Are you facing complex insurance decisions for your property? Many owners risk significant financial losses due to unsuitable or insufficient coverage. This article shows you how to effectively protect your property values with the right strategies and avoid costly mistakes.
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The topic briefly and concisely
A combination of home building, contents, and personal liability insurance forms the basic protection for every property owner.
Insurance against natural hazards is becoming significantly more important due to climate change and an increase in extreme weather events; only about half of the buildings in Germany are appropriately insured.
Regular review (every 2-3 years) and adjustment of insurance policies, especially after structural changes or in the event of inheritance, are crucial to avoid underinsurance and gaps in coverage.
Mistakes in insurance decisions can quickly lead to a financial burden of tens of thousands of euros, especially in the case of real estate. Whether as an heir suddenly taking responsibility for a property or as a long-term owner – the complexity of the insurance world poses challenges for many. A study shows that only about 50% of all buildings in Germany are insured against natural hazards, even though extreme weather events are increasing. This article provides you with a clear guide to making informed insurance decisions, optimising your protection, and thus securing the value of your property in the long term. Discover which policies are essential and how to avoid pitfalls.
Laying the Foundations: The Essential Insurances for Property Owners
Every property owner should have at least three core insurance policies to cover financial risks:
The building insurance is the foundation and protects against damage caused by fire, water leaks, storms, and hail. Repairs after storm damage can quickly incur costs exceeding 10,000 euros.
The contents insurance secures your movable inventory, from furniture to electrical appliances, often up to a replacement value of more than 50,000 euros.
Private liability insurance is also essential as it covers damages that occur to third parties on your property; coverage amounts of at least 5 million euros are recommended.
This basic coverage is the first step towards solid insurance decisions. Thoroughly reviewing the contract details prevents future surprises and ensures a quick processing in the event of a claim.
Addressing elemental damage: Minimising risks from natural hazards
The increase in extreme weather events requires extended insurance coverage beyond standard policies. Natural hazard insurance covers risks such as flooding, heavy rain, landslides, or snow pressure. In Germany, according to the GDV, only about 52% of buildings are insured against natural hazards (as of 2023). The average costs for natural hazard insurance can vary between 100 and over 1,000 euros annually, depending on the risk zone. Considering potential damage that can quickly reach six-figure amounts, this investment is often essential. Check your existing homeowner's insurance; often, natural hazard protection is not automatically included and must be added as a supplementary module. A comprehensive risk assessment of your property helps determine the necessary level of coverage. Early consideration of these risks is an important part of your long-term financial planning.
Special Case Inheritance: Correctly Transfer and Adjust Insurance Policies
Inheriting a property often means also taking over the existing insurance policies of the deceased. It is crucial to immediately review these policies and make any necessary adjustments. Inform the insurers about the inheritance within a few weeks to avoid jeopardising the insurance coverage. The land register must be updated within two years of the inheritance to save costs. Depending on the degree of relationship, different tax allowances apply for inheritance tax, for instance, 500,000 euros for spouses and 400,000 euros for children. If the property's value exceeds these allowances, inheritance tax will be due, which can quickly amount to 15% or more of the surplus value. An accurate valuation of the property is essential here. Clarify the following points regarding the insurances:
Does the sum insured correspond to the current value of the property and household contents? Underinsurance can lead to significant deductions in the event of a claim.
Are all relevant risks, especially elemental damage, covered?
Do the deductibles and conditions match your financial situation?
Do beneficiaries or account details need to be changed?
Professional advice, such as that offered by Auctoa, can help you keep an overview and make the right adjustments. This ensures the preservation of the inherited property's value from the outset.
Landlord obligations: Making the right insurance decisions for rental properties
As a landlord, you bear a special responsibility and require specific insurances. The landlord liability insurance is essential if you do not live in the property yourself. It covers damages that occur to third parties on your premises or
Avoid Common Mistakes: How to Optimise Your Insurance Decisions
Many property owners make avoidable mistakes that can become costly in the event of a claim. Pay attention to the following points:
Underinsurance: If the insured value is set too low, the insurer will only pay a portion, which can quickly lead to a coverage gap of 20-30%.
Failure to report structural changes: Oversights in reporting extensions or energy renovations (often costing over 25,000 euros) can jeopardise insurance cover.
Lack of regular reviews: Check your policies at least every two to three years or during significant life changes.
Focus only on the price: Don't just look at the price; pay attention to the scope of coverage.
An analysis of potential coverage gaps is crucial. Use independent advice to ensure your protection is optimally tailored to your needs. A discussion with the experts at Auctoa or our ImmoGPT chat can provide clarity and help you optimise your insurance decisions.
Supplementary insurance and special cases: When is more protection sensible?
In addition to basic insurance, there are situations where additional protection is advisable. A glass breakage insurance can be worthwhile if you have large glass surfaces like conservatories or panoramic windows, as repairs can quickly cost between 1,000 and 5,000 euros. For heating oil tank owners, environmental liability insurance is essential, as even small amounts of leaked oil can result in clean-up costs of over 10,000 euros. Operators of photovoltaic systems should consider a specialised photovoltaic insurance, which covers damage from fire, lightning, theft, or operating errors and can also compensate for loss of revenue – a system for a single-family home often costs 15,000 euros or more. Builders need a public liability and a construction performance insurance during the building phase. Public liability is often included up to a construction sum of 100,000 euros in house and landowners' liability insurance. Carefully weigh the benefits and costs of these additional insurances. An individual risk analysis helps with the decision.
insurance decisions
The insurance market for real estate is evolving, driven by digitalisation and climate change. InsurTech companies are introducing new, often digitalised offerings and enabling quicker transactions. Smart technologies like sensors for monitoring water or fire damage can detect risks early and support preventative measures, potentially reducing claim costs by up to 15%. Climate change leads to more frequent extreme weather events, forcing insurers to adapt their risk models and increase premiums, especially for natural hazards, by 10-20% over the last five years. Sustainability in construction is gaining importance, and insurers are responding with policies for environmentally friendly materials and energy-efficient technologies. These developments require property owners to proactively engage with their insurance decisions and regularly adjust their coverage. The use of digital tools like the ImmoGPT chat by Auctoa can help provide up-to-date information and make informed decisions.
Conclusion: Proactive Insurance Decisions as Value Protection
What happens to insurance policies if I inherit a property?
Existing insurance policies generally transfer to the heirs. You should promptly inform the insurers about the inheritance and review or adjust the contracts accordingly. The land register must also be corrected.
Is home contents insurance important for owners too?
Yes, home contents insurance is very important for owners as well. It covers damage to movable items in the house (furniture, electronics, etc.) that are not covered by building insurance.
What is the difference between building and home contents insurance?
Building insurance covers the building itself and fixed installations (e.g. heating system). Home contents insurance covers movable objects in the household (e.g. furniture, clothing, electrical appliances).
My property is located in a flood risk area. Can I still get elemental insurance?
In high-risk areas, it can be more difficult and expensive to obtain elemental insurance. Some insurers reject applications or require high deductibles and preventative measures. An individual assessment is necessary.
What can I do to reduce my insurance premiums?
Premiums can often be reduced by choosing higher deductibles, proving security measures (e.g. alarm system, backflow preventer), ensuring accurate valuation to avoid over-insurance, or by comparing different providers. However, make sure that the coverage doesn’t suffer.
How can Auctoa help me with my insurance decisions?
Auctoa offers AI-supported property evaluations and strategic advice. An accurate valuation is the basis for the correct insurance amount. Our ImmoGPT chat can also answer initial questions and help you better assess your needs.
Additional useful links
Der Gesamtverband der Deutschen Versicherungswirtschaft (GDV) provides detailed statistics on loss trends in residential building insurance.
Statista offers statistics on contributions and benefits in residential building insurance since the year 2000.
The Umweltbundesamt provides a publication on climate risk insurance.
The Verbraucherzentrale offers important consumer advice on residential building insurance for homeowners.
Wikipedia offers a comprehensive article on residential building insurance.
The Bundesfinanzministerium provides information on insurance and fire protection tax.
The Statistische Bundesamt (Destatis) provides data on construction prices and the real estate price index.
The Deutsche Bundesbank presents its indicator system for the residential property market.
FAQ
What happens to insurances when I inherit a property?
Existing insurance contracts usually pass to the heirs. You should promptly inform the insurers about the inheritance and have the contracts reviewed or adjusted. The land register must also be corrected.
Is home contents insurance important for homeowners as well?
Yes, home contents insurance is also very important for homeowners. It covers damage to movable items in the house (furniture, electronics, etc.) that are not covered by the building insurance.
What is the difference between building insurance and home contents insurance?
The residential building insurance covers the building itself and permanently installed parts (e.g. heating system). The household contents insurance covers movable items in the home (e.g. furniture, clothing, electrical appliances).
My property is located in a flood risk area. Can I still get natural hazard insurance?
In high-risk areas, it can be more difficult and expensive to obtain natural disaster insurance. Some insurers reject applications or require high deductibles and preventative measures. An individual assessment is necessary.
What can I do to lower my insurance premiums?
Premiums can often be reduced by opting for higher deductibles, providing proof of security measures (e.g., alarm systems, backflow preventers), ensuring an accurate valuation to avoid overinsurance, or by comparing different providers. However, make sure that the scope of coverage does not suffer.
How can Auctoa assist me with my insurance decisions?
Auctoa offers AI-supported property valuations and strategic consulting. An accurate assessment is the basis for determining the appropriate insurance amount. Our ImmoGPT chat can also address initial inquiries and assist you in better assessing your needs.
