What you should look for in home insurance

Household insurance is a sensible protection. Insured persons should be careful with old contracts. Because there is a risk of underinsurance. We say what is important.

Home insurance should not be missing in any insurance portfolio. It insures property damage to furnishings, items of daily use and consumables. A household contents insurance replaces the new value of the corresponding household contents in the event of a claim.

In addition, there are the costs, for example, for cleaning up or for hotel accommodation, should this be necessary. However, theft of bicycles, natural hazards or surge damage, for example in the event of an indirect lightning strike, are generally not insured. These can be covered with supplementary or additional policies.

Claims: In 2016, the insurers settled around one million claims with a total of almost 1.4 billion euros. The average amount of damage was around 1,400 euros. The majority are burglaries – around 1,400 were reported in 2016. The cost per burglary was 3,250 euros. (Source: GDV – Association of German Insurers).

Insurance protection with household insurance

The following property damage is covered by household insurance:

  • Fire (fire, lightning, explosion, implosion, impact or crash of an aircraft)
  • Tap water, frost and other breakages
  • Storm and hail
  • Burglary and robbery
  • vandalism

By the way: With a household insurance, only movable objects are insured. Fixed furniture, such as a walk-in closet, is not insured. This also applies to the installed parquet, but the boards as well as broken glass.

Before taking out or changing household contents insurance, a detailed comparison of the service catalog is recommended:

  • Which damage is covered by the household insurance?
  • Which benefits are explicitly excluded from the insurance cover (for example, willful intent and gross negligence)?

The differences between the providers can sometimes be quite clear. Ultimately, a mixture of the conditions and the amount of the premium should determine the choice of a provider of household insurance.

Special case of valuables: With a standard policy, valuables are usually only insured up to a certain amount. For example, the loss of cash – insofar as it was not kept in a safe – is usually only replaced up to an amount of EUR 1,000. Savings books, certificates and other securities are often only insured up to a sum of € 2,500.

“Finanztest” checks household insurance – the place of residence decides

In addition to the scope of insurance benefits, tariffs also play a role for insurance customers when choosing home insurance. What many do not know: In addition to the value of the household items to be insured, these largely depend on the place of residence of the insured. In cities with a large number of burglaries, premiums are usually higher than in cities with a low risk of burglary. It is also usually more expensive in the city than in the country.

In April 2018, Stiftung Warentest examined 144 tariffs from 60 providers for the “Finanztest” magazine. The testers found clear price differences: In the best case, a customer pays 56 euros a year for protecting the household items of the same apartment in Munich, and 277 euros in the most expensive case – almost five times as much. In Cologne, the cheapest tariff costs 131 euros a year, while the most expensive insurer charges 516 euros for it (source: Finanztest 4/2018).

Risk zones: The insurers divide Germany into different risk zones. In places with a higher risk of burglary, insured persons have to pay more for their household insurance than in areas with a lower risk of burglary.

Flooded streets: Household insurance does not cover damage due to heavy rain or flooding. Insurance against natural hazards can remedy this. (Source: Getty Images / fotojog)Flooded streets: Household insurance does not cover damage due to heavy rain or flooding. Insurance against natural hazards can remedy this. (Source: fotojog / Getty Images)

How can I insure myself against natural hazards?

Extreme weather conditions have also increased in Germany recently. However, damage caused by heavy rain or flooding is not covered by regular household insurance. Homeowners can, however, take out additional elementary insurance.

This protection is particularly effective in the event of flooding, for example when the basement is full. After heavy rain, this can also happen where there is no river nearby. As a rule, only damage caused by flooding is insured. If the groundwater rises, the insurance usually does not pay for the damage, the testers of “Finanztest” emphasize.

Which natural hazards are usually not covered:

  • Heavy rain
  • flooding
  • Flood
  • landslide
  • Earthfall
  • earthquake
  • Snow pressure
  • Avalanches

The insurers use the ZÜRS zones to calculate the risk of natural hazards. In addition, they usually check whether there has been any natural damage in the past five years. If this is the case, they often require a deductible from the insurance customer.

ZÜRS zones: The same applies to natural hazards. Here the contribution depends on the flood risk of the location. To this end, insurers have developed the zoning system for floods, backwater and heavy rain – called ZÜRS Geo for short. There are four ZÜRS zones, with 1 being a low risk and 4 being a high risk.

Happy Couple Dream New Home (Source: Getty Images / Ridofranz)Happy Couple Dream New Home (Source: Ridofranz / Getty Images)

What is a waiver of underinsurance?

Customers who have taken out household contents insurance years ago and have not adapted it to changing living conditions run the risk of underinsurance.

Over time, one or the other expensive piece of furniture may have added to the furniture, the tube television has given way to a flat-screen television with a considerably larger screen size, or the household has simply increased. If the sum insured does not change in the course of this, the household insurance can lead to an unpleasant surprise in the event of damage. Because underinsurance affects every damage that is covered by the insurance – even if it is far below the sum insured.

Underinsurance: The actual value of a risk should correspond to the sum insured. If the sum insured is set too low compared to the actual value, one speaks of underinsurance. In this case, the damage is only calculated proportionately.

An example: If the actual value of the household items is EUR 50,000, but only EUR 40,000 are insured, the injured party will only be reimbursed by the insurance for 80 percent of their damage.

To avoid underinsurance, insurance experts advise you to check your household items every two years and adjust the amount insured accordingly. Policyholders who are unsure should have their inventory to be insured estimated.

Objection to waiver of underinsurance – living space tariffs

Policyholders can also agree to a waiver of underinsurance with their insurance companies – a so-called “objection to waiver of underinsurance”. In the event of a claim, the insurance companies do not check whether there is underinsurance. This is usually based on a fictitious insurance value of € 650 per square meter of living space when the insurance is taken out. Makes an insurance sum of 65,000 euros for a 100 square meter apartment.

But be careful: As “Finanztest” emphasizes, the calculation according to square meters can lead to underinsurance for small apartments with a large number of households, and in turn to overinsurance for large apartments with fewer households. In one case, you get less reimbursement than your household items are actually worth. Otherwise you will pay too much for your insurance.

Open window: Not all insurers pay damages due to gross negligence. This is especially the case with old household insurance. (Source: Getty Images / GusakArtem)Open window: Not all insurers pay damages due to gross negligence. This is especially the case with old household insurance. (Source: GusakArtem / Getty Images)

Do insurers pay even in the event of gross negligence?

If insurance customers neglect their due diligence – for example, if they leave the window ajar, the pot is on the stove or the candles are left unattended – insurers can reduce or completely reject the claims settlement. Gross negligence can also exist if the insured does not prevent damage against better knowledge.

But not all insurance companies equate gross negligence with a disclaimer. While newer contracts often do not include cuts in these cases, these clauses are often still included in old policies. Customers of older household insurance companies should check their insurance contracts for a liability exclusion in the event of gross negligence. A changeover could be worthwhile.

What happens in the event of a conflict?

If insurance damage has occurred, insurance customers should not simply dispose of the things. In order to avoid conflicts, the insurance company should be able to see for itself.

If there are differing opinions on the regulation of damage, both the policyholders and the insurance companies can commission an expert. However, there are extra costs for this. If the expert’s opinion remains controversial, a chairman decides.

Can I deduct the cost of home insurance from tax?

Household contents insurance is not considered a pension expense in the sense of tax legislation. As property insurance, it is not tax deductible. The situation is different if a tax-recognized office is maintained in the household. In this case, the contributions to household insurance are tax-deductible as advertising costs. The costs include: rental and ancillary costs as well as the costs for cleaning, renovation and household insurance – each proportionate to the number of square meters.

If rooms in the apartment or house are used for business purposes, the costs for home contents insurance – as a proportion of operating expenses – are also tax deductible.

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