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Public Liability and Professional Indemnity Insurance

6 May 2016

By Nancy Rainbird, Claims Manager, Realcover

Understanding the difference

Agents are often confused about the difference between Professional Indemnity (PI) and Public Liability (PL) insurance for Real Estate Agents.

Public Liability protects your business against the financial risk of being found liable for negligence and Professional Indemnity protects you against litigation.

Both are essential for Real Estate practice and cover you for entirely different circumstances.
Public Liability Insurance

Public Liability protects the agency against property damage or personal injury claims as a result of an incident for which an agent can be held legally liable. It also covers any related legal costs.

It protects your practice from those costs that arise from an incident on your property, even if you are not to blame. It is connected to the ownership and/or occupation of the premises.

One of the key triggers of a public liability policy is the agent’s degree of physical control of the property; such as an agent’s own office.

As a rough guide, all agents that have clients visit their office should have Public Liability Insurance to insure against the possibility that they will be sued for damages owing from injuries incurred on their premises.

Public Liability Insurance policies cover the agency on the date the incident occurred, whereas Professional Indemnity Insurance covers you when the claim is first made against you.

Real life examples that public liability insurance would cover:

  • Tenants arriving at your premises to pay their rent and trip on frayed carpet in your office and suffer bodily injury
  • A signpost post at your premises falls onto a car causing property damage
  • A chair collapses in your office injuring a visitor.

Professional Indemnity Insurance

Generally speaking, Professional Indemnity Insurance protects real estate agents from any civil liability for claims made by third parties arising from the conduct of an agent’s real estate business that has caused alleged loss or damage.

In the real estate industry, most Professional Indemnity litigation involves breach of contract, breach of duty of care, allegations of misrepresentation, poor property management, and/or the breach of statutory provisions in various laws.

It is important to note that most Public Liability policies exclude claims involving professional duty breaches. Similarly, Professional Indemnity policies exclude claims related to Public Liability and claims arising as a result of any ownership or occupation of property.

This, and the fact that exact circumstances involving Public Liability related claims may not be clear, is the reason why real estate agents should have adequate cover for both.

Real life examples that Professional Indemnity insurance would cover, include:

  • A tenant falls from a balcony in a tenanted property and alleges the property manager did not act in a timely manner to repair a faulty railing
  • An agent indicates that a new housing development will have access to unlimited water views and does not disclose that a high rise apartment complex may obstruct views
  • An auctioneer accepts a bid after the fall of the hammer
  • A Strata Manager fails to act on instructions from the Body Corporate to install a nonslip mat and a visitor slips and suffers injury.

The message for all agents is ensure you are adequately protected.

For further information, please contract REALCOVER on 1800 990 312 or email [email protected]

The information in this article is of a general nature and individuals should always consider their own circumstances and read the relevant Product Disclosure Statement before making any decision regarding any Realcover product.
While care has been taken preparing this article, and the information contained in it has been obtained from sources that Realcover believe to be reliable, Realcover does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any
purpose that the article may be used. Realcover accepts no liability for any loss or damage (whether caused by negligence or not) resulting from the use of this article.