Compared to other careers, real estate agents face a host of challenges. From needing insight across property law to marketing, sales, and negotiation, one certainly has their work cut out for them in this industry.
If you’re actively pursuing a realtor business, running an agency has aspects to consider before diving in. The most important is knowing your risks and how to avoid them. To help you get a clearer picture of what liabilities you face as a real estate agent, we’ve put together four primary challenges to avoid and what you can do about them.
Failure to Deliver Service
In situations where a home seller or buyer feels you didn’t do your best to sell their home for a fair price, they may claim you failed to deliver on your promised services. For example, maybe they believe you didn’t perform your due diligence when researching a property’s value, or you missed a hidden lien that has now jeopardized their ownership. This often falls under a negligence claim, and the disgruntled client might sue you for financial damages.
When selling a home or commercial property, every detail must be itemized so all parties involved are fully informed and have the same expectations about the transaction. Unfortunately, disclosure mistakes get made during this process which can lead to accusations of your having intentionally omitted key details to sell the building.
For instance, let’s say there is a storage shed in the backyard the buyer expects to be included, but the seller won’t part with it and takes it with them. This could lead to a lawsuit in some situations. The same could be said for not disclosing a death on the property. Many states require this to be made known to buyers, and withholding this information could unfairly affect someone’s decision to buy or not.
Property and Auto Accidents
Your job as a real estate agent will have you travel far and wide and host prospective buyers on the premises for sale. But, what happens if you get into a car accident traveling to a showing? What if someone falls on a loose stair during an open house?
You could be on the hook for these issues if you didn’t take care to prepare the property ahead of time or didn’t have an appropriate warning about the clear and present dangers on the premises. While the current owner’s property and/or general liability coverage would possibly handle the claim, you may still find yourself at fault professionally for not addressing these safety issues before visitors arrived. You may even be sued for negligence if you knew there were dangers and did nothing to fix them before having your open house.
As an agent, you must determine if someone qualifies for a property you have for sale. You also have to deliver the bad news of their offers being rejected. Some prospects will take this particularly hard and might allege you unfairly discriminated against them because of age, sex, religion, or race. Even if this isn’t true, the mere accusation can severely damage your reputation as a realtor and impact your business.
How Real Estate Agent Insurance Can Mitigate These Risks
Real estate professionals often rely on the best business insurance in Ontario to protect their services from costly damage claims made against them. When you purchase this type of policy, an insurer typically bundles several coverages to simplify your plan and reduce costs.
The following insurances are what realtors rely on to protect their clients, employees, and business from liability:
General Liability Coverage
General liability is the first insurance you should buy as a real estate agent. These policies protect your service and clients when accidents happen. For instance, if you’re serving red wine at an open house and a prospective buyer spills it on the persian rug in the foyer. With this coverage, the homeowner’s claim for the cleaning or replacing of the carpet gets handled by your insurer.
Errors & Omissions (Professional Liability)
As a real estate professional, there are some mistakes you might make that don’t fall under general liability coverage but still cause financial harm to your client. Also called professional liability insurance, E&O policies protect your realty business against claims involving your professional services, such as:
- Inaccurate advice
- Errors and omissions
If a buyer or seller sues you for any of the above claims, your policy will cover your attorney’s fees, related court costs, settlements, judgments, and administrative expenses.
Traveling will play a significant part in your day-to-day routine. For example, if your vehicle gets totaled in an accident on the way to a showing, will you be able to buy a new car immediately? And don’t count on your personal insurance to handle collision claims if you are traveling for business. Only commercial policies cover this type of use, so make sure to purchase one, or you risk shouldering the entire cost of an accident on your own.
Many realtors take on additional staff to handle routine tasks like title searches, scheduling, and administrative duties. As an employer, you must carry workers’ compensation coverage should an employee get injured. This is a mandatory requirement in nearly every state, though the threshold can vary from having one employee or more to at least two.
Workers’ comp policies handle everything from lost income and hospital bills to therapy and transportation costs to appointments for your employee. Carrying this coverage shows your team’s well-being and can save your bottom line from an often expensive medical liability that can threaten the financial security of your business.
Success Begins with Real Estate Agent Insurance Coverage
With all the daily risks you will encounter while conducting real estate transactions, you probably realize you could lose everything with a single uninsured injury claim. Luckily, you can get real estate agent insurance cost in minutes and have peace of mind while helping clients buy their dream homes. Not sure the level of coverage you need? A knowledgeable insurance representative can make recommendations based on their own experience writing policies for realtors like yourself. So, don’t wait and protect your business today.
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