• Maintain detailed records and notes for each client or transaction, including writing down verbal instructions and discussions and sending follow up emails to create a paper trail.
• Keep up with changing legislation to ensure your agency remains compliant with state and federal law.
• Create accurate, verified, and truthful advertising for every property to avoid misleading or deceptive conduct claims.
• Conduct regular and document property inspections and address repair requests immediately.
• Point out obvious hazards at open houses, such as broken tiles or uneven surfaces.

* The claims examples are illustrative only and should not be taken as an indication of how any potential claim will be assessed or accepted. BizCover does not assess, manage, decide or settle claims, whether on your behalf or on behalf of any insurer. These, and whether a claim is covered, are determined solely by the insurer.