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Industry Insights

Words of wisdom from our business insurance experts.

The Proptech Industry and Insurance Considerations

5 min read
August 8, 2022
The Proptech Industry and Insurance Considerations

Suppose you’re familiar with the real estate sector and how technology is being used to improve how organizations do business. In that case, you must have heard the word ‘proptech.’ Property technology, or proptech, is all the technology tools that real estate professionals use in the real estate sector. It's beginning to disrupt the industry and our insurance advisors are providing expert advisement to help protect their future.

There are several reasons why real estate experts use proptech, including the option to experience and extract value from real estate and even help search, plan, construct, rent, buy, sell, and manage real estate.

Proptech has brought innovation and has improved the experience of many investors, brokers, landlords, tenants, etc.

If you operate a proptech business and are interested in business insurance, keep reading or get in touch with a business insurance advisor today.

Types of Proptech

Being a relatively new concept, the Proptech sector sprouted in the late 90s with the breakthrough of the Internet. Since then, there are essentially two types of proptech that have been specified:

  1. Residential Property Tech
  2. Commercial Real Estate Tech (CRETech)

Residential Property Tech

This type of proptech includes all digital products companies are developing to make things easier for people to rent or own apartments, houses, etc. Some of the tools and products that are available and define Residential Property Tech include:

  • Property Management Tools – for managing Internet of Things-powered tools;
  • Financing Tools – encompass all the brokers, digital lenders, and some types of alternative financing;
  • Property Search Platforms - include marketplaces, real estate agent tools, and property sale tools;
  • Real Estate Closing Tools – includes transaction management, types of insurance, etc.;
  • Mortgage Lender Software – helps organize and manage loan applications and documents.

Commercial Real Estate Tech

The second and probably more complicated type of proptech is CRETech or Commercial Real Estate Tech. This branch of proptech includes all tools that businesses and individual commercial real estate experts use in order to search, run, rent, buy, and sell real estate, industrial and office properties. 

Here are some of the tools and solutions that occupy this realm:

  • Property Search Platforms;
  • Constructions Planning and Management Tools;
  • Evaluation and Financing Tools;
  • Property Management Tools;
  • Asset Utilization Tools

For these tools and solutions to be effective, both data and enterprise software need to be combined into one whole product. 

The Alignment of Real Estate and Proptech

A few other sectors overlap with proptech, such as the shared economy real estate, smart real estate, and fintech.

Shared Economy Real Estate

This can include all the companies that offer shared or joint use of a proper shared economy real estate. One company that is a prime example of shared economy real estate is Airbnb, providing people with short-term or long-term spaces for rent.

Smart Real Estate

The smart real estate sector is a fraction of the real estate business that utilizes technology to digitalize properties or build smart homes, making real estate a sustainable and automated industry. More and more smart properties are built with automated house processes like heating, closing, opening doors and windows, controlling the light fixtures, etc.


Lastly, fintech provides all businesses and customers the opportunity to get a hold of financial services. This brings technology into the finance sector, making all financial processes easier for everyone involved.

The Future of Proptech

Specific trends have been going on for quite some time in the real estate sector involving proptech. There isn’t a doubt that proptech will become an inevitable part of many industries, and here are some of them that we think will come to fruition in the near future.

Big Data

Big Data can provide resources such as collecting real-time and history data about all types of assets, including residential and corporate facilities. Real estate businesses and individual real estate professionals can predict or even be accurate regarding home-value trends, pricing, and risks when you have a wide range of data sets.

Virtual Reality

With VR and AR continuing to be researched and improved, some say that proptech will be defined by virtual reality tech in a couple of years. Many have suggested VR tours of potential properties for rent, buying, or selling. 

Predictive Maintenance with the Internet of Things (IoT)

It is no wonder that IoTs, which are networks of devices and sensors that are constantly sending and receiving info, will be used to check and maintain the status and statistics of a building. In this era of smart appliances, everyone with a smartphone can monitor information like temperature, security, and facilities maintenance.

The Risks Associated with Proptech

While there can be many improvements and pros to proptech, some downsides need to be considered. With more and more real estate companies and individual real estate professionals using tech, cyberattacks are more prominent than ever before.

With more and more IoT devices being used, cyber criminals discover various ways to enter systems unlawfully. While the number of cyberattacks is negligent, it still exists. 

Whole ecosystems and infrastructures are being accessed illegally, which will start to cause business interference, ransomware demands, and health and safety concerns.

While some see it as an IT issue, it is way more than that, and it should be noted as a high business risk.

Sustainability is another factor that needs attention. While the development companies may update proptech products and platforms in the cloud, additional equipment will need updating and maintenance.

Insurance Considerations

With cyber-attacks being the most evident risks proptech can face, real estate companies and individual real estate professionals can patch things up with Cyber Liability insurance. Cyber Liability insurance will cover the financial losses and pay out the costs associated with potential lawsuits.

Here are all the costs that will be covered by Cyber Liability insurance:

  • Lawyer & Legal Fees;
  • Forensic Analysis and Investigative Support;
  • Data Loss, recovery, and recreation;
  • Loss of Revenue and Business Interruption Expenses;
  • Loss of Funds;
  • Computer Fraud;
  • Credit Monitoring Services;
  • Cyber Extortion;
  • Breach Notification Support;
  • Crisis Management and Customer Support;
  • Cryptocurrencies

On the other hand, here are some of the things that cyber insurance doesn’t cover:

  • Third-party Bodily Injury and Property Damage
  • War, invasion, or terrorism
  • Prior Acts
  • Patent, software, and copyright infringement
  • Security Standards
  • Electronic Device Damage or Loss

Whichever way you choose to go with proptech, getting all relevant information on the subject will go a long way. Having nice Cyber Liability insurance for your proptech won’t hurt.

Tyler Crawford
by Tyler Crawford
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