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Real Estate Agents Reviewing Professional Liability Insurance as Property Market Takes An Upward Turn


Real Estate Agents Reviewing Professional Liability Insurance as Property Market Takes An Upward Turn

Real Estate Agents Reviewing Professional Liability Insurance as Property Market Takes An Upward Turn

As the economy begins to see improvement so does the real estate industry, which experienced a severe downtown when the housing market imploded in 2007. Today, things are beginning to shift, with the U.S. housing market showing signs of sustained recovery. According to a Merrill Lynch Outlook report, housing prices in 2013 are expected to see a 5% increase. In fact, through 2021, we are expected to see an average 3% increase, according to Merrill Lynch. PricewaterhouseCoopers (PwC), in a report entitled Emerging Trends in Real Estate 2013, suggests that modest gains in leasing, rents, and pricing will extend across U.S. markets from coast to coast and improve prospects for all property sectors, including housing.

What’s more, as compared to one year ago, there was marked growth in December 2012 in the new construction market as measured by the number of building permits issued and housing starts. According to the U.S. Department of Housing and Urban Development (HUD)’s New Residential Construction report, single-family building permits were up +27% from October 2011; and single-family housing starts were up +18% from December 2011.  And in the most recent report from the Commerce Department on January 25th, for all of 2012, an estimated 367,000 new homes were sold, about 20% more than the previous year. Furthermore, homebuilders’ confidence in January remained at the highest level in nearly seven years, according to the National Association of Home Builders.

In the commercial real estate sector, the U.S. is poised for some growth in 2013 “with a healthy balance of risk and opportunity”, according to an Avison Young forecast. And according to PwC, “recent job creation should be enough to increase absorption and push down vacancy rates in the office, industrial, and retail sectors, helped by the limited new supply in commercial markets.”

What does this all mean for real estate professionals?

The overall outlook is improving for the real estate market and the professionals representing buyers, sellers, and investors. With this good news comes the need to be diligent in protecting yourself and your firm against exposures that can leave you open to liability and lawsuits resulting from a transaction that goes awry.  For example, with regard to residential real estate, a buyer can sue an agent or firm for allegedly not disclosing property defects prior to purchasing the home. The suit may be without merit, but the cost alone for defending it can be significant.

Now is the time to review your Professional Liability (also known as Errors & Omissions) insurance. Professional Liability is designed to protect the assets of real estate agencies, brokers, and individuals from claims of wrongful acts (errors, omissions, or negligence) that result from the performance of their professional duties. But not all policies are the same; therefore, it’s critical to make sure you are properly covered for the unique exposures you face. This involves reviewing your policy to determine the scope of work that’s covered; how your policy is written (ex: claims-made vs. reported basis); and what is specifically insured and excluded.

At Axis Insurance Services, LLC, we specialize in Errors & Omissions/Professional Liability insurance for the real estate industry, which encompasses agents and brokers, large residential firms, property managers, REO specialists, and others. We would be happy to review your current insurance program and discuss what we can provide. We’ll also be exhibiting at the 2013 NAI Global Convention, January 29-31, at Caesar’s Palace in Las Vegas, Nevada, and encourage you to come by and see us. NAI Global is a premier network of independent commercial real estate firms and one of the largest commercial real estate service providers worldwide.

Sources: Merrill Lynch Outlook, PwC, Fox News, The Mortgage Reports

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Blogged on: January 25, 2013 by Mike Smith
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