Businesses - What Insurances Does Real Estate Business Need?

What Insurances Does Real Estate Business Need?

Running a real estate business is not as easy as most people think.

While the job seems very simple—bridging the gap between potential homebuyers and tenants with sellers and leasers—there’s a wide gamut of risks involved in it. 

Many people choose the career path because real estate is always in demand and the business model helps them explore their innate sales skills.
However it’s not always that easy to work with clients and fulfilling their needs.

One of the biggest risks that you may face as a realtor is legal risks, something that can plunge your business into major financial adversity. It does not take a second for your real estate business to take a downturn following some negligence on your part while delivering your services as a realtor. Any mistake on your part—whether big or small—can potentially lead to expensive lawsuits, which can drain your financial resources, not to forget, your valuable time. Such situations can be incredibly devastating for your real estate business.

While these contingencies are not always evitable, business insurance can protect real estate businesses from many potential risks. To know more about insurance policy for real estate business, you can visit bizinsure.com.

There are many different types of insurance that you should consider as a real estate business owner. Let’s give you a glimpse of them here in this article:

1. General liability insurance

As a realtor, your primary job is to show various properties on sale to potential homebuyers, host open houses, and attend networking events. You may cause an injury to your client—something that can elicit a lawsuit against you. This is where you need general liability insurance, which can provide necessary protection to your business against another individual or business entity’s claims. These claims can be with regards to the following:

Physical injury: Claims of physical injuries come when your client suffers a bodily injury by tripping and falling over a carpet, rug, or any other object in your office. Since the client suffers an injury in your business premises, you will have to bear his or her medical costs, which can be substantial at times. 

Property damage: There may come a time when you may accidentally cause damage to an expensive property in the house you are showing to your client. It can be a costly vase, furniture, or an antique item. When that happens, you will have to bear the cost of replacing or repairing the property. 

In case these claims are initiated by the client in a court of law, you will have to pay hefty legal fees, which only general liability insurance can cover.

2. Professional liability insurance

Also known as Errors and Omissions (E&O) insurance, professional liability insurance provides the much-needed coverage for legal expenses that arise due to any harm or damage suffered by your client(s) because of your advice and guidance.
As a realtor, you will be dealing with clients who invest a huge sum of money on real estate. In case you commit a mistake while performing your duties as a realtor, your clients have the right to initiate legal action against you. It can be a failure to disclose crucial facts about the property, delay or the complete cancellation of the property sale, and negligence. 

Professional liability insurance provides coverage for court costs, attorney fees, administrative costs, compensation claims, investigation costs, and verdict ruled against you.
This insurance policy is a must for realtors because the costs mentioned above can be extremely high and can lead to the complete exhaustion of financial resources. So, in short, this policy can also provide you with the necessary financial protection if the property sale falls through because of misrepresentation, negligence, violation of fair dealing and good faith, and misleading or inaccurate advice.

3. Business owner insurance

The third type of insurance that you, as a real estate business owner, need to have is a business owner policy (BOP).
This insurance is a must for you if your business premises have computer systems, furniture, printers, and any other equipment that facilitates your operations as a business entity.
The policy insurance covers your commercial property and all its contents, such as equipment, signs, documents, and inventory, against fire, theft, water damage, and natural disasters.

The most noteworthy aspect of a business owner policy is that it’s a combination of business equipment and general liability insurance. Besides damage to commercial property caused by natural and human-made disasters, it also covers costs incurred due to injury to clients. Since these losses can also be hefty, you should definitely have this insurance policy to protect the liquidity status of your real estate business. 


Starting a real estate business is a good business idea, but you should always be aware of the various risks involved in the journey. Legal challenges and costs can come about in the most unexpected manner. 

This is where you are required to maintain a good degree of far-sightedness and proactivity. Getting insurance coverage is a good way to protect your business from potential risks.

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