Safeguarding Your Home from Storm Destruction: Strategies by Hagel & Co.
When it comes to safeguarding your home in Germany, choosing the right residential building insurance is crucial. Here are some key factors to consider to ensure you have adequate protection and understand what your insurance covers.
Assessing Your Property
The size, age, features, and condition of your home play a significant role in determining the insurance needs and premiums. Factors such as the roof, the materials used, and the home's overall condition are essential in determining the proper coverage amount for replacement or repair costs.
Understanding Replacement or Rebuilding Costs
It's important to understand local building costs, including materials, labor, and whether the home meets current building codes. Homes not up to code may require additional ordinance or law endorsement coverage to cover code-upgrade costs after damage.
Coverage for Natural Hazards
With the increased frequency of natural disasters like floods, storms, and wildfires, it's crucial to check if and how natural hazard coverage is included or available as an add-on in your insurance policy. This coverage can significantly impact premium costs but is vital in high-risk areas.
Contents and Valuables Coverage
Household contents such as furniture, electronics, clothing, and valuables like jewelry or art may or may not be fully covered by the building insurance, or may require additional premiums for full protection. Standard policies usually cover valuables at around 20-25% of the agreed sum.
Local Regulations and Insurance Market Specifics
Germany, as a mature market with advancements like smart home-linked insurance, may offer policies aligned with ESG compliance and sustainable building initiatives, which can affect coverage options and premiums.
Additional Services
Additional services that can supplement residential building insurance include coverage for power surge damage, costs of clearing and demolition work, temporary securing and guarding of the damaged building, hotel costs for the time when the house is not habitable, and insurance against natural hazards like floods or earthquakes.
Negligence and Professional Repairs
Negligence in caring for your home can lead to reductions in insurance coverage or even loss of home building insurance. Always ensure repairs are carried out by professionals to ensure that the costs are covered. In case of major damages, the insurer will usually send their own assessor. If you want to carry out repairs beforehand, discuss this with your insurer.
Reporting Changes and Renovations
You are obligated to inform in case of renovations, modernization measures, and the establishment of a business in the building.
Cost Variations and Underinsurance
The cost of building insurance and the services it provides can vary greatly from provider to provider and depending on the different tariffs of a single provider. If you are underinsured, the insurer will only pay the agreed insurance sum, even if the damage is higher. Consider an underinsurance waiver in your contract.
Common Coverage and Exclusions
Building insurance typically covers damage from fire, lightning, explosion or implosion, water leaks, storms with a wind speed of at least 8 and destruction by hail or frost. It usually includes the building itself, permanently laid floors, air conditioning and central heating systems, sanitary facilities, outbuildings and installations. Freestanding furniture, electronics, or clothing are typically covered by the household contents insurance.
Premiums and Cancellation Notice
The costs for a house insurance start at less than 200 € per year and can reach several hundred euros depending on the type and location of the building. The notice period for cancelling your building insurance is usually 3 months until the end of the year.
Documenting Damages and Regular Check-ups
In case of damage, document it with photos and a protocol. If you are absent for a longer period, you should appoint someone to regularly check the condition of the house. Keep receipts from craftsmen you have hired yourself.
Extended Claims Clause and the "Value in 1914"
If you want to be covered without gaps, you can specify an "extended claims clause" in the contract. Insurers determine the insurance sum and the height of the premiums primarily with the "value in 1914". The formula is: Replacement value ÷ (construction price index ÷ 100) = value in 1914.
Reporting Damage Promptly
Always report any damage to your insurer promptly. Try to prevent any subsequent damage: Turn off the main tap in case of water leakage or cover a damaged roof with a tarp.
The Voluntary Nature of Building Insurance
Building insurance is voluntary, but if you finance your property with a mortgage, the lender will typically require it as security.
In summary, selecting residential building insurance in Germany requires a comprehensive understanding of the home’s value and risks, including natural hazard exposure, building regulations, and the desired scope of content and valuables coverage. Balancing adequate protection and affordability is key.
- The 'finance' industry, particularly banking and insurance, plays a significant role in the process of securing residential building insurance in Germany, as lenders often require it as a condition for property financing.
- To ensure comprehensive 'personal-finance' protection, it's essential to thoroughly assess one's property, understand local building costs, and consider additional services such as coverage for power surge damage or natural hazards like floods, which can significantly impact overall costs and coverage.
