8. What does the real estate civil liability insurance cover against?

According the applicable law, the activity of a real estate agent is not covered by the obligation to insure against civil liability and therefore its voluntary. The insurance applies to natural persons; covers not only entrepreneurs running a business, but also employees, associates and subcontractors of the intermediary, if they perform their duties under his supervision.

The third party liability protection covers damages resulting from the insured’s actions or omissions resulting from the intermediary’s activities.

Therefore, the third party liability insurance will cover damages resulting from improper performance of the contract, its non-performance, as well as from unauthorized activities related to the intermediation activities performed.

Compensation also covers the effects of actions arising as a result of failure to comply with ethics and professional standards, as well as as a result of the intermediary’s failure to perform due diligence appropriate to the profession; as well as acting against the principle of protection of the interests of persons for whom the intermediary performs activities.

An example may be the situation of insufficient verification of the legal status of the real estate being the subject of the transaction. In such case, the buyer may be exposed, for example, to the inability to develop the land due to the rights or claims of third parties, or financial losses due to the need to transform or adapt the property to the requirements of the regulations (e.g. if the building does not have an occupancy permit or was built without a permit for use).

In order to obtain compensation for losses under the third party liability policy, it should be reported to the insurer and prove not only the scope of the damage, its amount and the fault of the intermediary, but also specify how the intermediary’s action led to the damage (cause-and-effect relationship).

Previously when the state real estate broker license was obligatory, the broker liability insurance was also obligatory, but it is not obligatory currently. Regardless, at Leach & Lang we treat having such a license as our obligation, to provide our clients with a greater sense of security in cooperation with us.

According to the regulations, the protection of civil liability does not apply to contractual penalties, material damage caused to relatives, as well as damages resulting from hostilities, riots and acts of terror.