Insurance is a little like plumbing or the internet: You’re not really sure how it works, but you’re happy to know it’s there when you need it.

For more than 20 years, the National Association of REALTORS® has provided its institutes, societies, councils, state and local REALTOR® associations, and REALTOR® association-owned MLSs with professional liability insurance coverage at no additional cost (subject to certain conditions). As the needs of these organizations have changed, so has the coverage. In 2010, NAR added crime coverage, and in 2017, it included a separate enhanced patent policy; in 2018, NAR began offering cyber response coverage for associations that fall victim to cybercrime.

New for 2020: Workplace Violence Insurance

In 2020, associations will have the option to apply for and purchase workplace violence coverage. Covering expenses incurred in the aftermath of a workplace violence incident, this new offering is not part of NAR’s insurance program for professional liability but, rather, an optional coverage that you can apply for from Aon Risk Solutions. (For an application contact Gayle Andrews at gayle.andrews@aon.com).

New Cybersecurity Member Benefit

CyberPolicy

CyberPolicy, the newest REALTOR Benefits® Program partner, helps real estate professionals compare, quote, and buy cyber liability insurance.

REALTOR® owned brokerages have access to exclusive premium discounts and enhanced coverage. 

The workplace violence expense insurance covers expenses including crisis management, independent security, employee counseling, public relations, salaries for victim employees, and medical care or rest and rehabilitation for employees. 

The NAR Insurance Suite

Included under NAR’s comprehensive professional liability insurance coverage are:

  • Professional liability (also known as “errors and omissions” insurance), which covers your association’s legal expenses (and any resulting judgment) when a third party sues you, alleging your services are to blame for their financial losses
  • Directors’ and officers’ insurance, which covers your volunteer leaders’ legal costs (and any resulting judgment) in the event of a lawsuit against them for alleged wrongful acts in their capacity as directors and officers
  • Employment practices liability, for claims such as harassment, discrimination, and wrongful termination
  • Defense costs for antitrust matters and operation of a legal hot line, dispute resolution system, lockbox program, breach of contract, and association endorsement of products or affinity programs
  • Publisher’s liability for copyright infringement
  • Crime loss coverage for employee theft such as embezzlement
  • Cyber incident coverage, which covers expenses to recover from cybercrime, such as ransomware and hacking
  • Patent infringement expense coverage

Keep in mind these five important facts about your association’s insurance coverage through the NAR insurance program:

  1. If you’re in compliance, you’ve got coverage. Coverage extends only to those associations that maintain their governing documents in full compliance with NAR’s constitution, bylaws, and policies. Every year, NAR posts the new policies and policy revisions that require adoption and compliance for associations to continue to qualify for coverage through its insurance program. For example, the new MLS Statement 8.0, also known as the Clear Cooperation policy, needs to be adopted by an association-owned MLS by May 1, 2020. If your association files an insurance claim in January to April 2020, and you haven’t yet adopted the Clear Cooperation policy, you’ll need to certify that your governing documents contain all mandatory policies from 2019.

    If you file a claim, you’ll be asked to provide a copy of your association’s governing documents to verify compliance and confirm the availability of coverage. Keep in mind that the insurer will ultimately determine whether a specific claim is covered.

    Remember, adopting and maintaining your governing documents in compliance is important, but so is how your association conducts its day-to-day business. The reality of your association’s daily operations must also comply with your association’s governing documents.
  2. You can raise your limits with additional coverage. Your association is protected for up to $1 million per claim for most types of claims. Certain claims such as employment practices liability, theft, and patent infringement have lower claim limits. Claims related to antitrust, breach of contract, lockbox system operations, dispute resolutions, legal hot lines, and association endorsement of products or affinity programs are limited to defense costs. This means that the insurance company will pay the attorney’s fees for your defense, but it won’t pay a judgment or settlement amount.

    Every year from Jan. 1 to April 1, your association has the option to purchase “excess coverage” for professional liability, cybercrime, antitrust defense, crime loss, and patent infringement. Excess coverage creates an additional layer of financial protection.

    How do you know if your association needs excess coverage? Speak with your legal counsel about your organization’s specific risk factors and any state laws that may affect your exposure. Also, solicit input from your board of directors, as the board’s risk tolerance may change from year to year. Aon Risk Solutions, NAR’s insurance broker for the program, is also available to answer questions about excess coverage. (Contact Gayle Andrews at gayle.andrews@aon.com.)
  3. The sooner you make a claim, the sooner you’re covered. As soon as you’re aware of a claim or a potential claim, you should report it to the insurer. Making a claim triggers coverage for that policy year, regardless of when the wrongful act took place.

    Keep in mind that a “claim” doesn’t only mean a lawsuit or other formal legal proceeding. Under the NAR insurance policy, an insured party should make a claim when they receive written or oral notice that another party plans to hold them responsible for a wrongful act. Common examples include a demand letter from an attorney or a verbal threat of litigation.
  4. Property damage is not included. One of the most commonly asked questions is whether damage to an association’s building is covered. The answer is no. Other things not included under the NAR insurance policy are:
    1. Slip-and-fall injuries on association property;
    2. Transportation to and from an association event;
    3. Fraud or dishonest acts; and
    4. Worker compensation claims
  5. Resources are a call or click away. Risk management benefits everyone, from your members and employees to your board of directors and volunteers. NAR has assembled a set of online resources to help you manage the risk your association faces every day. Online at nar.realtor/nar-insurance-program, you’ll find policy information, how to file a claim, and access to the employment resources of EPL Assist, including a no-cost, live hot line and email access to an employment attorney.

In 2020, look for a risk management webinar series specifically designed to arm you with information and tools for the hot issues associations face.

What Other Insurance Might You Need? 

A Business Owners Policy (BOP) typically combines property, general liability, business interruption, and a variety of additional insurance coverages into one bundle.

  • Property coverage generally refers to the insurance for your association building or office and your tools and equipment.
  • General liability covers personal and bodily injury for which you are liable, whether the damage is physical in nature, such as an injury, or perceived, such as slander or defamation. 
  • A business interruption policy will compensate you for when your business operations must pause due to a cause, such as fire damage to your building.

Event cancellation insurance provides protection for loss of revenue or deposits due to cancellation or rescheduling of an event as a result of forces beyond your control, including hurricanes and acts of terrorism. Some policies also cover the non-appearance of a speaker.

Association-owned vehicles most likely will require a commercial auto policy.

In general, workers’ compensation insurance provides medical coverage and wage loss benefits to employees for work-related accidents, injuries, or illnesses, and the employer’s liability for employee-related lawsuits that arise from their impairment.

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