Are you facing the challenge of insuring your property optimally without breaking the bank? A well-thought-out insurance strategy not only protects your assets but can also reduce your annual costs by up to 15%. Discover how to choose the right policies and avoid pitfalls.
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The topic briefly and concisely
A solid insurance strategy for real estate is based on residential building, homeowners' and property owners' liability, as well as natural hazard insurance.
Regularly reviewing and adjusting insurance policies can reduce costs by up to 15-20% and close coverage gaps.
An accurate property valuation is crucial to avoid underinsurance; the 1914 value and the construction cost index are important factors in this regard.
Do you own property and wonder if your insurance cover is really optimal? Many owners pay for unnecessary policies or are underinsured in the event of a claim. A solid insurance strategy is crucial to cushion financial risks such as natural disasters or liability claims, which can quickly reach six-figure sums. This article shows you how to effectively protect your property values, avoid cost traps, and optimise your insurance premiums. With the right strategy, you secure your wealth in the long term and gain financial security.
Foundation of Your Property Security: The Essential Policies
The first step to a robust insurance strategy is identifying the core insurances. For every property owner in Germany, at least three insurances are essential. Building insurance covers damage from fire, water, storms, and hail—risks that cause billions in damage annually.
Additionally, there's the home and landowner liability insurance. This protects you against third-party claims if, for example, someone gets injured on your property; the claims can quickly become existentially threatening. In light of increasing extreme weather events, natural hazard insurance, which offers protection against flooding, heavy rain, or landslides, is becoming increasingly important—about half of the buildings in Germany still lack this protection. A solid foundation of these insurances is crucial. The specific configuration of these policies forms the core of your individual protection.
Risk Analysis: What Dangers Truly Threaten Your Property Values?
A detailed risk analysis is the starting point of every effective insurance strategy. Not every property is exposed to the same hazards. Is your property located in a flood-prone area or in a region with frequent storm damage? The average damage cost during flood events like those in the Ahr Valley in 2021 was €42,100 per case.
In addition to natural hazards, technical risks such as water damage, which occurs over 1 million times annually, or fire damage must be considered. For landlords, the risk of rental loss or damage caused by tenants is also a factor, making specific policies like loss of rent insurance advisable. A precise examination of the specific risks your property faces helps to avoid overinsurance and close coverage gaps. Also, think of liability risks; an unsecured pathway in winter can lead to compensation claims running into six figures. The risk assessment of your property is a dynamic process.
Cost Optimisation: How to Reduce Your Insurance Premiums Smartly
A comprehensive insurance strategy doesn't mean taking out as many policies as possible, but rather securing the right ones – and at fair terms. There are several ways to optimise your insurance costs without compromising on coverage. An important point is regularly reviewing your contracts, as rates and terms change; switching can often be advantageous.
The following measures can reduce your premiums:
Adjust your deductibles: Opting for a higher excess can lower your premium by a few percent, for example, by 10-20% when the deductible is increased from €0 to €500.
Compare tariffs: Use independent comparison sites or seek advice. Differences of up to 30% in comparable services are not uncommon.
Take advantage of bundle discounts: Many insurers offer discounts ranging from 5-15% if you take out multiple policies (e.g. homeowners and contents insurance) with them.
Optimise payment method: Paying annually is often up to 5% cheaper than monthly or quarterly payments.
Implement security measures: Investments in security technology (e.g. smoke detectors, alarm systems, backflow preventers) can positively affect the premium and reduce risk by up to 25%.
Also check if you have a special right of termination following a premium increase, which would allow you to switch within a month. Avoiding coverage gaps is as important as saving costs.
Special Case of Natural Damage: Future Obligation and Present Necessity
Protection against natural disasters is becoming increasingly prominent in property insurance strategies. In light of the rising number of extreme weather events, there has been political debate for years about mandatory insurance against natural disasters. Currently, only about 50% of residential buildings in Germany are insured against damage from floods, heavy rain, earthquakes, or landslides.
Although there is not yet a nationwide mandate, it is highly recommended for most property owners to take out natural disaster insurance. Damage costs from natural disasters can be immense; the flood disaster in 2021 caused insured damages of around 8.2 billion euros. Such a policy typically covers costs for repairs, renovations, drying out, and in the worst case, demolition and rebuilding. The premium amount depends on the risk zone (ZÜRS-Zone) of your property. Do not underestimate this risk, even if your property is not located in a designated high-risk zone, as heavy rain can lead to flooding anywhere. It is particularly critical to avoid underinsurance here.
The role of proper evaluation in your insurance strategy
An accurate property valuation is an often underestimated but critical part of your insurance strategy. The sum insured in your home insurance should match the current new construction value of your property to avoid being underinsured in the event of damage. Underinsurance can result in the insurance only covering part of the costs in case of damage, even if the damage is less than the insured sum.
The value of 1914 is a common basis for calculation here, which is adjusted annually according to the building price index to ensure sliding new value insurance. An incorrect valuation can lead to undercoverage of up to 30%. Auctoa offers AI-powered valuations as a quick and neutral way to determine the correct value of your property, thereby establishing the basis for an adequate insured sum. This is particularly important for older properties or after extensive modernisations. A precise valuation helps to minimise financial risks.
Long-term Optimisation: When and How to Review Your Policies
Your insurance strategy is not a static construct but should be regularly adjusted to changing circumstances. You should review your insurance policies at least every three to five years. Early review may be required for:
Changes to the property: Extensions, renovations, or energy-efficient refurbishments can alter the value of your property and thus your insurance needs. An increase in value of 10% should trigger an adjustment.
Change in risk situation: New insights about natural hazards in your area or changes in legal requirements may necessitate an adjustment.
Personal changes: A sale, an inheritance, or a change in the use of the property (e.g. renting) require a review of insurance coverage.
Market changes: New rates or more competitive offers from other insurers can offer savings of up to 20%.
Document all changes carefully and inform your insurer immediately. A proactive adjustment of your insurance applications ensures optimal protection and avoids unpleasant surprises in the event of a loss. The continuous maintenance of your insurance strategy is an important component of risk management for properties.
insurance strategy
Developing an optimal insurance strategy can be complex. As your digital compass for property evaluations and strategy consultation, Auctoa not only supports you with precise, AI-assisted evaluations but also helps you ask the right questions of your insurance advisors. An impartial assessment by Auctoa can form the basis for setting correct insurance sums, thereby reducing the risk of under or overinsurance by up to 25%.
Do you need a quick, data-driven estimate of your property's current value as a basis for your insurance discussions? Our ImmoGPT chat is available 24/7 for initial inquiries. For a detailed analysis and advice on how an optimized insurance strategy can cover your specific risks and reduce costs, get in touch now without obligation. We help you gain clarity and sustainably secure your property values.
Additional useful links
Wikipedia provides a comprehensive overview of residential building insurance in Germany.
The German Insurance Association (GDV) offers detailed information about residential building insurance and its benefits.
The Federal Statistical Office (Destatis) provides official data and indices on construction prices and the real estate market.
The Consumer Advice Centre offers independent information and advice on residential building insurance for homeowners.
The Federal Environment Agency explains the necessity and measures for adapting to the effects of climate change.
The German Weather Service (DWD) provides a climate atlas with comprehensive weather and climate data for Germany.
The Federal Office of Civil Protection and Disaster Assistance (BBK) provides information on risk management and strategies for disaster protection.
The German Insurance Association (GDV) offers up-to-date statistics and reports on natural hazards and their impacts on insurance.
FAQ
What is the difference between home contents insurance and building insurance?
Buildings insurance covers damage to the building itself and permanently installed parts (e.g. heating, windows, roof). Contents insurance covers movable items in the house or apartment (e.g. furniture, clothing, electronics) against damage such as fire, burglary, or water damage.
How often should I review my insurance strategy for real estate?
It is recommended to review the insurance strategy at least every 3-5 years, or in the event of significant changes such as renovations, increases in value, sale, inheritance, or changes in the risk situation.
Is rent guarantee insurance worthwhile for landlords?
A rent guarantee insurance can be useful if tenants fail to pay their rent or the property becomes uninhabitable due to damage. It protects against loss of income. However, the costs cannot be passed on to tenants, and often, the buildings insurance already covers loss of rent due to certain damages for up to 12 months.
What does 'gleitender Neuwert' mean in residential building insurance?
The sliding new value ensures that the insurance sum adjusts annually to the construction price development. The basis is often the hypothetical value of the building in 1914, which is multiplied by the current construction price index. This is intended to prevent underinsurance.
Can I deduct my insurance premiums from my taxes?
Contributions to homeowners' and landlords' liability insurance as well as to residential building insurance for rented properties can be claimed as advertising expenses on the tax return. For owner-occupied properties, these costs are generally not deductible, unless they pertain to household-related services provided under the insurance (e.g., maintenance of smoke detectors).
What happens to the home insurance when a house is sold?
When selling a house, the existing residential building insurance is transferred to the buyer according to Section 95 of the Insurance Contract Act (VVG). However, the buyer has a special right to terminate the policy within one month of the entry in the land register.
