Do Realtors need to maintain commercial general liability insurance?

A Realtor recently posed this question to me:

How often are the agents getting sued when/if a client falls at someone’s house during a showing? To me it seems unlikely but recently in a CE course they tried to scare us.

My answer follows:

Liability generally is fault-based: Did you do something negligent to endanger a client? The standard is the normal “standard of care” a buyer expects from his Realtor. If the Realtor has that duty, fails to adhere to it, and someone is injured as a result, then liability may ensue.

  • Does a Realtor have a duty to-pre-inspect for hazards on and about a property? To turn on lights, to check for loose floor boards, to smooth edges of carpet that have curled? To make sure a buyer does not stick their hand in the electrical panel?

I never have heard of a scenario in which the Realtor was accused of negligence of this type, but I assure you if someone is seriously hurt, the Plaintiff’s attorney will sue everyone involved and attempt to say you “fell below the expected standard of care.”

So, prudence would call for everyone (Realtors, lawyers, appraisers, contractors, investors) to each have commercial general liability insurance against these types of risks. For Ohio real estate salesmen, this insurance would typically be maintained by his broker, and that coverage would extend to the agent. Each agent should not need to obtain his own coverage.

It is generally not expensive, but it is helpful to have.

Beyond that, there are certain special coverages that are advisable: Errors and omission insurance (sort of malpractice insurance for real estate brokers and agents), fiduciary coverage in case your employees steal from you or steal client funds (or property), and auto liability coverage, which is auto insurance for those engaged in commerce on your behalf (driving to and from appointments, getting signatures on contracts or delivering contracts, delivering keys, etc.).

For every business owner and individual, we recommend selecting a qualified insurance agent, and sit with him as the business is created, and as it grows over time, to discuss the amounts, deductibles, and types of insurance to maintain. Someday, you may be very happy that you did.