Many homeowners are currently receiving their homeowners insurance premium bill and are surprised that the premiums have risen again. The adjustment factor increased by about 15% this year to 24.06. For 2024, premiums will increase by a further 8%. Quite a few are now considering terminating their contracts “because of premium increases”. However, termination is not possible because the agreed premium rate has generally not been increased. Nevertheless, these adjustments are an opportunity to review the existing contracts. We explain what you should pay attention to:
- How to correctly determine the value of your home
- whether elementary insurance is necessary,
- how and when you can cancel,
- where bad surprises lurk in home building insurance,
- what household contents insurance brings.
1. Correctly determine the value of the house
The basis for the compensation is the valuation in the building insurance. Insurance companies often determine a so-called “value 1914” for sliding replacement value insurance, which is used as a fictitious calculation variable for sliding adjustment and complete compensation: The value 14 is multiplied by the respective construction cost index (2023: 19.61) to determine the replacement value . Check the information on the basis of the contract and see whether the new value for the house is still appropriate.
Many companies calculate the value 14 using the enclosed space (volume) and a guideline value that depends on the equipment. The guideline value is around 25 to 35 for residential buildings. Some shareholders only ask for living space, number of floors and type of furnishings and no longer show the value 14 (living space tariffs). If the insurance company’s numbers are accepted, the companies will typically provide a waiver of underinsurance. If the information is truthful, the damage will be fully compensated and no reduction will be made.
- Since residential buildings are usually rebuilt, they should be insured against fire, storms and tap water according to VGB (residential building conditions) at the sliding new value. The VGB are often much cheaper and more far-reaching than agricultural tariffs.
- Fire insurance insures damage caused by fire, lightning, lightning surges and explosions, for example caused by gases. Consequential damage, for example from extinguishing water or disposal of fire debris, is also insured.
- Tap water insurance covers damage caused by burst pipes, frost and moisture damage. Tap water damage is often not that serious, but it can be very annoying.
- Storm insurance covers damage caused by wind with a force of 8 or more. Hail damage to the glazing is also included.
- The insurance companies also offer deductibles for home building insurance upon request. Ask and decide for yourself whether you want to contribute €400 to €500 yourself and save on premium payments. Even after minor damage, insurance companies can terminate the contracts and increase the premium rates for new follow-up contracts.
- Some insurance companies no longer offer any insurance coverage at all for older homes with previous damage.
2. Elementary insurance necessary?
In some regions, elementary insurance should be considered due to the snow pressure. If the risk of flooding and heavy rain is low, for example Zürs 1 (zoning system for flooding, backwater and heavy rain, Zürs for short), the insurance companies offer protection for around €100 to €200. On the other hand, farms with residential buildings in a secluded location and outside a flood area have one low risk of heavy rain and flooding and may be able to forego insurance coverage.
Of course, this also applies to commercial buildings, which are significantly more expensive to insure overall. The deductible is usually €500 to €1,000. In locations with a risk of heavy rain, the backwater flap should be maintained and functioning so as not to jeopardize insurance coverage. In the highly endangered areas of Zürs 3 and 4 you will probably not get any insurance cover. Here you should try to use structures to prevent water from entering.
Homeowners in the SGK3 (heavy rain hazard class) area also have difficulty getting a contract or pay significantly more. Floods and heavy rain events can cause significant damage to residential buildings. Politicians are therefore considering introducing mandatory elementary insurance for all residential buildings in order to be able to offer such a policy to owners in endangered areas.
3. Check termination options and obtain offers
The building insurance can be canceled in writing at least three months before it expires. Furthermore, the contract can be terminated one month after settlement or rejection of a claim. When it comes to homeowners insurance or offers, make sure that there is a waiver of underinsurance.
Homeowners insurance should also pay out in the event of gross negligence. Clean-up costs, surge damage, additional costs due to official requirements should be adequately insured. Frost and breakage damage to drainage pipes outside the residential building and supply pipes on the property should also be insured.
4. Bad surprises with homeowners insurance
Expensive homeowners insurance does not in itself guarantee comprehensive insurance coverage. In the event of damage, unpleasant surprises can arise, as the following deficiencies in the policies show:
- The building values and therefore the insured amounts were not determined appropriately (underinsurance).
- Many farmers fail to report any modifications or extensions they have made to their insurance. The formerly empty storage facility is still insured for its current value, even though it has been extensively and expensively converted into an apartment. The conversion of the stable into apartments has also not yet been reported to the insurance company.
- Some residential buildings are insured under the agricultural tariff, although depending on the circumstances the linked residential building tariffs (VGB) are more comprehensive and cheaper.
- Installing a fireproof fire wall between the house and the threshing floor and removing straw can help to significantly reduce the risk of fire and save contributions.
5. What does household contents insurance do?
Household contents insurance covers damage to furnishings caused by fire, lightning, burglary, robbery, vandalism, tap water, storms and hail. The premium rate varies by region and society. The sum insured should correspond to the value of the household contents. Insurers often set a figure of 700 €/m² of living space for under-insurance waiver. However, the amounts do not always correspond to the actual values, especially in farmers’ large residential buildings. It would be worth considering choosing a lower insurance sum of, for example, €100,000 to €150,000 (even without waiving underinsurance). Ask about possible deductibles that will be deducted in the event of damage.
Valuables are usually insured with at least 20% of the insured amount. Surge damage should be insured for at least 5 to 10% of the insured sum. When it comes to household contents insurance, there is also the question of coverage against natural hazards with additional costs of possibly €50 to €100.
Check whether insurance against bicycle theft is necessary. The premium for bicycle theft often costs €40 to €80 per year. If you own valuable e-bikes, coverage of 1% of the insured sum will not be enough. The bicycles must be chained while on the move. Ask for the details.
Taking out household glass insurance is not part of the existential insurance of an agricultural entrepreneur. Since the potential for damage is manageable, you could forego this insurance coverage.
Residential building insurance and household contents insurance should always be taken out with the same insurance company in order to avoid delimitation problems in the event of damage.
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2023-12-05 22:29:12
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