Whether you’re a real estate agent dealing in home sales or rentals, working in the property space means you’re in a high-stakes environment from a risk perspective. From the advice you give to clients or the potential for injuries at managed properties, there’s plenty that falls at the feet of agents.
That’s why taking the time to secure the right insurance coverage for yourself, your business and your employees is essential.
What insurance do I need as a real estate agent?
There are two categories of business insurance you’ll need to consider as a real estate agent: mandatory cover and optional (but still valuable) cover. In parts of Australia, professional indemnity (PI) insurance is a compulsory part of operating as an agent.
PI insurance offers cover for claims of negligence, omission or errors and misleading conduct, as well as defence and settlement costs if such claims are escalated to court. There are, of course, terms and conditions for what is and isn’t included in a PI insurance policy, which depend on who you purchase your policy with, so it’s crucial to review the PDS carefully before you buy.
The exact requirements for PI insurance for real estate agents will depend on where you’re operating in Australia. New South Wales is the only state or territory where PI cover is mandated for real estate agents, which is as follows:
- At least $1 million for an individual claim
- At least $3 million overall
Western Australia’s professional real estate association, REIWA, requires a minimum of $1 million worth of PI insurance cover, which is the same for Accredited Agencies with REIQ in Queensland.
Policies are also mandatory for members of REITA in Tasmania. However, while other organisations don’t necessarily require you to have PI cover, it’s always strongly recommended based on the number of liability risks that you’ll face.
Other real estate insurance policies to consider
It isn’t just PI insurance that you’ll need to consider, though. Some of the other policies that are likely to come in handy for real estate businesses are:
| Type of insurance | What it covers |
|---|---|
| Public liability insurance | Claims of injury to a third party or damage to their property due to your business’ negligent activity, such as slipping on a wet floor. Real estate agents can be liable to such claims both in their own office and due to accidents occurring in rental properties or open inspections. |
| Cyber liability insurance | Claims of a breach of privacy due to a cyber-attack and expenses incurred as a result of sustaining an attack, including business interruption. Agencies could face significant reputational damage and legal action if their sensitive information were to leak. |
| Business contents insurance | Damage to your business’ contents, such as equipment, furniture, artwork and inventory. |
| Commercial building insurance | Damage to your business’ physical premises and fixtures or fittings due to an insured event, such as fire, theft, extreme weather and impact damage. |
| Management liability insurance | Claims of unfair dismissal, defamation, sexual harassment, OH&S breaches and legal and compensatory costs associated with these claims. |
How much will my real estate insurance cost?
According to BizCover, the average costs of different business insurance policies for real estate agencies are:
- Professional indemnity insurance: $166 per month
- Cyber liability insurance: $98 per month
- Management liability insurance: $91 per month
- Building insurance: $42 per month
- Contents insurance: $42 per month
- Public liability insurance: $41 per month
As you can see, purchasing all these policies individually would be mightily expensive. That’s why business insurers offer packages that allow you to bundle multiple policies together at a discount.
In reality, there’s a wide range of factors specific to your real estate business that’ll dictate the cost of your policy. These include:
- The size of your business: the more agents you employ, properties you manage and money you turn over, the greater the perceived risk of a claim. Bigger agencies will pay more for coverage in almost all cases.
- The location of your business: different states and territories, and the cities and towns within them, pose different environmental and other risks. Where you operate will be of importance to your insurer.
- Your record of business insurance claims: businesses with more insurance claims in the past will pay more for their coverage, as they’ll be deemed a greater insurance risk than another agency with no claims.
- The level of coverage you take out: by choosing a greater sum insured, you’ll be hit with a higher premium. Finding the right policy is all about making sure you aren’t underinsured without getting more coverage than you need.
