As an agent, have you ever had a client who has accused you of providing them with poor advice?
Have they ever said you didn’t do a good job promoting their property?
Have you accidentally used incorrect data when preparing reports?
Real estate agents are not just sales people, you are trusted advisors. And as trusted advisors, your clients rely on your knowledge, expertise and guidance when listing, pricing and selling or leasing their property.
Trouble is, if something goes wrong, that ‘advisor’ status can really come back to bite you!
Having the right insurance in real estate, can mean the difference between the end of a soured client relationship, and the end of your employment!
Why do real estate agents need insurance?
Real estate agents and agencies need insurance for a variety of different reasons.
Like every business, you need to be insured in case you injure someone, or they are injured on your property or as a result of something you are doing.
You also need to be insured if you employ staff, to cover any workplace-related injury that might occur.
But as an agent, and an expert, with the primary role of leading the sales or rental process, you also need to be insured against providing poor or ill-informed advice. If you’re not, and your error causes damage to your client, buyer or someone else, you could find yourself well out of pocket!
What insurance does an agent need?
As is clear above, an agency operating without Public Liability or Workcover insurance is an agency that shouldn’t be operating.
Beyond that, Professional Indemnity insurance is one of the most important and necessary ways you can protect yourself against one of those errors mentioned earlier.
More specifically, Professional Indemnity insurance is designed for professionals who provide a service or advice to their customers.
It covers you for damages another party may incur due to flawed professional advice and failure to execute the required level of skill to do the job for which you claim you are an expert. Essentially, it is what you need, to protect yourself against an ‘act, omission or breach of duty’.
As an agent who relies on your ability to earn commission, you also rely on your health and well-being. If you fall ill or get hurt, you may not be able to work, and if you are self-employed, not working, means not getting paid.
Income protection can be highly valuable to people who are self-employed, as it can give you the opportunity to recover from an illness or injury that prevents you from working, without the pressure of unpaid bills piling up!
What to look for in an insurance policy
When starting out or approaching policy renewal, one of the most important actions you can take is research.
Research, research, research!
So many agents feel cheated by insurance that costs an arm and a leg, but doesn’t pay out when they need it. Consider all factors of a policy carefully, before signing on:
The level of cover
While a good, cheap premium might seem like a win, if it also means a significant drop in the level of cover you receive, it might actually be a loss!
Finding the right insurance, starts by assessing your risk level. This doesn’t mean simply thinking ‘I’m a good agent, a good guy, I do my homework’ and ignoring the idea that you might ever be sued.
It means thinking about the types of property you are dealing with, its value, what people might stand to lose if you get it wrong and the people you will most often be working with.
All of this information can help you assess risk and work out the level of cover you need.
Compare the premium
Who said the premium wasn’t important?! Of course it is, there’s just no point in a low premium that offers inadequate cover.
Once you know your criteria for the cover you need, shop around!
Talk to different insurance providers and as importantly, listen to word-of-mouth from colleagues or industry associates, and find the best value option for the highest cover.
Interestingly – frustratingly – insurance providers can be another of those organisations that somehow manage to offer you a discount when you’ve been a loyal customer and then threaten to move on.
This means they potentially have wiggle room, right from the start.
Don’t be afraid to negotiate, especially if you are seeking to take out multiple forms of insurance.
Look into the provider
Just as policies aren’t all created equal, neither are insurance providers.
It could be they have more or less experience in the real estate industry. Perhaps they have unbeatable customer service. Maybe they have terrible reviews.
Just as you compared your premium, also compare the company that is looking to provide it to you.
Know your excess
This is one that catches a lot of people out! Either, they don’t think to check the excess, they believe nothing bad will ever happen to them so they don’t focus on the detail, or they focus too much on the premium and the level of coverage.
Excess is the part of the cost you need to pay yourself, when you make a claim. It’s the part not covered by the insurance company.
Before signing on with any provider, review the conditions and the excess very carefully, and consider these in combination with any limitations of coverage.
Why do this? Because if the amount you can claim is limited and you have to pay a hefty excess, then the insurance policy may not be worth it!
Whether we like it or not, insurance is a big part of doing business in real estate, so listen to other people with other premiums, do your research and find a provider and policy that really works for you. If you don’t have time to research, research, research, contact a broker and let them do the hard work for you!