Insuring your home is definitely one of the most important financial products. Yet mistakes are often made. So today, let’s take a look at what your property and home insurance policy should look like.
Real estate and household
Let’s start by talking about the difference between property and home insurance. Simply put, for insurance purposes, a property is a house or apartment that has just been built. A home is then everything we bring into it when we move in.
What to insure against?
Damage to your property can occur for many reasons. The most frequently insured are:
- fire
- blast
- lightning strike
- plane crash
- fall of trees, masts and other objects
- vehicle impact
- landslides and avalanches, rock collapses
- supersonic aircraft shock wave
- Earthquake
- whirlwind
- Hail
- flood and inundation
- atmospheric precipitation
- snow weight and pressure
- water damage
- exposure to smoke
- burglary, robbery, simple theft
- vandalism
- damage to the facade, insulation or fence by wild animals
- overvoltage, short circuit, undervoltage
- glass breakage (allrisk)
If we were to discuss each risk separately, this article would take hours of reading. Most insurers will offer you 2-3 variations of these risks in the form of packages. The cheapest basic package usually includes only natural events (fire, windstorm, hail, flood,…). Other risks are offered by insurance companies at an additional cost. Personally, I am a proponent of the all-in-one option. In my opinion, you shouldn’t skimp on the sunroof insurance. I often see people paying more for their car insurance than their home insurance. If we think about it a little bit, I think we can see the absurdity.
A typical claim that you will find in the additional equipment of your policy is for example:
- In a thunderstorm, lightning strikes a mile away from the house, but the voltage spike will burn out the boiler, heat pump and other appliances.
- Vandal has decided to put his art on your walls.
- Someone mistook your apartment for his and took everything of value from it.
- A pipe burst in the wall and the water did its work.
Beware of underinsurance
One of the biggest bogeymen on old property insurance policies is an unapplied sum insured. 10 years ago you insured your house for 2 million crowns. But today it’s worth $4 million. So what happens if the house goes up in flames? The adjuster will come in, assess that the house was underinsured and reduce the claim by the exact proportion of underinsurance. So if you had a $2 million policy instead of a $4 million policy, you were only paying half of that. So you only get half of the benefit, which in this case is only CZK 1 million. The Underinsurance Act is applied by all insurance companies.
Modern insurance policies take this into account and you can arrange for automatic updating of the sum insured. The insurance company will then increase your sum insured each year in line with inflation. This means that the amount you pay for your insurance will increase by a few crowns each year. However, it’s a small price to pay for not having your roof over your head underinsured.
The most common damages
In the first half of 2019, the following events were the most common causes of property damage:
- Vichřice – 32 652 events
- Water damage – 20 219 events
- Damage to electronics – 11 620 events
- Tíha sněhu – 7 568 events
- Theft – 5 952 events
- Overvoltage – 4 526 events
The following events caused the most damage in the first half of 2019:
- Fire – 947 miles. CZK
- Whirlwind – 812 miles. CZK
- Water damage – 532 mil. CZK
- Hail – 343 mil. CZK
- Damage to machinery – 343 mil. CZK
- Weight of snow – 183 miles. CZK
source: the Czech Association of Insurance Companies
Liability insurance
As part of your property insurance, you can also take out the so-called. “bullshit insurance.” This is a policy that every household should definitely have. However, we will talk about it in the next article. 🙂
Conclusion
Today we have discussed at least the basics of civil property insurance. We did not say anything about flood zones, terms of indemnity for individual risks, partial limits of indemnity, all-risk glass insurance or assistance services. It is definitely a challenging topic and therefore, you should definitely not underestimate your home insurance. The best option seems to be to contact a professional. Someone who can advise you, compare prices across the market and negotiate a discount. If you don’t have someone like that on hand, I’d be happy to help you out.
