What Kind of Insurance Do Real Estate Brokers Need?


As with any business, real estate comes with some risks. Being a real estate professional, your clients trust you to provide accurate information and always present the best options available. But even the most skilled real estate agent or broker can make mistakes and be subject to potential lawsuits and claims.

Buyers or sellers can file malpractice lawsuits accusing you of misrepresentation, negligence, violations of legal duties, and even accidental property damage. The smallest of errors can lead to a costly legal action that can scar your business image and severely affect your finances if you don’t prepare. 

Here are some insurance options that you should consider to ensure that your company has adequate coverage.

General Liability Insurance

This policy is ideal for covering the basic risks faced by a real estate agent or broker. It can even be purchased as part of a policy package—such as the Business Owner’s Policy (BOP)—allowing for more security at a lower price.

General Liability Insurance provides coverage for the most common types of lawsuits:

  • Physical injuries in your business property, including accidents with clients
  • Property loss or damage
  • Multiple advertising injuries (like reputational harm)

This means that you will be covered if a client slips on the recently waxed floor of your office, breaking an arm, or if you accidentally damage a property under your responsibility while showing it to potential buyers.

Errors and Omissions Insurance

Also known as Professional Liability Insurance, errors and omissions insurance for real estate professionals can cover legal fees in the event of a lawsuit related to accusations of negligence, professional mistakes, or failure to deliver promised services. If you are accused of damages caused by an error you made or something you didn’t do while performing your services, this coverage comes into play.

The policy is helpful in the case of providing inaccurate information or omitting valuable details to a client. Be aware that most policies cover only negligent and unintended acts, not deliberate and intentional acts or errors.

Workers’ Compensation Insurance

This coverage is so crucial that it is required by law in almost all states. If your real estate agency has employees, workers’ comp can help cover medical bills, missed wages, and legal costs if they get injured on the job.

Although you may not think of real estate as dangerous, workers’ compensation insurance is essential for real estate businesses. Many places regularly visited by your employees may be under construction or surrounded by hazards, generating risks of injuries, accidents, and possibly serious illnesses.

Business Owner’s Policy

BOP is usually bundled with General Liability Insurance under a single plan, making it one of the most efficient options for agents and brokers to save money and still guarantee adequate coverage. The policy covers common risks like:

  • Damage to commercial or customer property
  • Damage to business equipment
  • Lawsuits for customer injuries or property damage
  • Lawsuits for copyright infringement and other issues involving your advertising

Real estate professionals often work a lot on the move, so it’s a good idea to have business items covered against physical damage, including laptops and cell phones that could get damaged or stolen when out of the office.

Commercial Auto Insurance

Many real estate agencies provide vehicles to staff and brokers who spend their time driving around to visit various properties all day. Commercial Auto Insurance provides coverage for vehicles owned by a company (and for the employees involved) in cases of damage and injuries caused by accidents.

It can help with:

  • Physical damage and collision coverage
  • Uninsured driver coverage
  • Medical bills

The policy also covers vehicle theft, damages caused by acts of vandalism, and certain extreme weather events.

Cyber Liability Insurance

For the digital times in which we live, real estate professionals tend to have important data on their computers and digital devices. Unfortunately, according to recent surveys, data breaches have become common in the financial world, especially in the United States. 

This policy covers costs related to data breaches and cyberattacks—if a hacker breaks into your company’s computer and leaks private and confidential data from your clients, for example.

More Security for You and Your Clients

Working as a real estate agent or broker carries many inherent legal risks. That’s why real estate professionals need to have insurance coverage to mitigate consequences if something goes wrong. Legal actions, settlements, and legal fees can be devastating to a company’s finances and image, and going through it without insurance can even lead to the end of a business.

Keep in mind that many potential clients will not do business with you if you don’t have adequate coverage. After all, being insured means offering more security to everyone: your business, your employees, and especially your clients.