Insurances connected to Real Estate
Household insurance in Germany
The closure of insurance is equally important for German home owners and renters. It covers the belongings against damages caused by fire and supply water, robbery and theft, storm, hail and vandalism. The detailed insurance coverage is described in the policy. This document is the basis for the insurance agreement and serves as a proof that an insurance agreement exists. That’s the reason why the policy is so valuable. It should never be stored at home but rather at a secure place so that it doesn’t get destroyed in case of damage.The contribution that has to be paid depends on the amount insured. This amount again depends on the value assigned to the objects in the insured flat or house. Two approaches for this matter are available. Either the value of all objects is determined exactly or a lump-sum is calculated per square meter. The latter is the far more often used approach but it is worth mentioning that especially in smaller flats or with very expensive objects and underinsurance occurs. If this is the case, the insurance company isn’t obliged to compensate for the full damage or anything at all in case of damage. Therefore it is crucial to agree on an underinsurance protection. By the way, if an underinsurance exists isn’t evaluated by the insurance company in cases of bigger sums. It’s done in every case not matter how high the amount is.
Another determinant of the insurance sum is the location of the flat. Generally, the insurance contributions for flats in the city are way higher than for flat in a more rural area. The security of the flat is also a determinant. If an object has surveillance cameras and an alarm system, the security level is increased what leads to a decrease in insurance contribution.
Household insurance offers sufficient coverage for expensive object and furniture for a rather small amount. It is preconditioned that the insured amount is evaluated from time to time and adjusted if necessary. Complementary Insurances such as glass insurance or off-premises coverage present an opportunity to increase the insurance coverage to personal needs. This makes sense if the flat or house has expensive or floor-to-ceiling windows, customized windows or if there are glass doors and expensive showcases. Off-premises coverage makes sense if there is a garden or a terrace attached to the object. Bicycle insurance is also very popular. Bicycles are usually included in the household insurance but only to a limited amount. Useful is also an insurance against damages caused by over voltage. Due to that, PC, TV & Co. are covered even if a stroke of lightning isn’t directly responsible for the damage.
An insurance comparison is advised to find the optimal coverage with good conditions. The best way of course is an online comparison. This way it is possible to get an overview of all the companies and their policies in almost no time. Having that knowledge eases the process of choosing a policy which matches the requirements and offers also a good cost/performance ratio.
The US-American „Home Insurance“
The principle of a household insurance is also known in the USA although the American policies cover more risk than the German ones. The Home Insurance is also known as Hazard Insurance, Homeowners Insurance or just HOI. It’s considered as property insurance. This means that it is an insurance that covers private belongings in general. Its coverage pretty much matches the German household insurance – with one big difference. Part of the American insurance is a liability policy because separate personal liability insurance doesn’t exist.While in Germany, every household insurance company has to stick to the General Household Insurance Conditions if they formulate their contracts, the US insurance companies are selling seven types of Home Insurance. The spectrum goes from HO-1 (Basic Homeowner Policy) on the one end to HO-8 on the other end, an insurance for old houses. The HO-1 offers basic coverage for fire and damages that were caused by a stroke of lightning. HO-2 covers storm, theft, vandalism, etc. The most common household insurance in the USA is the HO-3. It covers all damages concerning home, structure and its content and it contains the personal liability insurance. The HO-4 is relevant for renters. It covers the most common damages a renter has to face such as damages due to strokes of lightning, vandalism, explosion, destruction, smoke, theft, volcanic eruption, etc. The HO-5 is rather similar to the HO-3 but has a wider extent of insurance coverage. Condos and special apartments are covered by HO-6. HO-8 finally covers damages on old houses which market values are too low. In some states the different types of insurance are not called HO-1, HO-2 etc but rather HO-A, HO-B, etc. Generally speaking, a household insurance in the USA can cover the following damages: fire, lightning, storm, hail theft, explosion, smoke damages caused by cars or planes, deliberate damages, collapse of the building and uprisings and riots.
As with the German household insurance, some damages are excluded from the regulation such as flooding or earthquake in endangered areas which are spread over the USA. On the other hand, a good location in a secure area or good furniture in the real estate which has to be insured might be a good thing. If real estate is located in a secure area, it has influence on the insurance contribution in contrast to Germany. By the way, to get a mortgage loan in the USA, a proof of home insurance is required.
