REALTOR® Magazine Online: Insuring Against Risks

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			*Risk management* Insuring Against Risks
	Three Lines of Defense Against Risk Keeping Risks Under Control Controlling Transaction Risks Agency Disclosure Avoiding Antitrust Risks Minimizing Liability from Contracts Fair Housing Risks Controlling Personnel Risks Communications Policies to Minimize Risks Insuring Against Risks More Resources: Controlling Business Risks Code of Ethics: Controlling Business Risks		After you’ve done all you can to control risk, your final line of defense is to pass a part of that risk on to others. That’s where insurance comes in. Properinsurance will help defray the cost of defending your company against lawsuits and, in most cases, will pay for all or most of the cost of judgments against you. Although there are many types of insurance, those that would probably be of most value to a real estate brokerage business are: General liability. Protects against claims for injuries on the company’s premises or injuries caused by company personnel off the premises. Professional liability/errors and omissions insurance. Protects against claims resulting from mistakes or negligence in the exercise of professional responsibilities. Other insurance options include: Fidelity insurance, or fidelity bond. Reimburses a company for loss of money or property due to the actions of a dishonest worker. A broker should consider fidelity insurance coverage if employees have access to large sums of money. TIP: Fidelity insurance was designed to protect to cover employees, but in many cases, the bonds can be amended to cover the activities of independent contractors, says Steve Balmer, vice president of product management and development for Travelers Bond in Hartford, Conn. Fidelity insurance often can be rolled into general business liability and business owners’ automobile insurance. However, be sure that these bonds have a high enough limit to protect yourself, advises Balmer. TIP: You can further reduce the risk of worker theft by instituting an internal auditing program on escrow accounts and company funds, establishing strict security procedures for computer operations, and setting up countersigning procedures for company checks over $50. —Insurance & Planning Resource Center Property insurance. Protects against losses arising from physical damage to the insured's property or from theft. Business interruption insurance. Covers losses arising from business interruptions and lost profits while a damaged building is being repaired. Extra expense coverage provides funds to relocate and continue business operations while the damage is being repaired. Directors and officers liability insurance. Protects directors or officers of a company from suits brought against them for wrongful acts that could damage the company, such as antitrust violations, misuse of company funds, or failure to honor contracts with salespeople or employees. Worker’s comp insurance. Protects employees when they are injured on the job. Workers no longer have to sue their employers to recover lost wages or the costs of medical care. Requirements for worker’s comp coverage vary by state; in some places only employees are covered by worker’s comp; in others independent contractors must also be insured. Automobile insurance. Covers liability for both physical injuries to others and damage to vehicles. Be certain that all sales associates carry comprehensive auto insurance. 3 Factors in Choosing an Insurer >

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