Real estate agencies face a unique mix of risks — from on-site accidents and client claims to technology failures and market disruptions. Having the right business insurance portfolio protects your revenue, reputation, and clients. Two cornerstones are General Liability and Business Interruption insurance, but a complete program often includes errors & omissions Professional Indemnity, cyber liability, and more. This guide explains what each key policy covers, real-world scenarios, and practical steps for choosing the right limits and endorsements.
Why General Liability Is Essential
General Liability (GL) protects your agency from third-party claims for bodily injury, property damage, and certain advertising or personal injury exposures. For real estate professionals, GL covers common risks such as:
– A prospective buyer slips and falls at a listed property during an open house.
– A delivery person damages a homeowner’s fence while on an appointment.
– Allegations of libel or slander in marketing materials (depending on policy wording).
Typical coverages and considerations
– Bodily injury/property damage: Pays medical costs, property repair, and legal defense if your agency is found liable.
– Personal & advertising injury: Covers claims like defamation or copyright infringement in ads.
– Limits: Many agencies start with $1M per occurrence / $2M aggregate; increase based on size, risk profile, and contract requirements.
– Exclusions: GL does not cover professional mistakes (E&O) or intentional acts.
Why Business Interruption Insurance Protects Your Bottom Line
Business Interruption (BI) insurance reimburses lost income and operating expenses if a covered physical loss forces your business to temporarily close or reduces revenue. For real estate agencies, BI can be crucial after events like a fire, major storm damage to office space, or prolonged access restrictions to key properties.
Key features
– Income replacement: Pays loss of revenue based on prior financial records.
– Extra expenses: Covers necessary costs to keep operating (temporary office rent, equipment rental).
– Civil authority/contingent BI: Some policies cover losses when government action prevents access or when a key vendor/property is damaged.
– Period of recovery and waiting period: BI has a waiting period (e.g., 48–72 hours) and a recovery period that should reflect your business’ time to return to normal.
Common Real-World Scenarios
– Open house injury: A client is injured at an open house; GL covers medical payments and legal defense.
– Office fire: A kitchen fire damages your office; BI replaces lost commissions and pays temporary office rent while repairs occur.
– Cyber incident: A phishing attack exposes client data and disrupts operations — cyber liability and BI (if included for non-physical losses) help cover response and income loss.
– Listing error: A wrong measurement in a listing leads to a client claim — this is typically an E&O exposure, not GL.
Other Policies Real Estate Agencies Should Consider
– Professional Liability / Errors & Omissions (E&O): Protects against negligence, missed disclosures, and contract mistakes.
– Cyber Liability: Covers data breaches, notification costs, and cyber extortion.
– Property Insurance: Protects office equipment, furniture, and policy may include business personal property.
– Workers’ Compensation: Required in most jurisdictions for employees; covers workplace injuries.
– Employment Practices Liability (EPLI): Protects against wrongful termination, discrimination, and harassment claims.
– Directors & Officers (D&O): For brokerages with boards or corporate governance exposures.
How to Choose the Right Coverage
– Assess risk: Map your exposures (open houses, rental property showings, remote work, vendor dependencies).
– Review contract requirements: Some listings, property management contracts, or MLS rules require specific limits or policy types.
– Compare coverage forms: Not all GL or BI forms are equal — check definitions, endorsements, and exclusions.
– Consider endorsements: Contingent BI, cyber extensions, hired/non-owned auto, and professional liability may be necessary.
– Work with a broker who understands real estate: They can tailor limits, bundling, and risk management recommendations.
Practical Tips to Reduce Premiums and Claims
– Implement safety protocols for showings and open houses (sign-in sheets, companions, PPE).
– Use standard listing checklists and documentation to reduce E&O exposure.
– Regularly back up data, enable MFA, and train staff on phishing to lower cyber risk.
– Maintain property maintenance and inspection logs.
– Review policies annually and after business growth or new services.
Short Insurance Checklist for Real Estate Agencies
– General Liability: Yes / Limits: 20 Million
– Business Interruption: Yes / Waiting period: 7 / Recovery period: 12 months
– E&O / Professional Liability: Yes / Limits: $1million – $5 Million depending on Agency exposures
– Cyber Liability: Yes / Limits: $500 – $2 million, Depending on agency exposures
– Property Insurance: Yes / Replacement value: Contents
– Workers’ Compensation: Yes / State compliance:
Frequently Asked Questions
Q: Does General Liability cover client lawsuits over a bad deal?
A: No — GL typically covers third-party bodily injury and property damage. Claims alleging professional negligence or advice are usually covered by E&O/professional liability.
Q: Will Business Interruption cover pandemic-related closures?
A: Many standard BI policies require a physical property loss to trigger coverage. Pandemic coverage may be limited or excluded; review policy language and consider specialized coverage if needed.
Q: How much coverage should a small agency carry?
A: Many small agencies start with $1M/$2M GL and $500K–$1M E&O, but needs vary. Compute based on revenue, contract requirements, and risk tolerance.
Call to Action
Protect your agency’s revenue and reputation before a loss occurs. Review your current policies, get a risk assessment from Sentinel Risk Managers who specialises in real estate, and update coverage to match today’s exposures. For a tailored quote and policy comparison, contact your broker or request a consultation.
