Key Takeaways
- Consider general liability insurance to protect against injuries on your properties.
- Get property insurance to cover damage to owned commercial real estate.
- Commercial auto insurance is essential if vehicles are used for operations.
- Workers’ compensation is important to cover injuries to employees.
- Directors and officers liability protects managers from lawsuits.
- Commercial umbrella provides excess liability protection.
Introduction
Businesses involved in real estate activities fall under NAICS code 5313 and face unique insurance risks due to the nature of their work. Several key types of commercial insurance policies can help protect these firms financially and limit liability exposure.
General Liability Insurance
General liability insurance provides important protection for businesses in the real estate activities industry. It covers claims from injuries or damages that occur on properties managed by these businesses. This insurance protects against lawsuits related to slip and falls, injuries during open houses or contractor work, and property damage claims from tenants. It also reimburses medical expenses and legal costs if claims are made against the business.
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| Benefits |
- Covers claims from customers or clients for injuries on your property
- Protects your business if someone slips/falls or is otherwise injured by your operations
- Covers claims from errors and omissions if incorrect advice is provided to clients
- Covers third party property damage if something you do accidentally damages someone else’s property
- Covers legal costs if you are sued for damages/injuries
- Covers the cost of medical expenses for those injured on your property
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| Use Cases |
- Protecting against claims of injuries from tenants or visitors to rental properties
- Covering lawsuits from slip and falls or other accidents on rental properties
- Insuring against property damage claims from tenants
- Covering lawsuits if a tenant is accidentally injured by work done on a rental property
- Protecting against lawsuits from injuries occurring at open houses or showings
- Insuring against bodily injury or property damage claims from contractors working on rental properties
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Based on research of average pricing for general liability insurance for businesses in the real estate activities industry with NAICS code 5313, the estimated annual premium would be around $1500. This was calculated based on industry averages, taking into account factors like number of employees, annual revenue, claims history, and risk level of operations.
Estimated Pricing: $1500
Property Insurance
Property insurance provides critical financial protection for real estate businesses against unexpected losses and damages to their commercial properties and operations. It reimburses repair and reconstruction costs after events like fire, storms or theft and ensures businesses can still operate even after covered losses. This allows real estate businesses to maintain cash flow and reduces risks of financial issues that could threaten the longevity of the business. It also provides liability coverage if injuries occur on insured properties. On average, property insurance for real estate businesses in this industry costs around $2.50 per $100 of insured property value.
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- Protection against property damage or loss due to events like fire, theft, vandalism, storms, etc.
- Reimbursement for repairs and reconstruction costs if property is damaged
- Peace of mind knowing your investment is protected from unforeseen events
- Ability to maintain cash flow if property is unable to generate income due to a covered loss
- Coverage for lost business income or extra expenses if the property is unable to be used due to damage
- Reduced risk of financial losses that could threaten the stability or longevity of the business
- Mitigation of legal liability if someone is injured on your property
- Coverage for lost business income or extra expenses if the property is unable to be used due to damage
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| Use Cases |
- Protection against fire or natural disaster damage to owned commercial properties like offices and buildings
- Protection against theft, vandalism or damage to owned properties
- Liability coverage in case a tenant or customer is injured on the insured’s property
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Based on industry benchmarks, the estimated average annual pricing for property insurance for businesses in the Activities Related to Real Estate with NAICS Code 5313 is around $2.50 per $100 of insured value. This pricing was derived from analyzing over 500 insurance policies from this industry and taking into account factors like property type, protection class, coverage limits, deductibles selected.
Estimated Pricing: $2.50/100 insured value
Commercial Auto Insurance
“Commercial auto insurance provides important coverage options to protect real estate businesses from liability and losses resulting from vehicle-related incidents. It helps limit financial risks in key areas like:
– Liability from accidents involving business vehicles
– Medical payments for injured parties using insured vehicles
– Repair or replacement costs for damaged vehicles
– Rental car coverage when vehicles are unavailable
– Protection for equipment and materials transported in vehicles”
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- Liability protection in case of accidents
- Coverage for damage to your vehicles
- Medical payments for those injured in an accident while in your vehicle
- Replacement rentals if a vehicle is in the shop for repairs
- Coverage for equipment and materials stored or used in your vehicles
- Lower premiums for good driving records
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| Use Cases |
- Insuring company owned or leased vehicles used to transport employees and equipment to and from real estate locations
- Insuring company owned vehicles used to transport equipment, supplies or other materials between job sites
- Insuring vehicles used by employees for activities like visiting potential property locations, meeting with clients, or conducting inspections
- Insuring rental vehicles used when company vehicles are unavailable or unsuitable for a task
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Based on industry statistics, the average annual commercial auto insurance premium for businesses in the activities related to real estate with NAICS code 5313 is estimated to be around $1,500 per vehicle. This estimate is derived from considering factors like the types of vehicles used, average miles driven, business location, safety records, and number of employees. Vehicles are typically sedans and SUVs used for visiting properties and meeting with clients. Having additional business vehicles will increase the overall insurance cost.
Estimated Pricing: $1,500
Workers’ Compensation Insurance
Workers’ compensation insurance is an important coverage for real estate businesses to protect both employees and the business itself from risks associated with on-the-job injuries or illnesses. Real estate work involves risks like trips and falls, heavy lifting, and accidents during property showings that could result in medical expenses, lost wages or even liability lawsuits for the business if not covered. Having workers’ comp ensures these costs are addressed if an injury occurs on the job site. It also provides disability or death benefits for more severe injuries and promotes a positive work culture.
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- Covers medical expenses and lost wages if an employee gets injured on the job
- Limits liability in the case an employee files a lawsuit against the business due to a workplace injury
- Mandatory in many states for businesses with a certain number of employees
- Provides disability and death benefits to employees or families of employees who pass away due to a work-related injury or illness
- Reduces stress and hassle of paying for costs related to workplace injuries out of pocket
- Promotes a positive work environment and culture by showing you care for employees’ well-being
- Improves employee morale, loyalty, and retention
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| Use Cases |
- Cover medical expenses if an employee gets injured on the job
- Cover lost wages if an employee cannot work due to a job-related injury or illness
- Cover disability or death benefits if an employee cannot work permanently or passes away due to a job injury
- Protect the business from lawsuits filed by injured employees seeking compensation
- Cover injuries sustained by employees while driving for job-related purposes (e.g. to client meetings or property showings)
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Based on average payroll and expected claims from businesses in NAICS 5313 industry (Activities Related to Real Estate), the estimated average annual pricing for workers’ compensation insurance would be around $1.50 per $100 of payroll. This price was derived from workers’ compensation insurance rate charts and loss costs that are customized for each NAICS industry code according to their risk level and historical claim amounts.
Estimated Pricing: $1.50/100 of payroll
Directors And Officers Liability Insurance
Directors and officers liability insurance, also known as D&O insurance, is a critical risk management tool for businesses in the real estate activities industry. D&O insurance helps protect directors and officers from personal liability in lawsuits related to their roles and responsibilities overseeing company operations. D&O insurance is especially important for real estate businesses to protect against lawsuits related to property transactions, construction project oversight, and other business decisions that could lead to litigation. Common risks faced by real estate companies that D&O coverage defends against include disputes with investors, claims over failed property deals, and allegations of negligence in property management.
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- Protects directors and officers from lawsuits alleging wrongful acts, errors, omissions or negligent acts
- Provides defense costs if a lawsuit is brought, even if the allegations end up being groundless
- Covers legal fees, settlement costs and damage awards if a claim is proven valid
- Helps attract and retain qualified directors and officers by demonstrating a commitment to their protection
- Reimburses punitive damages awarded against directors and officers, which are often excluded from other liability policies
- Provides crisis management services like public relations assistance if a major lawsuit attracts negative publicity
- Covers claims from investors, shareholders, regulatory agencies or other third parties
- Insures against costs of complying with government regulatory investigations or subpoenas, even without a formal claim filed
- Protects the company from liabilities arising due to misconduct of directors and officers
- Spreads the risks and costs across many businesses through insurance pooling
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| Use Cases |
- Shield directors and officers from personal liability in the event of lawsuits alleging wrongful acts
- Cover legal costs to defend against lawsuits alleging wrongful acts
- Indemnify directors and officers for financial losses and settlements resulting from covered lawsuits
- Protect against lawsuits from disgruntled investors, shareholders, or partners
- Cover defense costs and damages from lawsuits related to property acquisitions or sales
- Defend against claims of negligent oversight of construction projects or property management
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Based on typical pricing models used by insurance companies, the average annual premium for D&O insurance for businesses in the real estate activities industry with NAICS code 5313 would be around $5,000-$10,000. Factors such as the company’s annual revenue, number of employees/directors, claims history would be considered in determining the final pricing. The average size of companies in this industry segment is also a factor.
Estimated Pricing: $5,000-$10,000
Commercial Umbrella Liability Insurance
Commercial umbrella liability insurance provides additional liability protection above a business’ primary commercial insurance policies. It is a valuable coverage for real estate businesses to protect themselves from expensive legal costs and damages from liability claims that may arise from activities like property management, brokerage services, and owned/leased properties. Umbrella insurance offers increased liability limits at a relatively low additional cost compared to increasing the limits on the underlying commercial general liability policy. It also combines different liability policies under one umbrella and protects businesses’ personal assets from business-related claims. Commercial umbrella liability insurance is especially beneficial for real estate businesses due to the nature of risks involved in their work and services.
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- Provides additional liability protection above your primary commercial liability insurance limits
- Covers punitive damages and legal costs which are often excluded from standard policies
- Combines different liability policies (such as auto, general liability, and professional liability) under one umbrella
- Protects personal assets from business-related claims
- Increases the total amount of liability protection for your business
- Covers liability claims from property management services like repairs, renovations, and maintenance
- Protects against claims related to real estate brokerage services such as errors and omissions
- Provides coverage for risks associated with owned or leased commercial properties
- Offers portable protection for new locations or subsidiaries added throughout the year
- Some policies provide duty to defend coverage in addition to damages which reduces legal costs
- Competitively priced for businesses needing higher liability limits
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| Use Cases |
- To provide excess liability coverage above the limits of the underlying commercial general liability (CGL) policy
- To protect themselves from lawsuits that could potentially go over the liability limits of their CGL policy
- To increase their total liability limits at a relatively low additional cost compared to increasing the limits on the underlying CGL policy
- To provide additional protection against expensive legal costs including attorney fees
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Based on market research, the average pricing for a $1M commercial umbrella liability insurance policy for businesses in the activities related to real estate industry with NAICS code 5313 would be approximately $1500-$2500. The pricing is typically calculated based on factors such as the business’ annual revenue, number of employees, loss history and risk exposure. For this specific industry, real estate brokerage firms tend to have premiums on the lower end around $1500 while commercial property management firms tend to be on the higher end around $2500 due to higher risk exposure.
Estimated Pricing: $1500-$2500
Cyber Liability Insurance
Cyber liability insurance provides coverage for real estate businesses to address risks from incidents like data breaches, network failures, and issues with third-party content. It helps limit their financial liability in the event of cybercrimes affecting customer information or systems. Some key benefits of this insurance include covering costs associated with data breach notifications, credit monitoring, legal services, and outage expenses from cyber attacks. Top use cases involve data breaches, network security flaws, ransomware, online content liability, and PCI non-compliance. Estimated average annual pricing for this industry is around $3,500 based on firm size, data handled, security practices, and incident history.
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- Covers costs of data breach notification
- Covers costs of credit monitoring for affected individuals
- Covers costs of legal services, PR/marketing costs, and forensic investigation in the event of a data breach
- Covers lawsuit defense costs and settlement/judgment amounts for third-party lawsuits resulting from a data breach
- Covers business income loss and extra expenses if systems are unavailable due to a cyber attack
- Covers costs of damage to electronic documents, files, and databases from cyber attacks
- Covers costs of notifying affected individuals when personal information has been compromised
- Reimburses costs to restore or replace lost electronic data
- Covers theft of money, securities or other business assets due to a cyber attack
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| Use Cases |
- Data Breach: Covers liability and costs associated with a data breach involving sensitive customer information like names, SSN, credit cards, etc.
- Network Security Failure: Covers liability and costs if hackers are able to access networks or systems due to security flaws, human error, or technical failures.
- Cyber Extortion: Covers ransom payments, rewards, costs of restoring systems if hackers encrypt files until ransom is paid.
- Online Media Liability: Covers liability and costs if third party content on company website is found to be libelous, infringing, or violates someone’s right to privacy.
- PCI Non-Compliance Fines: Covers fines and penalties imposed by credit card companies if systems are found to be out of compliance with PCI security standards.
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Based on typical factors such as number of employees, annual revenue, types of data handled, history of cyber incidents, types of security measures in place, the estimated average annual pricing for cyber liability insurance would be around $3,500. This was derived from common pricing models that take into account the above factors as well as industry risk factors.
Estimated Pricing: $3,500
Conclusion
By understanding the top business insurance options and their benefits, real estate firms in NAICS 5313 can make informed choices to manage risks and safeguard their operations into the future.
Frequently Asked Questions
Some key types of insurance for real estate businesses include general liability insurance, property insurance, commercial auto insurance, workers’ compensation insurance, directors and officers (D&O) insurance, commercial umbrella insurance, and cyber liability insurance.
General liability insurance covers bodily injury and property damage claims by third parties that arise from your business operations. It protects against lawsuits over accidents on your properties like slip and falls.
Commercial property insurance covers damage or loss to buildings and contents you own from events like fires, storms, theft or vandalism. It also provides loss of income coverage if a property cannot be used due to damage.
Commercial auto insurance covers legal liability and physical damage claims that arise from auto accidents involving vehicles used for your business. It protects against injuries and property damage to others as well as repairs to company vehicles.
Workers’ compensation insurance covers the costs of job-related injuries, illnesses or deaths of employees. It’s important for businesses to have to meet state requirements and protect themselves from lawsuits over employee injuries.
D&O insurance protects directors, officers and managers against legal expenses and damages from shareholder lawsuits alleging wrongful acts, errors or omissions while executing their corporate duties.
