A civil liability insurance contract may be concluded individually for one real estate transaction intermediary (in the case of a natural person), or it may be collective (in the case of a legal person or a partnership), including several real estate transaction intermediaries working for the company at the same time. According to the State Revenue Service, at the end of 2018, there were 1,612 agents or intermediaries in real estate transactions in Latvia.
Janis Abasins, President of the Latvian Insurers' Association, commented:
"The rules on professional indemnity insurance for real estate brokers are important for a number of reasons: they provide for a new profession with compulsory professional risk insurance. Mandatory insurable risks are also defined at the level of the Cabinet of Ministers regulations, and we are moving towards strict determination of the amount of risks in other areas of civil liability insurance, such as construction."
The mandatory risks to be insured by the real estate agent are the direct risk of financial loss; the risk of third party claims investigation, expertise, legal aid, as well as legal costs and rescue costs. At the same time, the insurance contract may also provide for other risks that are insured by the real estate broker.
The Regulations on the Civil Liability Insurance of Real Estate Brokers are issued in accordance with the new Law on Real Estate Brokers, which entered into force on 22 June this year.
Besides this novelty, the new regulations also bring another important change to the insurance regulation in Latvia - the definition of the minimum coverage of the insurance policy or mandatory insurable risks.
The regulations of the Cabinet of Ministers provide for the minimum limit of civil liability insurance of the mediator's professional activity - this is the maximum insurance indemnity to be paid, which the victim or victims could receive for the damage caused by the mediator. The amount of the limit is set at 50,000 euros per year. However, intermediaries may also include a higher liability insurance limit in the contract, if necessary.