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Elemental damage: does my home insurance cover the costs?

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Natural hazards and the associated insurance are the subject of constant debate, and with the increasing number of severe storms in the United States, they are becoming more and more important and, unfortunately, more expensive. Insurers define natural hazards as damage caused by snow and avalanches, earthquakes, heavy rain, high water, floods or volcanic eruptions. Such events are not automatically included in the building insurance, but must be insured through additional modules or a proper natural hazards insurance.

Depending on how severely your region of residence is affected by such events, elemental insurance is an expensive undertaking. At the beginning of 2019, Finanztip magazine examined insurance companies for the costs of natural hazard damage and found that insurers charge an average premium of around 48 percent for the additional elementary damage module. Surprisingly, buildings outside the risk regions in particular were more expensive than average, with surcharges of 50 percent.

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If you live in a region affected by storm surges, landslides or floods, you should consider taking out natural hazard insurance despite the extra costs. The high costs of the insurance are quite understandable. Statistically speaking, the probability that your building will be damaged by natural hazards is much higher than that it will catch fire. Elemental damage is therefore more likely and more frequent than damage caused by fire.

Sensible coverage amount of the home insurance

The amount of coverage for building insurance should be based on the value of the house, just like the premium amount. However, determining this value is not entirely straightforward. There are various methods for doing this, such as the 1914 value, the valuation by an expert or the conversion of the building's new value. You can read more details about these methods of determination on the page Sum insured for building insurance.

In most cases, standard values are used to calculate the insurance policy, based on the size and location of your home. However, if you have an upscale and particularly luxurious building, you can specify this separately with your agent.

Include underinsurance waiver

If the coverage amount is set too low, the building may be underinsured. This usually only becomes apparent in the event of an emergency, when the damage incurred exceeds the coverage amount.

When taking out building insurance, it is best to make sure that the sum insured corresponds to the value of your property and that the insurance company contractually grants you a so-called underinsurance waiver. Then they will cover the costs in full even if they exceed the coverage amount.

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Previous owner's home insurance

Buildings insurance policies are transferable. This can be quite practical. You buy a house and take over the building insurance from the previous owner at the same time. It's quick and uncomplicated, and your bank is also satisfied. After all, an existing building insurance policy is usually an important prerequisite for obtaining construction financing.

The advantages of this approach are therefore obvious, but there are still a few minor stumbling blocks. As a first step, carefully check whether the previous owners paid their insurance premiums regularly. If this was not the case and a claim occurs under you as the new owner, the insurance company may not pay. It is also worth taking a close look at the insurance conditions: Does the insurance cover all major claims?

If you are unsure and would prefer to take out a new building insurance policy of your own, you will have to take action yourself: In case of doubt, you have a 30-day special right of termination with regard to the building insurance immediately after taking over the property, which you can use in this case.

Selecting the right home insurance

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Before taking out buildings insurance, many questions often arise: What damage is covered by buildings insurance, and what damage is covered by household insurance? How can natural hazard damage be included? How does the valuation work? Our insurance specialists will answer your questions and help you choose the right valuation method. They will then support you in choosing the right insurance policy with their expertise and comprehensive market overview.

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