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Insurance 101: Why Brokers Need Liability Insurance

Our world can be very unpredictable, and although we may not be able to control it, insurance can offer you peace of mind as a broker knowing that you’re protected. Society is becoming increasingly more litigious and nowadays people might sue you regardless of if their claim has any merit. This means that it’s more important than ever to have the right coverage in place.

As a broker, it is important to ensure that you not only have liability for your brokerage, but that your agents also have coverage. Although they are independent contractors, you can also be blamed for their actions or negligence. If they don’t have the proper insurance in place, then you could be found 100% liable to pay for damages.

For example, if one of your agents accidentally leaves a window open during an open house and a storm ends up flooding the homeowner’s basement, they will likely blame the agent and the brokerage for the damages. In this situation, the brokerage’s Commercial General Liability policy would be triggered and would provide coverage for payments and expenses that you may be legally liable to pay. Most standard policies don’t extend coverage to independent contractors so if the agent doesn’t have their own coverage then the third party could demand that the brokerage pays for all of the damages. Our RealProSure program has designed a policy to combat this issuing by extending coverage to the brokerage, employees, directors and officers, unlicensed assistants, as well as all the agents (including their professional corporation). This way, we make sure that everyone is properly defended during a claim.

An important element of the Commercial General Liability policy is coverage for Defense Costs in the case a lawsuit is ever brought against you. This policy provides coverage for the necessary costs incurred to investigate and settle a claim regardless of whether or not you are found legally liability for that action. This protects you against frivolous and unmerited lawsuits, which could be a big financial burden and take up a significant amount of your time. During a claim, insurance can help make sure that you can continue to focus on your business and not deal with claims issues.

RealProSure has created a customized product to meet the needs of real estate professionals and we are constantly working to improve the policy and keep with industry changes. This product complements the mandatory Errors & Omissions coverage you carry and is designed to start where it leaves off. We have created and added coverages that are unique to our program. For example, we include Mysterious Disappear coverage which would normally be excluded under a standard policy. This would provide coverage if a homeowner alleges that something went missing during an open house. For example, an expensive watch or diamond ring.

For more information on how to properly protect your brokerage, contact Adam Thomson at athomson@toolepeet.com or 403-209-5447.

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