Real estate agents and brokers offer the service of listing, advertising, promoting or arranging for the sale of real property or land for the seller or locating properties for a buyer. Real estate agents normally receive a commission for their part in the sales transaction — a percentage of the total sale or, in some cases, a flat fee.
More and more, real estate risks offer other services that may include insurance sales, mortgages, or valuations. Real estate agents need to pass an exam and be licensed to sell.
Property exposure is primarily an office exposure. There may be considerable storage of customers’ records, which significantly adds to a fire load. Storage should be in fireproof file cabinets, and fire suppression systems must not damage the papers.
Inland marine exposures are Accounts Receivable, Computers and Valuable Papers. Where are the valuable papers stored? How are they documented? Where are the duplicates? Is there a computer record?
Crime exposure comes from Employee Dishonesty, including customers’ property. There must be methods and procedures in place to prevent employees from gaining access to customers’ property and taking it. Realtors have access to customers’ financial information, which can be used by employees. Background screening is vital, along with monitoring procedures and securing of all records to keep access limited.
Occupiers’ liability is limited. Customers must be kept in customer waiting areas and designated conference areas. All areas must be well maintained with floor covering in good condition.
An important consideration is the status of employees vs. subcontractors. The relationships and contracts vary by agency. Contracts should be clear as to services provided by the agency to the subcontractors and the expectations the agency has of the subcontractor.
What about clients’ houses — are there exposures? Are there open houses and who is responsible for damage? How are the keys kept? Are there lockboxes or other devices that permit easy entry? How is the entry information passed on to other agents — is there a record kept of agents who ask to visit a home and who have gained entry?
Professional liability exposure is extensive. What services does the applicant provide? What are their credentials? How many employees are professional? Are clericals allowed to carry out tasks that only the professionals should handle? Is there a regular monitoring of files to check for errors and process of employee evaluation? Are these documented? Are there thorough background checks to verify credentials and education?
Automobile liability exposure depends on services performed. The primary exposure is Hired and Non-Owned. If vehicles are supplied for use, what are the rules regarding personal use? All drivers must have valid licences.
Workplace safety exposure is that of an office exposure. Due to the extensive use of computers, all workstations must be ergonomically designed to prevent repetitive motion injuries. Do employees work off site? What are the controls in place? What protections are there for agents who take clients to visit home?
Minimum recommended coverage:
Business Personal Property, Dishonesty, Disappearance and Destruction, Money and Securities, Accounts Receivable, Computers, Valuable Papers, General Liability, Professional, Umbrella, Non-owned Auto
Other coverages to consider:
Computer Fraud, Employment Practices Liability, Business Auto Liability and Physical Damage
