Real estate is a highly competitive business and ensuring you are fully protected while still being able to control costs is crucial.

The right insurance policy has never been more important, but in many states, Real Estate Agents and Brokers Professional Liability premiums have been steadily rising.

This sharp increase in premiums, combined with a shrinking marketplace, as the number of carriers offering this cover decreases. However, despite this reduction, it is still a crucial level of coverage for professionals. If you are looking for Real Estate Agents and Brokers Professional Liability, you may be wondering what exactly it protects from and what endorsement options you have available.

What does Real Estate Agents and Brokers Professional Liability protect against?

This type of policy protects against any loss that occurs due to a wrongful act being committed by a real estate agent during the course of their realty services. A Real Estate Agents and Brokers Professional Liability Policy agrees to pay set amounts that the insured is obligated to pay as damages due to this wrongful act.

An example of this is Granite Condominiums suing Great Place Real Estate because of the loss of value to the condominium association and members due to errors by Great Place. The insurance company would then reach a settlement agreement with Granite Condominiums, paying them a set amount of damages as outlined in the lawsuit.

Typically, these wrongful acts will consist of:

  1. An act committed, or alleged to have been committed, by the insured.
  2. An act, error, or omission that must have actually occurred, or is alleged to have occurred.
  3. An act, error, or omission that arises from a professional service.
  4. A professional service that should or could have been rendered, which was not carried out.
  5. Damages that arise from alleged or actual acts.

Alongside covering the wrongful acts of the insured, the insurance provider will also handle the high costs and expenses that occur from defending lawsuits. It is these rising costs that are leading to many providers either stopping providing this level of coverage or significantly increasing their premiums.

A Real Estate Agents and Brokers Professional Liability Policy will also typically include further levels of coverage such as Spousal Liability. This endorsement protects the assets of the insured's spouse that may be named in any lawsuit. Additional coverage options include:

  • Protection of innocent insureds
  • Lock box liability (a loss caused by a realtor's mishandling of resident keys)
  • Open house claims
  • Claims raised based on violations of the Civil Rights Act, the Fair Housing Act, or any type of rule, statute, or similar regulations.

Although a Real Estate Agents and Brokers Professional Liability Policy provides a wide level of cover, there are various situations that are not eligible for coverage. These situations include instances of abuse, bodily injury, damage to property, adequate insurance, contractual liability, criminal activities, discrimination, electronic data, and employment-related practices. These exclusions are typically covered by other forms of insurance or are ineligible as a matter of public policy.

If you are looking for a Real Estate Agents and Brokers Professional Liability Policy, then when comparing options available, you should examine areas such as deductible forgiveness, golden hammer clauses, and defense limits inside and outside the limits. As these premiums rise and the number of carriers offering this protection decreases, examining these additional costs can help you make significant savings.

If you are unsure, then you should talk to your insurance agent and see which policies they recommend and why, asking them to highlight the benefits of each option.


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