BaFin

Buildings insurance

Buildings insurance pays for damage to buildings when caused by an insured risk (e.g. fire, tap water, storm/hail).

Elemental loss insurance

In addition to the usual risks of fire, lightning, explosion, implosion, tap water, burst pipes, frost, storm, hail, etc. a buildings insurance policy may also be concluded to cover elemental losses. Such elemental losses policy covers damage to the building caused e.g. by flood, backwater, snow pressure, earthquakes, avalanches, volcano outbreaks, landslides.

updated on 05.04.2016

Questions & answers

What is meant by indexed replacement value insurance?

Under replacement value insurance the sum insured does not change automatically. By contrast, under indexed replacement value insurance the sum insured (as well as the premium) is adjusted to the price trend in the building industry as calculated annually by the Federal Statistical Office. Because of this adjustment, the insurer waives the defence of underinsurance when an indexed replacement value insurance policy is concluded. As a result, sufficient insurance cover exists at all times. The prerequisite for this is that the sum insured is correctly calculated when the insurance contract is concluded and that no value-enhancing structural changes are made to the building(s) after that time. By contrast, a replacement value insurance policy, as it does not provide for any adjustment in the sum insured, may lead to underinsurance if the sum insured agreed is no longer sufficient to restore the building.

Note: The insurance cover/scope varies depending on the insurance company. It is therefore advisable to obtain and compare offers from several companies.

When is consent of the mortgage creditor needed for termination of the building fire insurance policy by the policyholder?

If the mortgage holder has registered his mortgage with his insurer and the mortgage still exists, the consent of the mortgage creditor as a rule is required in order for the termination of the building fire insurance by the policyholder to be valid. This consent must be submitted to the insurer no later than one month before expiry of the insurance contract.

This provision does not apply if the contract is terminated by the policyholder after a claim (section 92 (1) of the VVG) or after the insured property is sold by the purchaser (section 96 (2) of the VVG).

I have sold my house. I paid the premium for the residential buildings insurance at the beginning of the year. Am I now entitled to recover from my insurer the pro rated premium for the rest of the year?

The question of whether the seller is entitled to recover the premium from the residential buildings insurer for the rest of the year after sale of the property is dealt with in section 96 (3) of the Insurance Contract Act (Versicherungsvertragsgesetz – VVG):

After the sale, the insurer and the purchaser both have a right of extraordinary termination as further specified in section 96 of the VVG. By contrast, no right of extraordinary termination was granted to the seller. That means that the seller may request to be repaid the pro rated amount of the annual premium from the insurer only if either the purchaser or the insurer exercises such right of extraordinary termination. The repayment claim is calculated from the annual premium less the period for which insurance cover existed.

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