A real estate risk management plan incorporates safety, transparency, and staying up to date. Since purchasing a home is the biggest investment that most people will ever make, the stakes can be especially high for real estate agents if a transaction doesn’t go smoothly. Lawsuits filed by dissatisfied home buyers are risks that real estate agents face every day. Luckily, with a strong risk management plan and the right insurance policies, unforeseen events are less likely to affect your career and income.
Open House Accidents and Injuries
Homes that are in desirable neighborhoods and competitively priced will inevitably bring large open-house crowds, therefore increasing the chance of injuries. It is best to stage a home for an open house in a way that allows plenty of space for prospective buyers to maneuver. While showing a particularly large property, consider asking a colleague to help to keep a better eye on visitors.
Agents can easily be sued if a visitor becomes injured during a property showing. It is very important to protect yourself with general liability insurance designed for real estate agents. This protection will also cover damage to a seller’s property during an open house.
If you fail to disclose a property defect to a buyer, or accidentally provide incorrect information, you could have a lawsuit on your hands. Professional liability insurance, or errors and omissions insurance, covers these work-related mistakes or inaccurate information that may lead to client dissatisfaction.
Agents are entrusted to keep their clients’ financial information confidential, so if you digitally store information, it is smart to secure cyber liability insurance as well, as it can cover data breach, including lawsuits, client notifications, and data recovery expenses.
Codes of Ethics
Real estate agents must follow a code of ethics and professional standards. Violating these ethics could prompt a home buyer or seller to sue you. Be completely transparent with clients in all aspects of business transactions and ensure both the buyer and seller have all terms in writing.
This line of work typically requires quite a bit of road time and personal auto policies may not be adequate for accidents that occurred during work-related driving. Hired and non-owned auto insurance will protect your personal vehicles that you take on business ventures so it is smart to integrate this in your real estate risk management plan. Also, if you take work trips with a car that your brokerage owns, you may need to purchase commercial auto insurance to cover damages to other drivers’ vehicles and their medical bills.
In the everchanging housing market, it is in your best interest to stay up to date on market conditions by following a few key indicators. Robust annual appreciation, low inventory levels, a brisk pace of sales, and many properties selling over the list price are signs of strong buyer demand.
The yearly price depreciation, a sluggish pace of sales, frequent price cuts, and rapidly rising inventory generally means there is a cooling real estate market, though an increase in the number of homes for sale could mean more business for buyers’ agents.
Stay up on monthly reports with key statistics and a broad overview of the U.S. housing market. You likely have access to local Multiple Listing Service for hyperlocal data. Also, keep an eye on national and state employment reports, as job markets directly affect real estate demand.
About SB One Insurance Agency
At SB One Insurance Agency, we have served the businesses and residents of New Jersey, New York, and Pennsylvania for more than 60 years. We are a wholly-owned subsidiary of SB One Bank, the region’s premier banking institution, and we are prepared to offer you personal, business, employee benefits, and risk management solutions. To learn more about our coverage options, contact our specialists today at (888) 990-0526.