Insurance of all types is crucial for the smooth functioning of real estate markets. Most mortgage financing is insured, through private mortgage insurers or public insurers like FHA, the U.S. Department of Veterans Affairs, and the Rural Housing Service. In addition, securities collateralized by mortgages—known as mortgage-backed securities—are backed by the federal government, through Fannie Mae, Freddie Mac, and, in the case of federally insured loans, Ginnie Mae. Other types of insurance are important in real estate: title insurance, which protects lenders should questions arise about the ownership of a piece of property, flood insurance, which is required in flood-prone areas and is almost entirely provided through the federal government, and other types of disaster insurance and home warranty insurance. In addition, real estate professionals are themselves consumers of insurance, mainly errors & omissions (E&O) insurance, which helps protect them in the event they’re sued.
Real estate professionals often must buy their own health insurance, since, as independent contractors, they don’t get insurance through an employer.