General Liability Insurance Coverage for Real Estate Professionals
General Liability insurance, also known as business liability insurance, is a type of insurance policy that helps protect businesses from claims that happen as a result of normal business operations. General liability insurance typically provides coverage to businesses for bodily injury claims, medical payments and other general businesses liability exposures.
In addition to bodily injury claims, the general liability insurance policy includes coverage for personal and advertising injury, coverage for damage to premises rented to you, and includes a nominal limit for medical expenses. Personal and advertising injury is typically an infringement on a person or business’ personal or intellectual rights. It can include libel, slander and copyright infringement. Coverage for damage to premises rented to you is fairly self-explanatory. Coverage applies to unintentional damage to your business location.
Medical expense coverage provides a small limit that allows the insurance company to provide payment to an injured party without filing a lawsuit or going to court and engaging in legal proceedings. This coverage allows the insurer to pay small nuisance claims without engaging attorneys.
What Is Real Estate Agent General Liability Insurance?
The difference between General Liability Insurance and Professional Liability Insurance is what is covered by the policies.The general liability insurance policy provides coverage for hazards that are common to all businesses while the professional liability insurance policy, also known as errors and omissions insurance, provides insurance coverage for the specific hazards that are common to the real estate professional.
What is not covered under a General Liability Insurance policy?
While the general liability insurance policy does cover a broad range of things, there are some situations that the policy will not cover. If an employee of the real estate business is injured on the job, the general liability insurance policy will not cover the cost of those injuries. This type of claim would be covered under a workers compensation policy. The general liability policy also excludes coverage for risks that are deemed socially or financially uninsurable, such as war and riots.
Why do real estate agents need general liability insurance?
Almost every business has a need for general liability insurance. A general liability insurance policy can help your business remain financially stable if you are sued by a customer, a member of the general public, or another business. The general liability insurance policy provides coverage for legal costs as well as settlements and judgements.
What is Hired and Non-Owned Auto coverage?
An optional coverage that can, and should, be added to the commercial general liability policy is Hired and Non-Owned Auto coverage. This coverage extension is part of the general liability policy in the absence of commercial auto insurance. The majority of real estate businesses do not own the vehicles that are used in the day-to-day operation of the real estate business. Most agents and brokers use their own vehicles and have their own insurance policies. In the event of a severe incident, this means the business can be held liable for medical bills and puts the personal assets of the business owner at risk.
When dealing with a large number of agents who are all taking care of their own personal auto insurance policies, it is not practical to monitor each agent’s policy limits and current status at all times. There is always the possibility that the agent has inadequate limits or, for whatever reason, their policy may have lapsed. If an agent were to be held responsible for an auto accident, which may involve multiple vehicles or multiple injured people, there is a real possibility that that agent’s policy limits are inadequate.
By adding Hired and Non-Owned Auto coverage to the general liability insurance policy, the company is protected if claims are made against the insured company due to the actions of the agent. Always be sure to verify with the insurance agent that the insurance company that has issued the general liability policy includes coverage for independent contractors under the Hired and Non-Owned Auto coverage.
Who is an insured under the general liability insurance policy?
A general liability insurance policy is issued in the name of the insured real estate company and includes coverage for the owners of the real estate business, any employees of the company, as well as all real estate agents and brokers. As part of the general liability insurance policy, the term “insured” means any person or organization that qualifies as such under the policy heading “Who is an Insured.”
What are the common professional liability risks real estate agents face?
When an agent or broker lists a property for sale, both they and their company are taking a risk. The same can be said for the business of buying, leasing, property management, vacation rental, etc. All of the services that a client benefits from come with risk to your firm. At least ninety percent (90%+) of claims are filed on real estate agents by clients who are buyers or sellers.
It is in your best interest to lower your liability by implementing risk management procedures to reduce the likelihood of an incident that could lead to a claim. Some of the most common mistakes that lead to a claim are related to the property for sale. “Failure to Advise” is the most popular type of claim and is a catch-all term for a sell side agent not listing the property correctly or for the buy side agent not notifying the buyer of flaws, restrictions or obligations that are subject to the property. A strong E&O policy will provide cover for the real estate company when a seller or buyer claims negligence which has impacted the deal.
Finding the Right Partner
General Liability insurance for real estate professionals requires an insurance expert specializing in real estate who can help navigate the decision process of selecting business insurance. At PBI Group, we specialize in insurance for real estate professionals and can offer expert advice when selecting the right insurance company.
PBI Group is founded on the principles of trust, partnership, fanatical service and, most of all, one of the strongest E&O policies available. We do what we do because we believe there is a better way to buy general liability insurance than online portals with cheap premiums and minimalist coverage. When your policy comes up for review, don’t just accept your renewal quote without finding out the benefits that come along with the strongest policy on the market.