Here's something most new real estate agents don't realize until it's too late: your broker's insurance doesn't cover your personal liability. If a client sues you for a mistake—even one you didn't actually make—you're on your own unless you have the right coverage. And in an industry where a single missed disclosure or clerical error can trigger a six-figure lawsuit, proper insurance isn't optional. It's your financial safety net.
This checklist walks you through every insurance policy you need as a real estate professional—from the state-mandated essentials to the optional coverages that can save your career. Whether you're getting your first license or you've been in the business for years, use this guide to make sure you're fully protected.
Essential Coverage: What You Absolutely Need
Let's start with the non-negotiables—the insurance policies that either protect you from the most common (and expensive) claims or that your state legally requires before you can practice.
Errors and Omissions Insurance (Professional Liability) is the big one. This coverage protects you when clients claim you made a professional mistake that cost them money. Maybe you forgot to disclose foundation issues, miscalculated square footage on a listing, or gave advice that turned out to be wrong. Even if you did everything right, defending yourself in court costs tens of thousands of dollars. E&O insurance covers your legal defense and any settlement or judgment.
Many states legally require E&O insurance to get or maintain your real estate license. But even if your state doesn't mandate it, most brokerages require agents to carry their own policy. Expect to pay between $500 and $1,000 annually for $1 million in coverage—some agents pay as little as $25 per month. That's a bargain when you consider that the average real estate lawsuit involves six figures in damages.
General Liability Insurance covers the everyday physical accidents that happen in your business. Someone trips over your open house sign and breaks their ankle. A client's child knocks over an expensive vase during a showing. You accidentally scratch hardwood floors while moving furniture for staging. General liability handles the medical bills, property damage, and legal costs from these third-party claims.
Most agents pay between $24 and $40 monthly for general liability coverage. Standard policies offer $1 million per occurrence and $2 million aggregate limits, which is enough for the vast majority of claims. This is baseline protection—if you're actively showing properties and hosting open houses, you need it.
Optional Coverage Worth Considering
Once you have your essential coverage locked in, these optional policies fill specific gaps based on how you run your business and the risks you face.
Cyber Insurance has become essential in 2026, not optional. You handle sensitive client data—Social Security numbers, bank account information, financial records. If hackers breach your email or someone steals your laptop with unencrypted client files, you're liable for the damage. Traditional E&O policies don't cover cybercrimes, so you need a standalone cyber policy to protect against data breaches, ransomware attacks, and identity theft claims.
Business Owner's Policy (BOP) bundles general liability with property coverage for your office equipment, furniture, and business property. If you have a physical office (not just working from home), a BOP is more cost-effective than buying separate policies. You'll pay more upfront but save money compared to purchasing general liability and commercial property insurance separately.
Hired and Non-Owned Auto Insurance fills a critical gap. You drive clients around in your personal vehicle all the time, but your personal auto policy may not cover business use. This coverage protects you if you cause an accident while transporting clients or if a client gets injured in your car. It's typically an inexpensive add-on to your general liability policy.
Commercial Umbrella Insurance kicks in when a claim exceeds your primary policy limits. If you work with high-net-worth clients or handle multi-million dollar properties, consider bumping your coverage from the standard $1 million to $2 million or more. The extra premium is modest—usually a few hundred dollars annually—but the additional protection can save your business if a major claim hits.
When to Add Coverage
Your insurance needs change as your business grows. Here are the key trigger points when you should add or upgrade coverage:
The moment you hire your first employee—even a part-time assistant—you need workers' compensation insurance. This isn't optional. Every state requires it as soon as you have W-2 employees on payroll. Workers' comp covers medical expenses and lost wages if an employee gets injured on the job. Skip it, and you're personally liable for those costs plus potential state fines.
When you start handling commercial properties or high-value luxury homes, your exposure increases dramatically. A mistake on a $10 million commercial deal carries much higher stakes than a $300,000 residential sale. Increase your E&O coverage limits to at least $2 million and consider umbrella coverage.
If you expand into property management, you'll need additional coverage specific to landlord-tenant issues. Property management involves ongoing responsibilities that create different liability exposures than one-time sales transactions.
Annual Review Checklist
Set a reminder to review your insurance every year. Your business changes, and your coverage should keep up. Here's what to check:
Coverage limits: Are they still adequate for your current transaction volume and property values? If you're consistently closing higher-value deals than when you first got your policy, you probably need higher limits.
Business structure changes: Did you hire employees, bring on partners, or change from sole proprietor to LLC? Each of these requires updating your policies.
Service offerings: Adding property management, commercial real estate, or investment consulting means you need specialized coverage for those activities.
Deductibles and premiums: Shop around every few years. Insurance rates vary widely between carriers, and you might find better coverage for less money with a different provider.
Getting Started with Real Estate Insurance
Start by checking your state's specific requirements through your state real estate licensing board. Some states mandate E&O insurance as a licensing requirement, and you'll need proof of coverage before you can practice. Your brokerage may also have minimum insurance requirements for affiliated agents.
Get quotes from at least three carriers. Insurance costs for identical coverage can vary by hundreds of dollars annually between companies. Many agents find bundling E&O and general liability with the same carrier saves money compared to buying separate policies. The National Association of REALTORS® offers a group E&O program that may offer competitive rates for members.
Most importantly, don't wait until you close your first deal to get coverage. Get insured as soon as you're licensed. Claims can arise from activities during the transaction process—not just after closing. And if you're working with clients or showing properties without insurance, you're risking everything you've worked for.
