News & Information: Risk Management Resource

The Right Mix

Thursday, October 10, 2013  
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A properly blended combo of insurance coverage will provide complete protection from the loss of your business and your assets.

By Dean Vanderpool

Comments from REALTORS® attending a recent seminar on insurance show they don't know enough about the various insurance products available to them. Neither do they understand how to use those products to build an effective insurance program that provides total protection from loss of their business and/or their assets.

Judging by those comments, most REALTORS® are either under insured or improperly insured.  

There is no single insurance program that fits the need of every REALTOR®. A properly blended mix of coverage involves combining several insurance products into one program in order to provide complete protection from catastrophic loss to both the REALTOR’S® business model and his or her attendant assets.  Each REALTOR’S® business must be examined independently to determine the types of insurance required; the gaps in coverage that need to be filled; the limits required to effectively protect the REALTOR®; and the exclusions that can be allowed.

Just as car insurance won't cover flood damage to your house, a single type of liability insurance won't cover all aspects of your business and assets. Insurance exists to provide recovery of covered losses, and usually several appropriate, individual policies are required for effective coverage. In addition, if a business model is very large, insured limits of any individual policy may not be sufficient to cover all anticipated losses, so a secondary insurance policy can be placed to provide higher levels of protection.

Coverage for Legal Costs

Included in the protection provided under most insurance policies are the legal costs associated with any liability loss. In today's world, lawsuits are commonly filed against all potential parties regardless of placement of fault. You don't have to be guilty to be sued. The cost of hiring an attorney and defending yourself in litigation can be very expensive — often thousands if not hundreds of thousands of dollars. However, if sued for liability under an insured event, the insurance carrier steps in to provide legal protection. The insurance policy normally provides for payment to the attorney during the litigation process, and the insurance carrier will stay active with the litigation and settlement discussions. Legal costs and the time associated with defending a liability claim can be a significant part of any loss exposure.

Many outside risk management consultants and insurance brokerage offices are available to help REALTORS® evaluate their business and their insurance needs. For complete risk management assurance and protection, REALTORS® should consider working with an outside agency that is capable of helping in the evaluation, selection, and placement of the appropriate insurance programs for their particular business model. Such a relationship should be built for the long term to ensure continued effective insurance coverage from policy period to policy period.

Dean Vanderpool, Devan Realty and Development Corporation, is a member of the ORRA Risk Management Subcommittee. He can be reached at

ORRA frequently schedules classes, workshops, and online offerings related to risk management. Check the ORRA Calendar often, as new classes are continually being added to the education lineup.

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