Professional Indemnity Insurance (PI) is insurance that covers any professional that provides a service or advice to a third party. PI is necessary for professionals, who get held to a very high standard of professional conduct, to guard against claims being made against them for injury or loss incurred by a client in the discharge of their duties.
Estate Agents fall under the category of professionals, and many of them are self-employed and have a high risk of being sued. It is therefore incumbent upon them to ensure that they carry professional indemnity insurance for real estate agents.
Why Do I Need Professional Indemnity Insurance Real Estate?
Real estate agents are obliged by law to carry PI. Section 142 of the Property Agents and Land Transactions Act 2005 provides that a Real Estate Agent “must maintain insurance cover in the form of Professional Indemnity Insurance.”
The Property Agents Board determined that the level of Professional Indemnity Insurance Cover required by a real estate agent or property manager is $500,000. This does not mean that you can only take out PI to that amount, but that $500,000 is the minimum that you should carry.
What Does Professional Indemnity Insurance Real Estate Cover?
Professional indemnity insurance protects you from any civil liability claims made by a third party arising from your conduct or the conduct of one of your employees that has caused an alleged loss or damage.
Key exposures that real estate agents face include:
- Conflicts of interest – this includes disclosed or otherwise
- Errors in and timelines of transaction documentation
- Fraud and dishonesty of any sort
- Misrepresentation as to the property or various property details
- Non-disclosure as to the property or any property details
- Property management failures
- Underquoting or not abiding by auction rules
Professional Indemnity insurance will provide you with the essential financial protection required against potential losses arising from any claims against you arising out of acts or errors and omissions in the services that you provide in respect of auctioneering, real estate sales, valuations, residential and commercial property management, and stock and station agents.