Realtors: Extra Auto Insurance Needed?

Real estate agents often use their personal vehicles for work purposes, such as meeting clients, showing properties, and attending meetings. While they are required to carry auto insurance, their personal insurance policies may not cover business use. In the event of an accident while on the job, realtors could be left facing a lawsuit or significant out-of-pocket expenses. To protect themselves, realtors may need to purchase a separate commercial auto insurance policy or obtain a business use endorsement.

Commercial auto insurance for realtors

Commercial auto insurance is a type of insurance that covers vehicles used for business purposes. It is important for realtors to have this type of insurance because they often use their personal vehicles for work-related activities, such as meeting clients, showing properties, and attending meetings. While personal auto insurance policies typically exclude business use, commercial auto insurance provides coverage for accidents, property damage, and injuries that occur while using a vehicle for work purposes.

In some cases, a realtor's personal car insurance policy may not cover them if they are in an accident while driving for work. Therefore, it is recommended that realtors obtain a commercial auto insurance policy or a business use endorsement to ensure adequate coverage for their professional activities. Commercial auto insurance policies typically include higher liability coverage levels and legal protection, which can be beneficial in the event of a lawsuit.

In California, for example, state law requires business-owned vehicles to be covered by commercial auto insurance. Personal vehicles used for business purposes should also have commercial coverage. This ensures that realtors are protected in the event of an accident or property damage while using their vehicle for work.

Realtors should also be aware of the mileage they drive for business purposes, whether they transport clients, use their vehicles for advertising, and if they have any equipment or tools permanently installed in their vehicles. These factors can impact insurance rates and the type of coverage needed.

Additionally, some insurance companies offer specific coverage options and discounts for realtors. It is recommended that realtors research and compare different insurance providers to find the best coverage and rates that fit their unique needs and budget. By having adequate commercial auto insurance, realtors can protect themselves and their business from potential liabilities and risks associated with vehicle use.

Personal auto insurance policies

In addition to liability coverage, personal auto policies may also include medical payment coverage, comprehensive, or collision coverage. Medical payment coverage covers the medical costs of the policyholder and anyone in their vehicle at the time of the accident. Comprehensive coverage reimburses you for loss due to theft or damage caused by something other than a collision, such as fire, flooding, wind damage, vandalism, or contact with animals. Collision coverage pays for damage to your car resulting from a collision with another car, an object, or as a result of flipping over.

It is important to note that personal auto insurance policies may not be sufficient for realtors, who may need a commercial auto insurance policy or a business use endorsement to ensure they are adequately covered for their professional activities. Commercial auto insurance policies offer higher liability coverage levels and legal protection, but they can also be more costly.

When considering personal auto insurance, it is always a good idea to check what your policy covers and to compare quotes from multiple providers to find the best rate.

Errors and omissions insurance

While realtors are not required to carry additional auto insurance, salespeople in real estate are considered employees of the broker in the eyes of the law and the Department of Real Estate. Therefore, if a realtor is involved in an accident while showing a property, they and the broker would be liable if found at fault. As a result, the broker is typically listed on the car insurance policy as an "additional insured" also covered against claims made up to the purchased limits.

Errors and omissions (E&O) insurance is a type of professional liability insurance that protects real estate companies and their employees or individuals from claims made by clients for inadequate work or negligent actions. E&O insurance often covers both court costs and any settlements up to the amount specified by the insurance contract. It is intended for many businesses and professionals in the real estate industry, including brokers, agents, and appraisers.

E&O insurance can help cover claims and legal costs if a client sues a real estate business for a mistake in the services provided. For example, if an employee incorrectly describes a property in a home listing or a business gives incorrect legal advice to a client purchasing a home. It is important to note that E&O insurance does not cover criminal prosecution, certain civil court liabilities, or bodily injuries, which are typically covered by general liability insurance.

The cost of E&O insurance can vary by location, brokerage size, and type. Some states, such as Nebraska, North Dakota, New Mexico, Rhode Island, and Tennessee, require real estate agents to have E&O coverage. It is recommended to understand the local laws and insurance requirements for the state in which you operate.

General liability insurance

In some jurisdictions, brokerages, and individual realtors are required to carry general liability insurance, specifically the commercial variant (CGL). This insurance protects realtors from third-party claims arising from negligence that has resulted in property damage or bodily injury. CGL insurance may also cover defence costs, which can be substantial in the event of a lawsuit.

For example, if a client or third party is injured during an open house due to a slip and fall accident, general liability insurance would cover the associated medical expenses and potential legal fees. Similarly, if a realtor accidentally causes damage to a client's property, such as through fire or water damage, their general liability insurance would provide financial protection.

Realtors should be aware that general liability insurance does not cover civil liability errors and omissions made during real estate transactions. These types of errors, such as providing erroneous information or incomplete work, are covered under a separate policy, typically known as errors and omissions (E&O) insurance or professional liability insurance.

The cost of general liability insurance for realtors can vary depending on location and specific needs, but it is an essential investment to protect their business and personal assets.

Business owner's policy

A business owner's policy (BOP) is a package policy that combines various insurance coverages with additional protection into one convenient package. It is ideal for small- and medium-sized businesses, including restaurants, wholesalers, retail stores, and contractors. BOP insurance is a popular choice as it helps save money by bundling commercial property insurance with general liability insurance at an affordable rate.

The liability coverage available in a BOP is the same as a standard general liability policy, including property damage, product-related claims, and customer injury. It also includes property coverage for commercial buildings and other personal property owned and used by the company. This can include protection from fire damage, hail damage, theft, and vandalism. It can also pay for certain claims involving loss of business income, inventory spoilage, and more.

A BOP is a great option for businesses that own or rent workspace, as it includes general liability and commercial property insurance. This combination protects your business from accidents, lawsuits, theft, and more.

For example, if a customer trips over a loose wire and falls, fracturing their wrist, a BOP can help cover the medical expenses if you are sued. It can also cover repair or replacement costs of stolen, damaged, or destroyed property, including property that isn't yours but was in your care.

In addition to the standard coverages, a BOP can be customized with additional coverages, such as cyber liability, food contamination, equipment breakdown, and tools and equipment coverage.

The cost of a BOP will depend on your business's characteristics, including coverage needs, type of profession, number of employees, and claims history. The national median monthly cost of a BOP policy in 2023 was $63 for new customers, while the average price was $106 per month.

Frequently asked questions