Introduction
The frequency and intensity of extreme weather events are increasing. Heavy rain, flooding, and storms cause billions of euros in damage annually. Yet only about half of all residential buildings in Germany carry natural disaster insurance (Elementarschadenversicherung). This article explains what such insurance covers and why it is important for property owners.
What Are Natural Disaster Losses?
Natural disaster losses (Elementarschaeden) are damages caused by natural events. These include:
These risks are not automatically included in standard building insurance (Wohngebaeudeversicherung). They must be separately agreed upon as natural disaster insurance.
The Insurance Gap in Germany
According to current surveys, only about 50 percent of residential buildings nationwide are insured against natural disasters. The rate varies significantly by region: In Baden-Wuerttemberg, it exceeds 90 percent due to the historical mandatory insurance requirement, while in other federal states it falls below 30 percent.
This insurance gap is becoming increasingly problematic in light of climate change. The Ifo Institute highlighted in a recent study the need to find a new balance between individual prevention and collective responsibility.
Political Developments: Mandatory Insurance Under Discussion
The debate about mandatory natural disaster insurance has been ongoing for years. Following devastating flood events in recent years, it has gained new momentum. The federal government's coalition agreement provides for a corresponding regulation.
Mandatory insurance would mean that all building owners would be required to obtain natural disaster coverage. Details on the specific design -- such as premium levels and insurability of particularly high-risk locations -- remain open.
What to Consider When Choosing Insurance
Covered Perils
Check carefully which natural disaster perils are covered. Not all policies cover every risk. Heavy rain and backwater in particular should be included.
Sum Insured
The sum insured should correspond to the replacement value of the building. In the event of underinsurance, you will only receive partial compensation for damage.
Deductible
Many natural disaster policies include a deductible. This can be agreed as a fixed amount or as a percentage of the damage. A higher deductible reduces the premium.
Waiting Periods
After the policy is signed, waiting periods often apply before coverage takes effect. These typically range between 14 days and several months.
Exclusions and Obligations
Pay attention to exclusions -- such as for groundwater damage -- and to obligations such as the installation of backwater valves.
Special Considerations for HOAs
In homeowners' associations, building insurance is a communal matter. Taking out natural disaster insurance requires a resolution by the owners' meeting (Eigentuemerversammlung). Given the increasing risks, it is advisable to place this topic on the agenda.
Preventive Measures
In addition to insurance coverage, preventive measures should also be taken:
These measures can not only prevent damage but also have a positive impact on insurance premiums.
Conclusion
Natural disaster insurance provides important protection against natural hazards that are increasing due to climate change. Given the current insurance gap and the political discussion about mandatory insurance, property owners should review their insurance coverage and expand it if necessary.
As a property management company, we support our clients in analyzing existing insurance coverage and obtaining quotes.
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*This article is for general informational purposes and does not constitute individual insurance advice.*
