Real Estate Marketing & Beyond
There are a lot of different real estate business careers people are involved in. With that comes a need for business insurance. Every businessperson needs to periodically review not only his or her current business insurance coverage but also whether or not their insurance needs have changed. This includes the person that has recently started a new business as well as a person that has been in business for many years. As business strategies change, business models evolve, and businesses grow, so do insurance needs.
As a business owner, you deal with a large array of insurance needs such as property, product or service liability, auto, worker’s compensation, and specialty insurance. There are a lot of ambulance chasing attorneys always on the lookout for another case they think will deliver up a huge contingency fee for them. There is little or no cost to the person claiming to be a victim of your business when an attorney accepts their case on contingency. The attorney is only paid if they win the case. But the more money they win, the more they get paid - typically more than 30% of the settlement.
There are many types of business insurance available from basic fire/damage, auto, workers comp, to loss of income. One thing that most insurance coverages have in common is a requirement that the insurance cover any legal expenses you may incur.
Often the most important role business insurance plays is paying for your defense legal costs. One clause that you want to be particularly robust in your insurance policy is the clause stating the insurance company will fully defend you in all lawsuits. And more…
For insurance companies it is often less expensive to settle a suit for a few thousand dollars than go to the expense of defending your business. Ideally, you want a strong voice in deciding if the insurance company settles or goes to court. You don't want your business to become the target of multiple slip-and-fall lawsuits only because your insurance company is fast to settle out of court. That makes you a bigger target for future lawsuits and drives up your insurance costs.
Errors and ommissions (E&O) insurance should be common for those providing real estate services. This is includes people performing inspections, giving advice, doing design work, consultants, and most real estate service businesses.
E&O is not generally part of a standard Business Owner's Policy (BOP). And it’s not only limited to service providers. E&O can cover many things not covered by BOP insurance. E&O can provide coverage for things like contract service performance. It protects you if a client claims your services resulted in a financial loss to them or their business.
Written and signed contracts are intended to protect you in this area but these don't always go far enough. Mistakes happen and you may not be able to perform as you intended to when a contract was written. That's one area where E&O insurance comes into play.
It's important to know that most E&O policies only cover you during the policy period. If you allow your policy to lapse, you probably will not have coverage for business conducted in the past. You will want to look into an "extended period" policy to cover work from the past if you decide you no longer need coverage for the future.
As always, consult with a professional about your specific insurance needs.
Please leave a comment if this article was helpful or if you have a question.
Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.
