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What Are the Different Types of Real Estate Broker Insurance?

By K. Reynolds
Updated: May 17, 2024

A person looking for real estate broker insurance may be surprised by the different types of insurance policies that are available. Errors and omissions (E&O) insurance is typically the first insurance coverage that comes to mind for many real estate professionals as it is responsible for covering claims that are a result of errors, omissions, or negligence on their part. While some real estate broker insurance policies are specific to the real estate industry, such as E&O insurance, there are several insurance policies that are just as important to every business owner regardless of his or her industry.

In addition to E&O insurance, real estate broker insurance coverage must also consist of a worker's compensation policy. Even though real estate agents are independent contractors and are not considered employees by law, it is still their responsibility to have adequate coverage by law in order to compensate agents and employees in the event that they are unable to complete their job duties. Corporate general liability insurance is another type of real estate broker insurance coverage. This policy is responsible for insuring the real estate broker against any liability that may be caused by the broker or his or her agents.

Business interruption insurance is another type of real estate broker insurance, as this policy insures the broker against the loss of business revenue that may result if the business loses the ability to operate due to an unforeseen interruption, like a natural disaster. In the event that a hurricane or tornado decimated a particular city or town, for example, a real estate broker may be unable to generate revenue because of the physical damage to the properties within the city. This insurance coverage would ensure that broker could continue to operate until the business is able to generate revenue in the future.

A type of real estate broker insurance policy that is often overlooked is life and disability insurance. This type of insurance will protect the business against the death or disability of a critical employee, which in most cases will be the real estate broker himself or herself. Many real estate brokers will also need to acquire health insurance policies for themselves as well as their agents. Moreover, real estate brokers will need to acquire property and casualty insurance in order to obtain coverage against the loss of damage to the business as an entity as well as the physical location of the business.

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Discussion Comments
By Animandel — On Oct 31, 2014

Real estate brokers are always getting blamed when anything goes wrong with a house, or the purchase of a house. As a buyer, you need to make sure the house is inspected, and take some responsibility for what you are doing. You're the one buying the property.

By mobilian33 — On Oct 30, 2014

@Feryll - When the people who bought the house down the road from me were looking for a house they wanted to do it without getting a real estate agent involved, but they were unable to find the house they wanted, and they were concerned that the real estate agents who were working with the sellers of the houses they were looking at were trying to take advantage of them. The last thing they wanted was to buy a money pit.

When their agent showed them the house near me that they eventually bought, they noticed that there was some water and general moisture in the basement. Their agent told them not to worry about this because there was always some moisture in the basements of houses, especially in the mountains where we are.

After she told them this they decided to buy the house. Once they got there they had to spend almost 30 thousand dollars getting the mold out of the basement and getting the foundation stable from where the water had caused problems. They don't want to sue her, but she won't take any responsibility for what happened, and they can't afford not to get some of their money back.

By Feryll — On Oct 30, 2014

I didn't know real estate brokers needed liability insurance. I worked with a real estate agent and it never occurred to me that she might possibly be held responsible if something went wrong with our deal to purchase a house.

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