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Real Estate Insurance Needs

5 Types of insurance every Real Estate Agency should have.

Real Estate Agencies take on a unique set of risks compared to other traditional businesses. Many businesses, like a restaurant for example, have a brick and mortar location where a majority or all of the business takes place. Real Estate Agencies, while most do have a physical address, have a majority of their work taking place at a third party location. These locations frequently are at the property they are helping to sell. For this reason, real estates agencies have to secure a unique group of coverages in order to adequately protect their business. Here are 5 recommended coverages most real estate agencies should secure.

General Liability Coverage
Errors and Omissions (Professional Liability)
Property Insurance
Hired and Non-Owned Auto
Workers’ Compensation Insurance

General Liability Insurance

For most real estate agencies, the risks related to general liability coverage are often minimal. This is primarily due to not much business occurring at the physical location. A majority of their work is done over the phone, by electronic mail or at a third party location. Off-Premises risks can be extensive for this industry. That is true whether you are dealing with the selling of properties or rental properties. These risks typically arise from sales visits, inspections, open-houses and similar work done at the customers’ home or other buildings. In some cases, there is an agent representing both the buyer and the seller. Any damage that occurs during joint operations, like an open-house, can cause a dispute between all parties involved. Monitoring of keys is another risk that must be dealt with carefully. Documenting every time, you access a facility is highly recommended to limit the risk you face regarding access to the facility.

Errors and Omissions Coverage (Professional Liability)

Exposure associated with errors and omissions (E&O) may be the most significant risk a real estate agency faces. This is because a majority of the work you do is highly specialized and you are giving advice. If you give the wrong advice, it can cause the business to be liable to the client in the future. To limit these risks the agency can make sure all employees have the proper credentials, experience and has the proper ratio of professional employees to clerical employees. Thorough background checks are essential to limit E&O Claims.

Commercial Property Insurance

If your agency owns physical property, you need to secure Commercial Property Insurance. There are two ways these policies are sold. They are sold on a replacement base or on an agreed upon value of the property. In most cases, it is better to secure a policy at replacement level. This will include the cost to tear down the facility, remove all debris and build a new facility. If your policy is an agreed upon value it typically does not include these additional costs.

Commercial Auto/Hired and Non-Owned Auto Coverage

If you own vehicles for your employees to use when they are away from the office than you need to secure a Commercial Auto Policy. Most real estate agencies do not own vehicles specifically for company use, but they do have agents who use their personal cars for business purposes. When these employees are using their personal vehicles for business purposes the business is liable for any accidents that may occur. The business is not liable for the damage to the employee’s car. This is covered by the employee’s personal auto insurance policy. The business is liable for damage to the car and any bodily injuries that may occur to third parties. A Hired and Non-Owned Auto Insurance Policy will take care of most liability a business faces resulting from accidents that occur when employees drive their personal cars or rented vehicles for business purposes.

Workers’ Compensation Coverage

Workers’ Compensation Insurance is required by law in 48 out of 50 states. Each state has their own rules and regulations regarding the administration of this system. Each state has their own exceptions for some small or family owned businesses. Workers Comp is similar to general liability, except that it covers employees and not third parties. When an employee is hurt on the job, work comp coverage will cover some of their lost wages (typically 60%) and medical costs incurred as a result of the injury.

5 businesses that need Data Breach Insurance

Insurance to protect a business in the instance it has a data breach is becoming much more common. This risk is only going to grow stronger as more and more information is stored digitally. There are three main policies a company can secure, Cyber Security, Cyber Liability and Technology Errors and Omissions Insurance. The first two coverages are typically sold together and the third is sold to specialized technology companies. Not all small businesses will need Technology Errors and Omissions Insurance.

Data Breach Insurance

Cyber Security Insurance

Cyber Security Insurance is also known as Privacy Notification and Crisis Management Expense Insurance. Cybersecurity insurance is designed to protect eh damages to you and your business. It can mitigate losses from a variety of cyber incidents, including data breaches, business interruption, and network damage. A robust cybersecurity insurance market could help reduce the number of successful cyber attacks

Cyber Liability Coverage

Also termed, Information Security and Privacy Insurance, Cyber Liability Insurance covers the insured’s liability for damages to third parties resulting from a data breach. It does not cover expenses that deal with the immediate response. This type of insurance protects businesses which sell products and services directly on the internet. Also, it protects businesses which collect data within its internal electronic network.

Technology Errors and Omissions Coverage

Technology Errors and Omissions Insurance (also known as Professional Liability Insurance or E&O) is a form of liability insurance that helps protect businesses providing all types of technology services and products. This coverage prevents businesses from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in a civil lawsuit.

Consider the impact to your business if:

A software glitch causes a client to lose important data.
A flawed program installation keeps a client from receiving orders.
Missing code prevents a customer from booking reservations.

Costly mistakes can happen, even to people with the best training and years of experience. It’s human nature. That’s why Technology Errors and Omissions Insurance is essential to protect your business. Agents at Technology Insurance Shop.com have the industry insight to help tailor coverage to your individualized needs.

Get the best answers to Cyber Security Insurance questions at MyInsuranceQuestion.com

Medical/Dental Offices

Medical Dental Offices store just about every bit of a client’s personal sensitive information. This can include the customers date of birth or social security number, their credit card and bank account numbers, or even their sensitive medical information. Protecting your business from the potential of this falling in to the wrong hands is extremely important for the long term success of any business.

Law Offices

Lawyers have a legal obligation to keep every bit of information they receive confidential. When and if this information is made public it can have extremely drastic effects to the clients a law firm is representing. Cyber security, cyber liability are needed for all law firms and depending upon the scope of the business, some law firms may also need technology errors and omissions coverage. Speaking long and honestly with a trusted independent insurance agent can help determine the risks your law firm faces and what type of coverage you need.

Accounting Firms

Accounting Firms store clients most sensitive financial information. The information that they have is some of the most valuable information a cyber-criminal can get access to. For this reason, it is extremely important to protect your accounting firm with cyber security and cyber liability insurance coverage.

Architecture and Engineering Firms

Architecture and Engineering Firms have access to the plans of new and existing businesses. If this information falls in to the hands of cyber criminals or the client’s competitors, the impact can be extreme. These firms are one of the few businesses that need all three types of insurance related to data breaches. Cyber liability will cover your liability to third parties, cyber security will help with the damages to you and your business and technology errors and omissions coverage will help protect you from problems with technology expertise and advice your business may give.

Retail Businesses

Retail businesses are one of the most common places for cyber criminals to access a victim’s sensitive financial information. As more and more purchases are made with a card instead of with cold-hard cash, retail establishments are a prime target for cyber criminals. Criminals use techniques as simple as a skimming machine at an atm or a gas station pay at the pump location. Once the information is accessed it is commonly sold on the black market for other criminals to create fake debit and credit cards for access to the victims hacked accounts.

New Business- Starting from scratch

Ideas for Start-up Business Plans

So you have decided to (or maybe you are still considering) taking a leap most of us only dream of. That leap is to start your own business. Perhaps you have worked for someone else in your trade for several years and want something of your own. You may be fresh out of school (or still in school) and want to get started early. Maybe you just have a unique opportunity to start your own business. If this is you than you are probably looking at what you need to start:

Start up capital
Supplies
Office/shop space
Sales opportunities

These are things all first time business owners are looking for. One thing many new businesses put off until last moment is insurance. You will spend thousands of dollars just to start up your dream of owning your own business; you don’t want one accident to take it all away from you. Below are several insurance policies that can protect you from claims that could easily ruin your dream of owning your own business. Here we will go over the basic areas that you want to look at for starting your own business, and when you want to start looking.

First, Why is this important? Claims with new businesses can be more devastating for a few reasons.

The controls that are in place to prevent/reduce the extent of claims/liabilities are less established. Many of these types of firms can be started in a home office.
New businesses are many times less defined in their operations, which can bring the operations in to areas the business owner may not be as familiar with. These areas they may not have as much experienced in. This can bring up more risks a
Some businesses do not have an established LLC or Corporation established. Regardless of the insurance policies you have, it’s important to work with your attorney and CPA to make sure you choose the business entity type that works best for you. This separates your business liabilities from impacting your personal assets. It is bad enough if the incident you could have protected closes your business, but it is a much worse situation if the same incident causes you to lose your house or your savings.

Here are a few policies we recommend you start out with pretty early on:

Commercial Auto – Commercial auto is a topic in itself and oftentimes one of the most overlooked policies by a new business owner since many people just use their personal auto’s and don’t see this as something they need. This might not be the first new policy you look to get, it should be the first insurance policy you likely already have that you will want to look at changing though. If your using your personal vehicle for business purposes, at the very least you want to make sure your agent and insurance carrier is aware of that and that you have business use on your policy, upgrading your personal auto policy to a commercial auto policy might be a couple bucks more, but in many cases the difference is a lot less than you may expect, plus, a less expensive policy that doesn’t cover what you need isn’t really that valuable anyway.

General liability – Starting a business, general liability is the first policy most companies look for. If you’re a retail store its sometime referred to as “slip and fall coverage” to cover liability from bodily injury on your premise. Keep in mind, some of these policies only do that and might not cover all/any off premise damages. These policies come in a variety of forms and coverages and the pricing typically reflects that, that’s not also to say you cant shop to make sure you’re getting the best value. This for some business types can be packaged into a Business Owners Policy that can cover property and other additional coverages your company needs like Data Breach, EPLI and Hired/Non owned auto liability.

Workers Compensation – For starters let me clear a couple things up first: Workers Compensation is not automatic; it’s not something automatically gets taken out of payroll without you getting a policy in place first. This policy covers employee injuries when hurt on the job for medical expenses and a portion of lost wages. For some high risk businesses like heavy manufacturing, construction and transportation this can be one of the most expensive and hardest policies to get competitive quote’s on and can be frustrating for businesses owners that just want to buy the policy. The key in the beginning is getting a policy in place, pay your bill on time, and keep continuous coverage. Once you have a prover record, especially for 3 years with coverage in place the market is a lot easier to get coverage for companies that have established. If you are a labor intense business the pricing can seem very high, the expense for covering a claim out of pocket, and fines from many states can be just as expensive if not more than your premium would be anyway. This normally isn’t needed until you hire an employee, but sometimes contracts can still require it which can open up more business opportunities for your company.

Professional Liability – For some companies your biggest risks aren’t necessarily a customer slipping and falling, or an employee injuring themselves. Many professional firms have what can be equally as damaging of risks to them. The obvious ones are your Physicians Medical Malpractice, your insurance agents and accounts have Errors and Omission’s insurance to cover mistakes or professional errors made. Little mistakes can make huge claims but there are some companies you don’t think of needing this like Printing companies, Website Developers, IT Companies, Bookkeeping and Marketing Firms. Website Copyright infringement, or a faulty code in a software program that causes a glitch or even worse a breach could be a huge expense and could mean huge liability on your company.

Every business owner is worried about protecting what they own. The property you own can be devastating if its lost, damaged or stolen. However, the liabilities you take on during the everyday course of your business operation can be even worse and costlier. Even if you don’t own any property. There are insurance policies to cover the obvious, but also many things you wouldn’t think of. If there is a chance of an injury, fire, something stolen, or decreasing in value for something other than every day wear and tear (heck maybe there’s a policy for that too) there is likely an insurance policy for it. Working with a Professional Insurance Agent that can give you options and help guide you on the coverages that would be most important to you.

Hammer Clause

A Hammer Clause Transfers Some Risk for Defending a Lawsuit Back to a Business From The Insurer if The Business Does Not Take a Recommended Settlement.

A Hammer Clause is a clause within an insurance policy that allows an insurer to compel the insured to settle a claim for an amount the insurer recommends. In some instances, a Hammer Clause is also known in some circles as a blackmail clause, settlement cap provision or consent to settlement provision. A Hammer Clause is usually a part of a directors and officers or errors and omissions insurance policy. The main purpose of this policy is to allow the insured to choose if they want to settle for what is offered or accepted by the “injured” party. Also known as the consent to settle provision, without this provision in a policy the insured is at the mercy of the insurance carriers desire to settle. Frequently, insurance carriers know the recommended settlement is the better outcome financially based on historical pay outs. The Hammer Clause can help a business determine if they want to fight the suit in court in an attempt to preserve the precious image of the company. When a business decides to do this, they take on some or all of the cost to fight the claim in court.

When Does a Hammer Clause Kick in?

A Hammer Clause kicks in when the insured refuses to settle for an amount the insured recommends. In many cases the insurance carrier will recommend to settle for an amount they feel confident will be less than the defense and indemnity costs of a particular lawsuit. Hammer Clauses have developed because insurance carriers deal with these situations fairly frequently. The carriers have reliable data to help them predict how much a lawsuit will cost. Business owners do not deal with getting sued very frequently, but insurance companies do. The Clause is typically there to encourage the business owner to settle for the recommended amount. In turn, the insured is penalized for not accepting the settlement only if the judgment amount plus defense costs exceed the amount for which the claim could have been settled. Frequently lawsuits among businesses are a time when pride and emotion can effect the judgment of many good business owners. The Hammer Clause is there to prevent pride from getting in the way of sound judgment. unfortunately, it does not prevent emotion from getting in to the way. It does spread the risk to the business owner who decides to take on the additional risk.

How Can a Hammer Clause Be Arranged?

There are several different ways a Hammer Clause can be arranged. The most common type of Hammer Clause is a Full and a Modified Clause. A Full Clause states that if the insured refuses to settle for the recommended amount they take on the full amount of the settlement costs. A Modified Clause is set up to give the insured the option of refusing to settle, but requiring them to take on some of the costs of this decision. If the costs amount to more than what was originally offered. Typically, if the insured refuses to settle than the costs will be shared at an amount of 50/50. It is not uncommon for some policies to go higher to a 70/30 split of the costs.

Important Facts to Remember About a Clause

The important part is that Hammer Clauses Exist and this is something a business owner should always speak about with their agent. A Full Hammer Clause is taking a lot of risk and it puts a business owner at the mercy of their insurance carrier. It is in the best interest of the carrier to settle quickly. For most businesses some version of a Modified Hammer Clause is best. A Modified Hammer Clause allows a business owner to make the decision for their business in the event they determine it is worth the reputation of the business to risk losing in court. When deciding what type of insurance policy is best for your business, it is important to speak long and honestly about a Hammer Clause with a skilled insurance agent.

Faulty Workmanship Coverage

Faulty Workmanship Coverage, offered by Builders and Tradesmen’s Insurance Services (BTIS)

One coverage that most carriers exclude is Faulty Workmanship Insurance. However, one carrier writing liability insurance is Builder & Tradesman Insurance Services (BTIS). Some might assume this would be a coverage included in Commercial General Liability (CGL), bnut many times it is not. Usually this is a standard exclusion from CGL policies. Faulty Workmanship Insurance is coverage for a contractor. It is coverage for property damage due to the contractor’s own faulty workmanship. Are you thinking why would this not be a standard coverage for CGL policies? Well, liability policies are designed to protect the insured when the contractors have defective materials or cause injury to property other that the insured’s own work or products.

Faulty workmanship can also fall under a design Errors and Omissions Policy. This can mean poor building or installation by the contractor. This could also be anything from a bad roof repair or install, to bad wiring done on a remodel. Most insurance policies do not cover the cost to repair or make the errors right. For $30 in additional annual premium BTIS is able to offer that coverage on the back of most CGL policies.

Three exclusions are known as the “your work” exclusions and are excluded coverage’s by the insurer. Damage that arises out of defective workmanship, damage to the defective work and damages incurred to replace the defective work. Business owners should generally absorb their own replacement and repair losses. After all, if you accidentally did damage to either the product you were installing or did damage to the property while installing the product, you typically want to show your client it was an error on your part and fix the damage.

The annual premium on this coverage is very modest for contractors. This is one of many reasons it pays to understand and know what coverage’s are included or excluded on your liability policy.

What is Professional Liability Insurance?

Professional Liability Insurance is also referred to as errors and omissions (E&O) insurance. It is commonly referred to as this in the insurance, law and accounting fields. In the medical profession it is called medical malpractice. Professional Liability Insurance is a type of business liability coverage designed to protect traditional professionals who give professional advice and provide technical services for a fee. This coverage is usually in addition to a preexisting General Liability Policy. At the heart of what Professional Liability Insurance does is: ensure consumers have a legal recourse for mistakes made by professionals, and enable professionals to defend and pay damages if they are found responsible.

Accountant’s, Doctor’s and Lawyer’s are not the only professions who have a need for Professional Liability Insurance. There are many types of professionals who are expected to have extensive technical knowledge or training in their particular area of expertise. Some of these others professionals include Insurance Agents, Graphic Designers, Architects, Engineers, Real Estate Agents and Financial Advisers. All of these professionals are expected to perform the services for which they were hired according to the high standards of conduct in their profession. If those professionals fail to live up to the standards of their profession, they can be held responsible in a court of law. This is where Professional Liability Insurance can protect these individuals from litigation that could otherwise ruin their career.

Professional Liability Insurance can also be a benefit when a professional has done nothing wrong. In many instances professionals have claims brought against them or their business for occurrences they are not liable for. Court costs and reputation management costs can be covered in most Professional Liability Policies.

There are certain types of exclusions within Professional Liability Policies. Errors and Omissions Policies typically have specific language and may have strict definitions of what is covered within their contractual language. This makes it imperative for business owners to be honest with their agent about what they are and are not doing within the day-to-day operations of their business.

Professional Liability does not cover bodily injury, property damage, personal injury, or advertising injury claims. Those such claims would be covered under a commercial general liability policy. Most agents should easily be able to design a specific Business Owner’s Policy including all of these coverage’s. This frequently saves the business a lot of cost and ensures there are no gaps in coverage.

So in closing, Professional Liability Insurance is a type of liability coverage designed to protect traditional professionals who give professional advice and provide technical services for a fee. It is designed to ensure consumers have a legal recourse for mistakes made by professionals, and to enable professionals to defend and pay damages if they are found responsible.