Homeowners' insurance: important cover for damage to the building

However, if you have homeowners' insurance, you are on the safe side: the insurance covers any damage to your property. We will now show you what damage and costs you can protect yourself against with homeowners' insurance, when it pays out and what it costs.

What is homeowners' insurance?

For you as a property owner, homeowners insurance is an important form of risk protection against potential damage to your building. In its basic version, the insurance covers damage to your residential property caused by fire and lightning, mains water or storms and hail.

The following example shows just how important homeowners' insurance is for homeowners: in 2020 alone, German insurers had to pay out around 5.5 billion euros for damage to residential buildings.

What is a residential building?

Please note in connection with residential buildings insurance: For the insurance cover to apply, your property must be a building used at least 50 percent for residential purposes. If this is not the case, you must take out buildings insurance for commercial properties.

When does buildings insurance pay out?

Your homeowner's insurance pays out if an insured event causes damage to your building.

The basic risks covered by the basic version of homeowners' insurance are

• Lightning and fire
• mains water
• Storm and hail

Other perils for your building can be included in the homeowner's insurance contract on request and for an additional charge.

If one of the perils covered by the insurance causes damage to your building or parts of the building, the homeowners' insurance will pay for the damage. In addition to the main building itself, the following building elements are included in the insurance cover:

• Walls
• roof
• Permanently installed windows and doors
• Terraces and balconies
• Elements that have been permanently installed in the building (e.g. fitted kitchens, built-in furniture, sanitary installations or permanently laid floors)
• Building accessories (garbage bins or letterboxes and doorbell systems)
• solar systems

With many insurers, insurance cover can be extended to outbuildings (garages, sheds or carports).

What types of damage are covered by homeowners' insurance?

The basic version of most homeowners' insurance policies covers fire, water damage and storm damage to the building. You can now find out exactly what these types of damage are:

• Fire damage: Fire damage is damage to your home caused by fire, lightning, explosion or implosion. Homeowners' insurance also covers damage caused by fire to permanently installed electrical appliances
• Water damage: Damage to your building caused by mains water is often frost damage or burst pipes. The insurance covers damage caused by all installations carrying mains water. Damage to the building caused by flooding is not insured, as this is not caused by mains water
• Storm damage: Your homeowner's insurance covers storm damage caused by wind force 8 or higher. Frequently occurring cases of damage as a result of a storm are covered or damaged roofs and corresponding consequential damage to the building. Hail damage is also covered by homeowners insurance

When does homeowners' insurance not cover?

There are various types of damage to the building that are not covered by homeowners' insurance. In particular, it does not pay for damage to appliances, furniture, clothing or other movable items in your building. You can take out household contents insurance for such damage. In addition, the following types of damage are not covered by buildings insurance:

• Uninsured fire damage: The insurance does not cover fire damage to the building caused by deliberately lit material (for example, wood in a fireplace). Surge damage is also generally not covered
• Uninsured storm damage: Residential buildings insurance does not cover storm damage caused by storms with winds of less than force 8. If you have been negligent during storms with winds of force 8 or higher and have not securely locked the windows or doors of the building, the buildings insurance will also not cover you for this
• Uninsured water damage: Your homeowners' insurance only covers water damage if it was caused by mains water. Damage to the building caused by flooding, groundwater or weather-related backwater is not covered by the insurance
• Damage to unfinished buildings: If your residential property is not yet completed, the cover provided by homeowners' insurance does not yet apply. However, you have the option of taking out appropriate insurance for unfinished buildings

Supplement for your homeowners insurance: natural hazard insurance

In its basic versions, homeowners insurance does not cover damage caused by natural hazards.
This means that your insurance will not pay out if your building is damaged by earthquakes, landslides, floods, avalanches or heavy rainfall. However, especially now - in times of climate change - it is becoming clear that it is important to insure residential buildings against these risks and damage. To obtain appropriate protection, you can add the “natural hazard insurance” module to your homeowners' insurance.

Who needs homeowners insurance?

Homeowners' insurance is not compulsory.
Nevertheless, it is a must for homeowners. After all, property damage or the destruction of a building can have serious financial consequences. Homeowners' insurance pays for any damage that occurs or finances reconstruction if your building is destroyed.

It can therefore be said that no property owner should do without homeowners' insurance. This also applies to apartment owners - although there is a special feature here: if you own an apartment in an apartment building, you do not take out homeowners' insurance yourself and only for your apartment. Instead, the condominium owners' association (WEG) regularly takes out homeowners' insurance for the entire building. This protects all condominiums equally against potential damage.

What does homeowners' insurance cover?

If an insured event occurs in the event of damage, homeowners' insurance pays:

• the costs of repairs resulting from the occurrence of an insured event
• the costs of any necessary demolition of the building, including clearing work and securing the property
• the cost of rebuilding the building at the so-called replacement value price. This means that your insurance will finance the cost of constructing a new, similar building at today's prices

How much does homeowners insurance cost?

The basic version of homeowners' insurance is available from many insurers for as little as around €10 per month. If you want to extend the insurance cover to extreme weather events, the insurance will cost you from 15 euros per month. The amount of the insurance premium depends on various factors:

• Living space of the building
• Number of risks covered by the insurance
• Location of the building
• Equipment of the building
• Year of construction
• Amount of the agreed sum insured

How to proceed in the event of damage

In the event of a claim, it is important that you document all damage to your building for the building insurance. To do this, prepare a written damage report, attach photos and report the damage to your insurer immediately. Depending on the extent of the damage, the insurance company will send an expert to check the amount of damage.

Also make sure to take emergency measures to prevent further damage to your building. This means, for example: If you notice tap water damage, turn off the main tap on the water pipe immediately. If the roof of your house has been covered by a storm, cover it with a tarpaulin. You do not have to carry out a complete repair. If you have to repair damage to your home yourself immediately because it would otherwise be uninhabitable, discuss the measures with your insurer beforehand.

What happens to homeowners' insurance in the event of a change of ownership?

If the ownership of a property changes due to purchase or sale, the insurance cover of the homeowners' insurance is automatically transferred to the new owner by law. However, the new owner has the option of canceling the buildings insurance immediately or at the end of the insurance term and opting for an insurer of their choice.

If the ownership structure changes due to an inheritance, the heir automatically enters into the existing homeowners' insurance. Unlike a buyer, they cannot cancel the insurance for the building immediately.

Homeowners' insurance is a must for property owners

As a homeowner, you are not obliged to have homeowners' insurance. Nevertheless, we advise you to take out appropriate insurance against potential damage to the building.

If your building is damaged or completely destroyed by fire, for example, you will be faced with immense costs. In the worst-case scenario, the reconstruction costs could threaten your livelihood. Therefore, insure your building with homeowners' insurance. Make sure that the agreed sum insured corresponds to the value of your building.