Is it necessary to cover your building in an apartment?
Insuring your building is very important as it is your major asset. Many people believe that their building is insured within the community insurance. This will be the case, however, the community insurance is limited. It will only cover the building’s structure and communal zones. The internal build of your property will not be covered under any community insurance policy.
Community coverage for your property:
In a few cases, the community does cover internal water pipes in your property. However, in our experience, only very few communities choose this option as it will increase the cost of the community insurance by approximately 20%.
In the best-case scenario, your property will have good community insurance with internal water pipes cover. This being the case you still will not be insured for internal walls, electrics and liability.
Explaining internal walls and electrics is straight forward. This relates to damp, water or fire damage to internal walls and electric cables. What is slightly more complicated to explain is the liability aspect.
Liability included once Buildings is covered:
Probably the most important reason to cover your “personal” building is so that the damage to other properties is covered. Damages which can happen to other properties are mainly by water leaks and by fire spreading.
There is a common assumption that by having your contents covered you will have the liability included for your property. This is, in part true since the liability coverage for your “contents” damaging other properties is covered. This type of damage would be for example a plant pot or sun umbrella falling to the property below and causing damage. However, contents insurance will not cover the liability for damages to other properties caused by fire or water damages.
Community insurance will also not cover the liability from your personal building to another property. This is the reason you need your personal build insured.
What are the options to include buildings cover?:
There are a few options to make sure your property is fully covered.
- The first option is to cover your building for its full rebuild value.
- The second and most common option is to cover the property for a percentage of the rebuild value. This type of cover is called “first loss” cover. For an average apartment, the value of first loss cover would be approximately 15,000 euros. The reason it is this figure is that if the damage or claim is over this amount it will usually be a structural problem. Another reason for this figure is that 95% of claims relating to personal buildings damages is below 12,000 euros.
The reason to choose option 2 is that the cost will be less for the insurance. Both options include a minimum of 300,000 euros liability coverage.
How do I work out the building value?:
Another common mistake that people make is thinking the value of the property is related to the purchase price of the property. This is not the case since the “rebuild” value does not take into account things such as: the view, location, and scarcity of property.
The rebuild value is based on the sq meters of the building. An insurance broker will be able to tell you this value and what the minimum rebuild value should be in your area relating to builder’s costs.