In today’s real estate landscape, PI insurance isn’t just a regulatory requirement, it’s a strategic tool to safeguard your business.
With property transactions becoming more complex and diversified, regulatory scrutiny increasing, and financials risks expanding, PI coverage is a critical line of defence for your business.
As a real estate agent, you need to be aware that not all PI products are equal. This means your coverage could be unfit for purpose.
It must be tailored to the needs of your business and be designed to mitigate emerging risks. A changing market demands a rethink of your risk management strategy.
The question remains – are you truly covered?
The assumption that your PI policy is adequate needs to be challenged.
Standard wordings could leave you and your business dangerously exposed due to exclusions and outdated wordings that can create significant blind spots.
Inside the PI market: what you need to know
Typical PI claims in real estate include misrepresentation, negligence, breach of duty, failure to disclose material facts, and property management failures.
These risks remain a constant threat regardless of your agency’s size and can result in considerable financial fallouts if you don’t have the right risk management in place.
It’s vital to fully understand the scope and limitations of your coverage to protect the future of your business.
New risks on the rise:
Over the past year, new challenges have appeared across the market. The use of contractor agents, is increasingly common, though not necessarily covered.
Market volatility can also heighten risk exposures, particularly during downturns when the volume of disputes and claims tends to rise.
Hidden gaps can be extremely costly…
Off-the-shelf PI policies often fail to reflect the complexities of modern real estate practice. Key areas to watch include, but are not limited to:
- Sight Unseen clauses – exclusions may apply if a property wasn’t fully inspected.
- Contractor coverage – many policies don’t extend to contractor agents. Businesses often engage contractor agents assuming they have cover under their policy.
- Retroactive date – determines how far back your cover applies; incorrect structuring can leave gaps.
- Insured Entities – only named entities are covered, so omissions can be costly.
The impact of inadequate cover can be severe:
- Financial impact – uninsured claims, legal costs, and settlements.
- Reputational impact – loss of trust, regulatory penalties, and even licensing issues.
An annual PI check is non-negotiable
A proactive annual review of your PI policy is essential. Key questions to ask include:
- Is my retroactive date appropriate?
- Are all my activities disclosed and covered?
- Does my limit reflect my business activities? (Property managers may need higher limits).
- Do I engage contractors, and are they covered by my policy?
- Have I reviewed and understood my Policy Endorsements and excess structure?
“It’s time agents stopped assuming their insurance program is fit for purpose. Review it. Challenge it. Speak to someone who knows your world.” – Gary Ward, Partner Affinity
Turning compliance into strategy
A skilled broker does more than just place a policy; they tailor protection to the realities of your business.
That means crafting custom wordings specific to your real estate practice. Your cover should be structured to include all relevant entities and contractors.
They should challenge policy limits to ensure they align with your current risk profile.
They can also help you explore alternative excess structures to strike the right balance between affordability and protection.
In short, a broker’s role is to transform PI insurance from a compliance checkbox into a strategic safeguard for your agency.
Beyond PI, you should also consider:
- Public & Products Liability
- Workers’ Compensation
- Office Cover
- Cyber Risk
- Management Liability
- Motor Insurance
Now is the time to rethink your PI strategy
Regulatory pressure is at a critical juncture; we are observing increased scrutiny from regulators and legal bodies.
This means you need to be more prudent than ever before when it comes to your risk management strategy.
As your business grows in scale your insurance must grow too. Reassessing your PI coverage will allow you to operate with peace of mind that your investment if fully protected.
Our experienced team at Howden is here to deliver market leading insurance products, advice, and risk management services for real estate professionals.
Our PI insurance coverage includes access to complimentary legal advice and contract reviews, as well as liability cover and limits options.
Get instant cover online today or reach out to our team of highly skilled insurance specialists.
Any advice or recommendations are general in nature and do not take into account your individual objectives, financial situation or needs. Please read all relevant Policy Wordings, Product Disclosure Statements and any other information we provide before deciding if this is right for you.
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