What Insurance Do Real Estate Agents Need

To become a real estate agent, you have to possess excellent people skills. These skills will help you with buying and selling property, as well as the many other things that make up the rest of the industry.

But it’s safe to say that not every agent is safe from liability. These liabilities can come in all forms, so an agent has to maintain an insurance policy to protect them from such liabilities.

More so, certain licenses are a must. This means that an agent cannot operate within that state if they do not have the required license.

While all this might sound confusing, we’re here to tell you what insurance real estate agents need to have. With all that said, let’s start.

Source: cpacanada.ca

How Much Do Insurances Cost?

There are all kinds of types of insurance out there. From General Liability Insurance to Professional Liability, all of them vary in cost. More so, each type of insurance comes with different tiers. A $1,000,000 General Liability Insurance policy costs only $27 a month. The bigger and more expensive version, which costs $2,000,000, costs $39.

The price of the insurance depends on multiple factors. The most important one of all is location. Certain states have more expensive policies while others are far cheaper. Other factors include size, payroll, and sales, and experience of the agent.

Types of Insurances

It’s important to note that there are three specific policies that each agent must have if they are to operate as a real estate agent within a market. There are also two additional policies that we will also explain.

The types of insurance are the following:

Source: The Messenger
  • General Liability

This one is pretty simple as it is the sort of insurance policy that every business has to have. And real estate agencies and agents fall within this category.

The rule is simple. If someone, a client, injured himself while in your offices, you would be then held accountable and would need to pay damages. These sorts of injuries occur mostly due to slipping and falling.

Well, a general liability policy protects an agent by keeping them covered in the case of an accident.

An agent must have this policy as it also protects them from copyright infringements and privacy invasion. These are two things that happen very often in the industry.

  • Property Insurance

The next one is also a must as it takes into account an agent’s office. Property insurance simply means that you are insured and covered by a policy that protects you in the case of risks. These risks come in the forms of fire, flood, earthquakes, and other natural factors.

Source: Strategic Insurance Partners
  • Professional Liability

And the last policy is a professional liability policy that covers you in the case of claims of negligence against you or your real estate business. You might find this policy under different names such as E&O (Errors and Omissions).

In addition to these three, there are two more insurance policies that you might need. Those are the Business Owner’s Policy or BOP for short, and a Workers’ Compensation policy.

A BOP policy is essentially a general liability policy and property insurance rolled into one, while a Workers’ Compensation policy protects your employees if something happens to them while at work. This mostly takes into account injuries.

The three policies we mentioned are a must for any real estate agent, according to title agency experts from Bergen, sunnysidetitle. The two other policies do come in handy and especially if agents want to roll one or more policies into one.

How Do You Benefit From These Policies?

Now comes the part of the article where we explain to you how a real estate agent benefits by taking these insurance policies. While the name of each policy mostly gives out the reasons why every agent should familiarize with the benefits of a General Liability or Property Insurance policy.

Source: The Ferrara Law Firm
  • In Case of Injury

We live in an age where everyone tries to get one up on another. And there is no shortage of people looking to exploit the system that protects us.

You’d be surprised as to how many lawsuits are filed each year because of injuries at the workplace. Real estate agents aren’t exempt from that, as not every agent has a General Liability insurance policy.

According to the U.S. Small Business Administration, more and more agents are taking BOP policies that roll multiple insurance policies into one. This also protects agents from claims of negligence and accidents.

  • In Case of Property Damage

Every business owner, including real estate agents, can benefit from property insurance in the case of natural accidents. Certain states will not allow you to set up shop without one such policy. But property damage can seriously hamper your business, regardless if you’re a solo practitioner or a big real estate agency.

Source: The Mahone Firm
  • In Case of Litigation Costs

And the last benefit every agent gets by taking up insurance policies has to do with protection against lawsuits.

We live in an age where sending information from one place to another is relatively easy. Real estate agents communicate with their clients through numerous means such as email, phone, chat, etc. In this line of work, keeping your clients well informed is a must. This is especially true if your client is expecting an offer.

If the information somehow slips through the cracks, then certain issues might arise as a side effect. An example of how such policy protects you is if an agent doesn’t relay all the information regarding a particular property.

One famous example is when real estate agents sold a home to a buyer but failed to disclose that the house was a site of a recent suicide. The buyer was furious and ended up suing the real estate agents, and won after seven years.

The agents were covered by Professional Liability so the policy covered a bulk of their legal bills.


Insurance policies exist to protect real estate agents. While some policies are a must and you cannot operate without them, others are optional. But it’s better to be safe than to be sorry.