As authorities crack down on industry practices amid a chronic labour shortage, the necessity for real estate agents to protect themselves with business insurance is becoming even more important.
The real estate workforce is in a period of transition after a turbulent 2021, which saw job vacancies increase by 80%.
More than 3,000 property manager roles were listed on seek.com.au alone in mid-August, making up close to 10% of the national property management workforce, according to the Real Estate Institute of Australia (REIA) – and a quick search will likely show you a similar result if you are reading this in 2022.
This struggle to recruit staff has coincided with a string of incidents involving real estate agents being fined due to various reasons regarding their professional service.
From NSW agents being hit with $250k in fines due to underquoting to a real estate agency in Melbourne breaching Covid-19 renting laws, agents have been in the news for all the wrong reasons.
With an inexperienced workforce and authorities on the lookout, real estate agents may need to ensure they have financial safeguards in place to protect themselves from claims.
“Insurance is a necessary part of being a real estate agent, but that doesn’t mean it has to be expensive,” says Jane Mason, Head of Product, Channels and Risk at business insurance platform BizCover.
“At BizCover, we’ve made some changes to our Professional Indemnity (PI), Public Liability and other real estate agent insurance cover, and there’s a good chance you could be saving on your policy.”
What insurance cover to get?
While there are plenty of other business insurance policies that real estate agents might consider, Professional Indemnity (PI) insurance is the only policy type required for agents either by an industry body or at state level.
Buying or selling property is a complex process that clients pay real estate agents to manage. If a real estate agent is negligent in their services, it could financially damage their clients.
“PI cover helps real estate agents by protecting against losses arising from errors or omissions in the practice of their profession,” says Mason.
“From misleading or deceptive conduct and poor property management to some statutory breaches, PI Cover is there to cover the costs if a client were to claim against you.”
Is it mandatory?
As with many occupations in Australia, the insurance requirements for real estate agents vary from state to state.
New South Wales (NSW) is the only jurisdiction that requires real estate licensees to hold a policy that provides at least $1 million of PI cover for any one claim and $3 million in the aggregate for all claims made during the insurance period.
This is the case for many occupations within the NSW real estate industry, including real estate agents, stock and station agents, business agents, strata and community managing agents, and on-site residential property managers.
While Western Australia (WA) doesn’t legislate any insurance requirements for real estate agents, the industry’s state governing body, REIWA, requires a minimum of $1 million of PI insurance to obtain a professional association membership.
Tasmania’s industry body, REIT, also requires member agents to hold Professional Indemnity insurance.
Jurisdictions such as Queensland, Victoria, South Australia and the Northern Territory do not have legislative or industry requirements for PI insurance or any other business insurance. Still, many of the state’s industry bodies heavily recommend the product, given the risks associated with giving advice.
Where to get covered
Whether or not real estate agents are required by law or its governing body, the industry is frequently in the crosshairs of risk stemming from their professional service.
For time-poor real estate agents, the often-manual process of getting business insurance can be difficult to navigate.
BizCover is an online platform that has tailored products for real estate agents where they can compare multiple quotes and get covered in minutes.
“More than 80% of our customers save when they switch policies with BizCover,” says Mason.
“From Zahid in New South Wales, who saved $300 on their PI insurance in May, to Kosta in South Australia, who saved $5001 on their PI and Public Liability insurance in June2; these are actual agents saving money and getting protected.”
1- savings made in May 2022. 2- savings made in June 2022. This information is provided as a guide only and may not reflect pricing for your particular business, as individual underwriting criteria will apply.
*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this page is general only and should not be relied upon as advice. Public Liability Insurance is a trading name of BizCover Limited. BizCover Limited is owned by BizCover Pty Ltd (ABN 68 127 707 975). © 2022 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769
