Commercial real estate agencies help their clients buy, sell, or rent real estate. With a lot of money on the line for all of the interested parties, commercial real estate agents play an essential role in commercial real estate transactions, and when something goes wrong, the stakes are very high for everyone involved. And often it’s the agent or broker who is caught in the middle or even takes the blame.
As you work for your diverse set of clients, your agency is subject to numerous business risks, from typical property and physical injury risks in your office, to serious financial risks if a client or someone else sues you. Your commercial real estate agency insurance can help you cover many of your risks and avoid devastating financial losses.
Why Do You Need Commercial Real Estate Agency Insurance?
Commercial real estate agencies are businesses that are experts in the field of real estate. They help clients with the purchase, sale, or lease of commercial properties.
Commercial real estate agencies may represent a buyer, seller, or a tenant, and serve as a mediator between the parties ensuring that the client receives the best terms, value, and conditions for the transaction. For many clients, a commercial real estate transaction is far more important than a simple sale or acquisition of a property; it’s a long-term investment.
In order to complete their work, commercial real estate agencies may engage in exhaustive searches for properties that meet their clients’ criteria. They recommend optimal purchase or listing prices, search for qualified buyers, and negotiate terms for property sales. Commercial real estate agencies also help landlords and tenants lease space, with activities including establishing rates, finding tenants, finding suitable spaces, and negotiating lease terms.
In any given transaction, a commercial real estate agency may serve as a listing agent, a tenant representative, or both.
Clients who hire commercial real estate agencies place a great deal of trust in their professionalism and expertise. Buying and selling commercial property is a costly and critical process for any company. Unfortunately, there are many ways in which errors are made or other problems occur, causing somebody (or everybody) to lose money or be otherwise harmed.
If you own a commercial real estate agency, you need tailored business insurance policies to ensure that you can weather the storm of any claims against you, whether or not the claims have merit. Without comprehensive insurance coverage, your entire livelihood could be at risk.
Professional Liability Insurance for Commercial Real Estate Agencies
Your clients place a great deal of trust in your expertise and abilities. You need to protect yourself, because at any time you could miss an important detail, transpose a number, provide bad advise, or commit some other type of error that leads to a financial loss for one of your clients.
That’s why you need professional liability insurance, or errors and omissions (E&O) insurance. If your client thinks you’ve made a mistake that has cost him financially, you may be sued. Professional liability insurance covers the costs of lawsuits related to your professional advice or services, whether you are sued by an overly litigious client (you still have to defend yourself if the claim is unfounded!) or if you are truly negligent.
What might lead to a professional services lawsuit? Commercial real estate agencies can be sued based on:
- Actual or alleged errors
- Professional negligence
- Breach of duty
- Misleading statements
- Claims resulting from the performance or non-performance of professional services.
You could misstate the square footage on a property, misstate a closing date, miss important details in paperwork, or fail to inform a buyer about a mold problem in a building.
But with E&O insurance, you have a financial shield. Professional liability insurance protects real estate professionals, their partners, their employees, and the partnership or corporation from damages caused by failing to provide professional services. It is needed for these types of claims in order to pay defense costs as well as any settlements or judgments rendered against you.
Because of the wide variation in the types of businesses or professions that need E&O coverage, there is neither standard policy language nor a one-size-fits-all solution. Your commercial real estate agency professional liability policy should reflect your needs and address the unique exposures you face.
General Liability Coverage for Commercial Real Estate Agencies
Like any other small business, you need general liability insurance to protect you from other sources of lawsuits.
Commercial general liability (CGL) insurance provides broad coverage for lawsuits that may be filed against your business. CGL insurance covers third party bodily injury and property damage claims against your agency. It helps you pay for direct costs related to a claim (e.g., medical expenses, repairing or replacing damaged property) as well as your legal defense if you are sued. (Note: general liability insurance excludes coverage for professional liability claims.)
Because you regularly have members of the general public (customers, vendors, delivery persons, cleaning crew) on your business premises, this coverage is essential. If someone trips and falls at your office and is injured, they may sue you for damages. The CGL policy will pay for attorney fees, court costs, and even settlements or court-ordered judgments.
And if you damage a client’s property or a commercial building during a tour, your CGL policy offers coverage here as well.
Commercial Property Coverage for Commercial Real Estate Agencies
Whether you own your building or lease your office space, you need some type of protection for your business property. Commercial property insurance covers damage to a building and its contents (computers, office equipment and furniture, supplies, fixtures, etc.) if it is damaged by a weather event, fire, theft, vandalism, and other causes of loss.
Most business property policies also offer coverage for business interruption which helps you pay for ongoing expenses if you must temporarily close or relocate due to a covered property loss (e.g., a fire).
Talk to Your Independent Insurance Agent about Additional Coverage
Talk to your independent insurance agent about your need for the following additional types of insurance for your commercial real estate agency. Some may be purchased as stand-alone policies, while others can be added as endorsements to a basic business liability or property policy.
- Computers and media coverage — also called electronic data processing (EDP) insurance — pays for lost data and related lost income if your computers or network are damaged by theft, vandalism, viruses, or malware. It may pay for loss of data or software and physical damage to computers or hardware.
- Cyber liability insurance provides coverage in the event of a data breach involving your business. It helps pay for the costs of notifying affected clients, as well as legal fees, public relations costs, and investigative costs.
- Commercial auto insurance covers any vehicles your company owns. It provides liability coverage if you or an employee injure someone or cause property damage while driving a company vehicle. If your agents drive personal vehicles for business purposes (e.g., while showing commercial spaces or traveling for various property tours) you must have non-owned or hired auto liability coverage to protect your company from accident-related costs.
- Workers’ compensation insurance is typically required for any business that has employees, and pays for lost income and medical expenses for employees who are injured on the job.
- Employment practices liability insurance provides coverage for violations of antidiscrimination regulations. It protects a business owner if a prospective, current, or former employee sues based on discriminatory employment practices.
- Directors and officers (D&O) liability insurance provides protection for directors and officers of companies against legal judgments and costs arising from unlawful acts, erroneous investment decisions, failure to maintain property, releasing confidential information, hiring and firing decisions, conflicts of interest, gross negligence, and errors of many other types. It is recommended for directors and officers who are accountable to investors, shareholders, creditors, employees and customers.
- Commercial umbrella insurance provides liability protection above and beyond the liability coverage included in a commercial general liability and business auto policy. A commercial umbrella policy would pay when your other liability coverage has been exhausted.
How Much Does Commercial Real Estate Agency Insurance Cost?
The cost of commercial real estate agency insurance depends on several factors, including the size of your business and the types of policies you need to cover all of your unique risks.
With so many variables (e.g., number of employees, physical assets of varying types and values, the location and size of your building or office space, the potential for errors and omissions), business insurance costs will vary among commercial real estate agencies.
Find and Compare Quotes
An independent agent can work with you one-on-one to determine the types and amounts of coverage you need to protect your commercial real estate agency from a variety of costly problems. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice.
Benefits of an Independent Agent
Our agents simplify the search process for finding the right commercial real estate agency insurance. They’ll walk you through the handpicked policy options and explain the details and options.
Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately.
The Lowdown on Online Quotes
Online quotes can be tempting. They are fast and easy to get — but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.
Online quotes can’t and don’t see the whole picture. They can omit important coverage that will leave you devastated if something unexpected happens. And they can leave out cost-saving opportunities that an agent can help you take advantage of.
Instead of getting an online quote, find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs.
TrustedChoice.com Article | Reviewed by Paul Martin
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