Insurance is like a hospital gown, you are covered, but not as much as you think you are. With this thought in mind, and apologies for the visuals I may have provoked! I want to take a few minutes to help REALTORS® understand what types of coverage I believe are worth looking into. Full disclosure, I am not an insurance broker, and I am not providing insurance advice, I am just pointing out gaps in your business that you may not realize are there, like in the case of the hospital gown.
REIX Errors and Omissions Insurance
In Alberta, every REALTOR® since 1991 subscribes by law to the Real Estate Insurance Exchange, a self-insurance provider for all Alberta and Saskatchewan real estate licensees. As a non-profit organization, premiums cover operations and claims defence rather than shareholder profits, making REIX one of the best investments the REALTOR® ever makes in insurance coverage for their business.
As an errors and omissions policy, REIX protects subscribers from losses that result from errors, omissions, or negligent acts while performing real estate acts related to a trade, up to a maximum of $1,000,000. These protections consider the reputational damage associated with settling a claim, so where a subscriber is innocent of wrongdoing, REIX will fight to clear their reputation rather than simply settle the claim. However, the important note regarding the policy is that you are covered when conducting a real estate trade only, and many things related to the job are not specific to a trade.
Additional E&O and Business Brokerage
Since every REALTOR® has REIX errors and omissions coverage up to $1,000,000, many REALTORS® believe they are sufficiently covered for all real estate activities, however some REALTORS® work in high-value disciplines such as rural, commercial, or industrial properties where trades can run into the tens or hundreds of millions. In such situations, the $1,000,000 REIX policy may not cover the liabilities created in such high-value/high-risk trades.
Additionally, some activities in these areas, such as selling a business without property or consultation services, would not fall within the “trade in real estate” requirement of the REIX policy coverage. For such situations, REALTORS® and, by extension, their brokers and brokerages should seek an insurance broker to recommend coverages for these gaps which will bind for real estate services provided without a trade or where additional E&O coverage is necessary. Toole Peet offers real estate industry-designed policies that can help with this, but other insurance providers may also be sought through an insurance broker for your specific needs.
Comprehensive General Liability Insurance
A REALTOR® is an individual. However, they are also a business. REALTORS® provide services to the consumer through the brokerage, collect payment for those services, and have expenses. This means that as a REALTOR®, wherever you are is your workplace, and there is a liability in all that you do. For example, if you are holding an open house and someone slips on the front steps and hurts themselves, you may be liable for that injury as happening under your supervision. What if you put up a directional sign to a new listing on a windy day, and it blows out into traffic and causes an accident? These are only two examples of countless unseen liabilities in the daily actions of a REALTOR®. Still, you can get coverage for such things through a Comprehensive General Liability (CGL) policy. Some boards include general CGL coverage in their board fees (sometimes called commercial liability). Some brokerages also offer a policy to their associates, but if you are unsure of your coverage, talk to your broker because your business liabilities are not part of your REIX coverage. It would be best if you certainly were covered as soon as possible.
I want to offer three additional things to consider when covering your insurance needs as a REALTOR®:
Nobody loves paying for protection against something that could happen when nothing happens, but boy, howdy, is it ever a relief to know you are covered when something does happen!
Insurance serves one singular purpose: to take potential liability off your shoulders and transfer it to someone else’s shoulders for a small monthly or annual fee. It’s a piece of mind payment that helps you avoid cracking and scrambling your nest egg if things go wrong. But trust me on the hospital gown!
Provincial Practice Advisor
Bryan has many years of experience in the real estate industry including over 10 years as a former broker in the Edmonton Region.
Email: firstname.lastname@example.orgPhone: 403-209-3619