Most independent contractor agreements require real estate agents to carry sufficient or minimum insurance for their automobiles. Agents are also required to add brokers as additional insureds to their automobile insurance. However, it has come to BRM’s attention that many brokerages are not monitoring or ensuring that agents have sufficient insurance and that the brokerages are being added to the policies.
Recently, an agent licensed with a client had an automobile accident after leaving a client’s home. The agent gave conflicting stories, stating on the one hand that he was “running personal errands.” He then claimed, to obtain coverage under the broker’s insurance policy, that he was undertaking business activities at the time of the accident. The accident was severe, leading to significant brain damage, as well as other consequences for Plaintiff. The agent was determined to be at fault by the police. After the lawsuit was filed by Plaintiff against the agent, the broker was added. The broker realized at that point that the broker had never been added to the agent’s insurance policy. Worse, the agent had insufficient insurance levels which were a fraction of the amounts being sought by Plaintiff.
Eventually, the action resolved. However, this scenario is a reminder to brokers that they should ensure that every agent has adequate automobile insurance (minimum $1 million for liability), and that the brokerage is added to the agents’ insurance policies as an additional insured.