For many people, their own property is the biggest investment of their life. Regardless of whether you live in it yourself or rent it out – good insurance is the be-all and end-all. Owners should not ignore these policies.
Homeowners insurance
When major storms sweep across the country, it is not uncommon for them to cause major damage to properties. In Germany alone, these amounted to 2.1 billion euros in 2018, according to the financial guide “Finanztip”. It is therefore advisable for property owners to take out residential building insurance. This covers damage caused, among other things, by environmental influences and affecting the building or fixed fixtures such as the fitted kitchen or the permanently laid floor.
As a connected residential building insurance, the contract is made up of three components: fire, tap water and storm insurance. While fire insurance covers damage caused by fire, lightning or explosion, tap water insurance covers losses caused by tap water, frost and other breakage damage. In the event of storm damage from wind force eight or more or hail damage, storm insurance comes into effect.
However, if natural damage occurs due to flooding, earthquakes, landslides or heavy rain, the standard residential building insurance tariffs do not apply. For this purpose, the contract must be expanded to include the element of elementary insurance.
Home contents insurance
However, insurance also intervenes if damage occurs within a property, for example if items are destroyed by fire, tap water or storms or are stolen in a burglary. Household contents insurance is suitable for this and landlords should particularly consider it if they rent out their property furnished. However, you should think carefully about the value of the furnishings and whether you could cover the loss yourself.
In addition to furniture, household items and appliances, the protection of household contents insurance also includes borrowed items. Privately used antennas and awnings are also protected. The insurance also covers the loss of valuables, but only up to a certain limit.
Loss of Rent Insurance
However, the property owner is not only helped in the event of property damage. Financial losses due to loss of rent can also be covered through rental loss insurance. For example, it may happen that a property becomes uninhabitable and requires repairs due to major damage caused by water or fire. Residents are exempt from rent costs during this time. This means a financial loss for the owner, especially if the property still has to be paid off with a loan: “The mortgage payments continue,” says insurance expert Elke Weidenbach from the North Rhine-Westphalia Consumer Center.
Loss of rent insurance can help here. However, when concluding a contract, you should carefully consider when and for how long the insurance will intervene and how much the costs will be covered. According to Gerold Happ from the owners’ association Haus & Grund Germany, the decisive factors are the amount of the insurance premium and the actual risk of default.
Home and landowner liability
But having your own property also comes with great responsibility. For the owner, this means that he must ensure that both residents and visitors can enter and leave the building without harm. Neighbors or pedestrians walking past must not be harmed by defects in the building. For this reason, landlords, homeowners’ associations and owners of undeveloped properties need separate liability insurance for house and land owners.
This covers both damage costs and additional losses incurred by a third party. For example, if someone trips over a step in the stairwell in the semi-darkness because the lamp has broken and is therefore unable to work for a long period of time, the insurance will cover both the cost of the lamp and the person’s injuries.
Home and landowner liability makes sense for the landlord, as building insurance involves high liability amounts. If necessary, the costs for both insurance policies can be passed on to the tenant via the utility bill.
Legal protection insurance
When it comes to renovations, rent increases, utility bills or terminations, there are always disputes with both residents and co-owners – which often end up in court. As a landlord, you are often confronted with costs amounting to several thousand euros, which you can, however, avoid by taking out legal protection insurance. However, landlords should carefully consider whether legal protection insurance is right for them, as it does not cover all disputes and can demand high benefits.
With legal protection insurance, customers can usually put together their own insurance because the policy works according to a modular principle. From the areas of private life, work, traffic, rent and real estate, customers can choose which area they would like to insure and then only pay for the corresponding services for this area.
But as nice as insurance coverage sounds, it’s still not a free pass for a landlord. As a property owner, you are still bound by your duty of care and are responsible for your property and its residents. Even though an owner has taken out homeowners insurance, it does not relieve them of the obligation to, for example, install smoke detectors in the living spaces (as is required in some federal states). A homeowner’s or property owner’s liability insurance does not exempt him from the proper maintenance of his property.
Editorial team finanzen.net
