defense and other services. If the agent, bro- ker, or property manager is found to be at fault for the claim, the insurer will pay dam- ages, up to the limits of the policy.
Liability Issues Professional liability and general liability are the foundation of any insurance pro- gram for real estate professionals. Profes- sional liability, oſt en called errors and omis- sions, covers risks incurred in carrying out one's professional duties. Risks can include giving incorrect advice, omitting or failing to disclose material information, or failing to deliver services in some way. Depending on the specific policy and
insurer, coverage may include alleged or actual negligence; defense costs; personal injury, such as libel or slander; and claims arising from services done by employees, temporary staff , and independent contrac- tors. Some policies cover claims arising from services provided in the past. General liability insurance, also called
Nearly 60 percent of
real estate professionals surveyed say they
believe REO-related disputes will increase over the next two years.
commercial general liability insurance, covers third-party claims for bodily injury, associated medical costs, and damage to someone else's property. Real estate professionals continue to face a
challenging market and demanding clients. If a claim is fi led against them, and they don't have insurance, even before the claim is decided, they will have to devote scarce time and limited resources to managing and defending against the claim. Oſt en, the real estate professional will have to hire an attor- ney. If they lose the claim, the settlement or
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judgment could land a substantial fi nancial blow, putting them out of business or even into bankruptcy. While cutting back or foregoing insurance
altogether can seem like a reasonable way to cope with the economics of today's real estate market, the bottom line is that lawsuits are an ever-present threat. Just one claim, even if it's baseless, could wipe out years of hard work and decimate an agent, broker, or property manager's fi nances. With the high stakes involved, insurance is not an option. It's a necessity.
Kevin Kerridge is the director for Hiscox Small Business Insurance, located in New York. Con- tact him at contactus@hiscoxusa.com or visit www.hiscoxusa.com/smallbiz.
T is article does not constitute legal, tax, or insurance advice. Please consult your attor- ney or other professional adviser to discuss your specifi c situation and obtain the appro- priate legal or other expert advice.