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Introduction

By their very nature, real estate companies are subject to a number of potential risks, lawsuits, and claims. Real estate professionals undoubtedly work hard to keep their clients informed every step of the way, but information slipping through the cracks and innocently overlooked errors can lead to costly, time-consuming lawsuits.

Additionally, if a client slips and falls on your premises or if an employee is injured at work, the business would be liable. Over the course of doing business, any number of unfortunate accidents and injuries can occur due to human error or simply bad luck.

Similar to how unforeseen accidents can lead to bodily injury and subsequent litigation, property damage can be devastating for real estate companies. According to a recent report on property insurance, the impact of recent natural disasters will greatly affect the commercial property market in the coming years, particularly when it comes to property and assets located in areas at risk for wildfires, floods, and hurricanes.

From fires and hurricanes to burst pipes and vandalism, your insurance policy can provide the right protection for your property.

What Insurance Policies Do  Real Estate Companies Need?

While every business has a specific set of insurance needs, there are typically core insurance policies that real estate companies should obtain in order to mitigate and transfer risk:

General Liability Insurance:
A general liability insurance policy provides real estate companies with protection from injury claims, advertising claims, and property damage claims. It will also cover defense costs in a lawsuit brought against you, including court costs, witness fees, and attorney fees, in addition to judgment or settlement monies.

Commercial Property Insurance:
This policy protects property owned by the business such as buildings, contents, equipment, and personal property used in the business from perils of fire, theft, and natural disasters. Additionally, commercial property Insurance often provides coverage for losses of income caused by these perils. Business income coverage is not sold as a stand-alone policy but can be included with the business’s property insurance policy.

Errors and Omissions (E&O) Insurance:
Real estate E&O protects against client lawsuits for errors, omission, or failure to perform during a property development process or a real estate transaction that resulted in financial losses for the client. The right E&O policy can protect your assets and cover the legal costs, should a suit be brought against your company.

Builders Risk insurance:
Builders risk is a type of inland marine policy that insures the structures that your company is building along with all of the materials that are onsite. Companies are able to buy these types of policies on a per-project basis and they will usually cover damage caused to the site and all materials on site caused by inclement weather, natural disasters, fire, and vandalism.

Owner Controlled Insurance/Contractor Controlled Insurance Policy:
Also referred to as “wrap-up insurance,” these policies are purchased by the owner or general contractor of a development project on behalf of all the participants, such as the contractors, architects, and engineers. A wrap-up policy addresses the gaps in coverage between all parties by serving as an all-encompassing policy. Although an OCIP/CCIP may be set up in a variety of ways a policy package usually contains, at a minimum, commercial general liability coverage and workers’ compensation to protect the property owner and other interested parties. Depending on the project, there may be endorsements providing additional coverage such as pollution liability, builders risk and professional liability. Having one common insurance policy streamlines the claims process and decreases the possibility of disputes and liability lawsuits between the various parties.

Environmental Policy:
Environmental or “pollution liability” insurance addresses the coverage gap that exists because many standard CGL policies have a pollution exclusion. Common exposures only covered under this type of policy include asbestos, mold, lead paint, and other pollutants.

Workers Compensation Insurance:
Employees can be exposed to risks related to your business’s daily operations. If someone from your staff is injured in the workplace, Workers compensation insurance will pay for medical care and lost wages. Additionally, workers compensation is typically compulsory in most states, with the notable exception of Texas.

Employment Practices Liability Insurance (EPLI):
EPL insurance provides protection against employee claims related to issues such as wrongful termination, harassment, and discrimination. With the rise in employment-related litigation, it’s wise to have Employment Practice Liability insurance. Real estate companies offering professional services are also strongly encouraged to get third-party coverage to protect against claims coming from outside the firm, such as claims made by clients.

Cyber Insurance incl. Data Breach:
Most real estate companies keep detailed records of their clients’ personal information. Your business is legally liable to protect this data and the right cyber insurance policy helps mitigate the risk of losses that can result from being hacked or experiencing data breaches.

Commercial Auto Insurance:
Vehicles are important for the work of property developers and real estate professionals, and all of the cars, trucks, and vans that are used in your business should be covered in your insurance program. A commercial auto policy provides liability coverage that will pay for damages to third-party property or injuries resulting from accidents involving your business vehicles. You’ll also be able to get coverage for any medical bills of your own and damages that your vehicles may incur.

What Does It Cost?

A frequent question we hear (and a common problem with insurance underwriting in general) is that no one really knows how an underwriter arrives at a premium.

When applying for insurance, there are many factors that carriers take into consideration while underwriting new coverage. Cost drivers will always be different based on the policy type, limits needed, the size of your company, the number of employees working for you, the locations of your property, and more. Working with the right partner will ensure they are not only negotiating the right coverage but the best possible pricing options for your company.

Embroker believes in giving our clients better choices using data and transparency. We benchmark your policies against similar companies in your vertical, then procure quotes from multiple insurance carriers for coverage you may not carry and want to consider purchasing. We also cross-reference your costs with companies of comparable size, policy limits, claims history, and risk tolerance so we know your premiums are as competitive as possible.

Once set up on our platform, our tools and data ensure you’re adequately covered and get the best value possible in the insurance marketplace, even as market conditions change and your business grows.

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“Buying insurance has never been easier. The expertise and guidance I received in making my coverage selection allowed me to make my choice with confidence. I will be moving all of my policies to Embroker.”

Jen Panning

Assignar Holdings Inc.

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