5 Types of Insurance You May Need if You Run a Real Estate Business

by | BiggerPockets.com

If you’re a real estate professional, you may sometimes feel like you’re in the paperwork business—especially when it comes to insurance. Between traditional forms of property insurance, health insurance, and liability protections, there are endless forms to be filed. Nevertheless, you’re probably still missing a few key coverage areas.

For those concerned with maintaining a full profile of insurance coverage, here are five types you may be overlooking that your business might need. Don’t be caught unprepared.

5 Types of Insurance You May Need if You Run a Real Estate Business

1. General Liability

General liability insurance is one of the most valuable policies you can have as a real estate professional because it covers costs associated with any lawsuits that derive from your business, and if you’re in this game long enough, you’re sure to face at least one or two. For example, this is the coverage you’ll need in the event of a slip-and-fall case at your office or if someone is injured while touring a property. You can’t do business without it.


Related: LPMI: What is Lender Paid Mortgage Insurance and Is it Right for You?

2. Standard Property Insurance

Whether you’re a house flipper or a landlord, property insurance is the bread and butter of your professional life. In general, how much you pay for property insurance depends on the type of structure, structural stability and protections (fire alarms, security system, etc.), and how many additional protections the policy includes, such as flood or fire insurance.

Carefully review every property insurance policy with the carrier and be sure to shop around—rates tend to vary widely by company, but you can probably bring them down if you’re covering numerous buildings.

3. Health Insurance

As a real estate professional, you don’t have an employer offering you health coverage, but you’re still legally required to have a policy. Spend time assessing your individual and familial needs to determine what kind of policy is best for you. A family where everyone is relatively healthy will typically save by choosing a high deductible plan with a low premium since you may never even meet the deductible, while those with significant health issues should aim for a higher premium and lower deductible since they’ll likely hit the deductible early in the year.

Remember, you can’t do your job if you’re unwell, and you don’t want to drive yourself into medical debt by ignoring the need for health insurance. Get a policy no matter how great you feel—you can’t predict accidents and illnesses.

4. Floods And Fires

Flooding and fires can happen anywhere, but your location is a major determinant for how important such policies are and how much they’ll cost. Technically, you only need flood insurance if you’re in an official flood zone, but climate change has decidedly shifted weather patterns in recent years, making it more difficult to determine where exactly that is—or at least where it should be. Meanwhile, in designated flood zones, premiums are on the rise.

Similar wisdom applies to fire insurance. Regions that are especially prone to drought and fires, such as parts of California, are more likely to present high insurance premiums, but that insurance is also much more greatly needed. In other areas, you can probably get by with your property insurance, which will cover fires.


Related: Home Insurance: 5 Tips for Finding the Right Policy

5. Data Coverage

No one outside of major tech companies ever seems to think of this one, but data compromise insurance may just be the most important coverage you could have in this day and age. Simply put, it covers you if hackers steal client information or another data breach happens, and we all know from reading the news that information interception can happen to anyone. While a breach at a small company may not have the financial implication of compromise at a major store or credit card company, the costs in terms of scale and reputation can be huge.

Investing in all the right insurance policies isn’t about building a wall against worst-case scenarios, but rather about taking care of yourself and your clients. By doing your research, you can put together a portfolio of policies that raise your business up and make it easier for you to operate with confidence in your day-to-day interactions.

Which of these insurance types do you hold? What do you think is most important?

Let’s talk in the comments section below!

About Author

Larry Alton

Larry is an independent, full-time writer and consultant. His writing covers a broad range of topics including business, investment and technology. His contributions include Entrepreneur Media, TechCrunch, and Inc.com. When he is not writing, Larry assists both entrepreneurs and mid-market businesses in optimizing strategies for growth, cost cutting, and operational optimization. As an avid real estate investor, Larry cut his teeth in the early 2000s buying land and small single family properties. He has since acquired and flipped over 30 parcels and small homes across the United States. While Larry’s real estate investing experience is a side passion, he will affirm his experience and know-how in real estate investing is derived more from his failures than his successes.


  1. Well, I guess this list depends on your definition of “Real Estate Business”… because if you are a broker, you need E&O coverage.

    Next up, an umbrella policy. Near the top of the list to me, right after property insurance.

    Throwing in climate change… Well, I won’t be basing my investing decisions on it, but if someone wants to get out from under their risky beachfront property for dirt cheap, let me know.

  2. Dominick Dahmen

    Also life insurance. Near the top for me. Yes I am a life agent somI may be alittle biased, but it’s pretty important in buy-sell agreements. Especially if the spouse doesn’t know that much about RE or wants nothing to donwith it. The life insurance death benefit could cover the mortgage(s) on property or properties that you have in the unfortunate event of your death. Then your spouse could wait to sell if the market isn’t the best or not have to worry about covering the mortgage.

  3. Kevin Yeats

    It is a good thing that your bring up this topic. I know most people get a certain cross-eyed glaze when discussing or thinking about insurance, but insurance (all types) answer a lot of what if questions.

    More important that just saying “I have a ______ policy” is understanding what the policy covers and when. Have a discussion with another professional over all the what if scenarios with aim of discovering and understanding what happens after a negative event. It is better to understand before hand than to learn where your coverage comes up short … which means that you are in the hole.

    Start by READING every policy that you have.

    Still, I am reminded of Woody Allen’s quote …. “There are some things in this world that are worse than death …. like spending the evening with an insurance salesman.”

  4. Patricia Smith

    hello larry,

    thank you for that great post! It helps a lot when you try to understand the insurance jungle.
    I have a question about the liability insurance: is this the SAME as an umbrella policy?
    Thank you in advance for your answer

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