Real estate insurance at a glance: significance, scope of coverage, and types

Real estate insurance is an important topic for property owners. It encompasses various types of insurance that protect both the building and the owner's liability. In this blog post, we provide an overview of the most important types of real estate insurance, their significance, and the scope of coverage they offer.

Close-up of a person handing contract documents on a clipboard and a pen to a smiling couple.

Close-up of a broker's and a client's hands at a table, going through contract documents together.

Home insurance: absolutely essential for owners

For homeowners, residential building insurance is a must, so to speak. Many banks will only pay out a loan if proof of residential building insurance is provided. This insurance covers damage to the building itself, its structure, and all permanently installed parts, including windows, doors, the roof, and walls. Good to know: The heating system and the custom-made fitted kitchen are also considered permanently installed elements and are therefore also insured. However, this property insurance does not cover damage to the contents or household goods. The exact damage covered by the home insurance policy depends on the selected tariff. As a rule, the basic tariff covers the main risks of fire (lightning strike, explosion, and fire), storm, hail, and tap water (e.g., due to a burst pipe). As the weather is becoming increasingly unpredictable in this country, additional insurance cover against natural hazards is recommended for many regions. This refers to damage caused by natural forces, i.e., flooding, heavy rain, landslides, avalanches, earthquakes, subsidence, volcanic eruptions, and snow pressure. In most cases, insurance companies check very carefully before concluding a contract whether the building is located in a corresponding risk zone. In addition, various extensions are available on request: glass breakage and damage to photovoltaic systems are two particularly useful and common examples. Comparison portals offer homeowners the opportunity to compare the various providers and conditions of property insurance in a clear and transparent manner, enabling them to find the best deal. By the way: If you own an apartment, you don't usually need your own separate home insurance, as condominiums are generally covered by the building's joint home insurance.

An insurance broker sits across from a client at a desk, smilingly accepting documents from them.

Home contents insurance: property insurance for your belongings

Home contents insurance is also a type of property insurance, but it only covers the movable items inside a house or apartment: furniture and electrical appliances, for example, but also carpets and valuables such as art and coin collections. It mainly covers damage caused by fire, tap water, hail, storms, theft, and vandalism. There is no obligation to take out this type of property insurance, but it is highly recommended because if, for example, a fire destroys all your furnishings and belongings, replacing them will involve immense costs. The sum insured should be chosen carefully: if it is too high, the premiums will also be unnecessarily high; if it is too low, not everything will be replaced in the event of damage. A good guideline for this property insurance is €650 per square meter. Like home insurance, it can be extended to cover natural hazards, so that household contents are also insured against flooding, landslides, avalanches, and other forces of nature. Almost all providers of this property insurance will reimburse the items at their replacement value in the event of damage. Follow-up costs such as hotel accommodation are also covered if, for example, the apartment has been rendered uninhabitable by flooding.

An insurance broker sits across from a female client at a desk and goes through documents with her.

Home and property owner liability insurance: real estate insurance against damage to third parties

Every owner is responsible for traffic safety on their property and in the building itself. If a third party suffers damage here, it can be extremely expensive for the homeowner. For owners who use their property themselves, private liability insurance usually covers damage. However, the situation is different for undeveloped properties and rental properties. In many cases, private liability insurance does not cover the costs if damage is caused to third parties. This means that special property insurance is required, namely home and property owner liability insurance that covers property damage, personal injury, financial loss, and environmental damage. This protects owners from high claims for damages and also defends them if it turns out that these claims are unjustified (passive legal protection). In the case of a condominium, home and property owner liability insurance is usually taken out by the owners' association, as is residential building insurance.

Close-up of a person's upper body sitting at a desk, explaining something with gestures; a pen lies on a clipboard next to a miniature house with a grey gabled roof.

Water damage liability insurance: Property insurance for owners of oil heating systems

There are other important liability insurance policies that are considered part of property insurance. For example, water damage liability insurance: this is relevant if there is an oil tank on your property. If oil enters the groundwater at some point due to a leak or a defective pipe, the contamination is often severe. In such cases, property insurance not only covers the repair of the damage, the disposal of the contaminated soil, and the restoration of the damaged area, but also compensation for damages, if necessary. Although this property insurance is not mandatory, a single drop of oil can contaminate up to 1,000 liters of water, and even a small rust spot in an oil tank can often have fatal consequences, so it is a matter of course for many property owners with oil heating.

Close-up of a hand offering a house key with a keyring in the shape of a small house; beneath it some documents and a calculator.

Other property insurance policies that may be useful depending on your needs

If the property has not yet been built, builder's liability insurance is recommended: this is only real estate insurance in the broadest sense and protects builders from the costs incurred on the construction site as a result of property damage or personal injury. After all, the risk of accidents on construction sites is high, and the builder is liable for everything that happens there. Home and property legal protection insurance can also be classified as real estate insurance. It can be taken out by homeowners and landlords, but also by tenants, and covers both neighborhood disputes and disputes with tenants. Lawyer's fees and court costs are usually covered. Also of interest to owners who are also landlords: rent loss insurance, which protects against losses due to defaulting tenants.

A radiant young couple sits at a table with a female estate agent and joyfully signs contract documents together.

Important for all property insurance: compare and check

Needs-based property insurance is worth its weight in gold in an emergency. This makes it all the more important to choose customized rates and conditions that are tailored precisely to your individual circumstances. Comparison websites not only offer you a good overview of the jungle of rates, but also provide you with the best possible means of comparison. The information contained herein has been researched to the best of our knowledge. Please obtain detailed information before taking out insurance.

All information has been compiled to the best of our knowledge. However, we cannot accept liability for the details.