Insurance of flats and apartment buildings

Complete protection of the property and its contents in the event of fire or earthquake, for example, may include three policies simultaneously: insurance of the dwelling unit, home insurance and insurance of the common parts of the house. We’ll advise you on how to combine the policies and what to look out for when taking them out.

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Chapters of the article

Apartment building fuse

The basis of the insurance should be a whole-house insurance policy. Although individual owners can insure their privately owned flats, this does not protect the common areas in the apartment building (such as corridors or attics) or the building as such. The HOA committee should therefore find out and calculate the value of the common parts of the building and in case of events such as flood, storm or earthquake, insure them. The insurance policy can then be used to pay for, for example, the repair of a damaged roof. In addition to insuring for common natural events, it is also worth considering insurance for theft of parts of the house (e.g. gutters) or insurance for vandalism. Liability for damage caused by the “house” may also be part of the policy. That is, a situation where, for example, a piece of plaster or tile falls off the roof of a house and causes damage to someone’s property or health.

Tip: Don’t forget to review the policy from time to time to take into account the evolution of property prices, as well as improvements or renovations that have been made to the apartment building. Otherwise, you could find that in the event of a loss, the insurance company would only pay out a claim up to the sum insured of the unrepaired building.

Apartment fuse

Apartment insurance policies are already arranged by individual apartment owners. What is most often confused in this context is the difference between property insurance and home insurance. Property insurance certainly does not mean insurance of the house itself, but it can be just insurance of the dwelling unit. However, many insurance companies offer this insurance as a combined policy, so clients are sometimes unaware that the two policies can be separated.

Property (dwelling unit) insurance covers damage to the property itself. This means floors, ceilings, walls, door frames, radiators or pelmets. However, it also includes things like the bath and all the things that are fixed in the flat. As insurance experts like to say: imagine your house is a doll’s house and you turn the whole thing 90 degrees. Anything that falls out the windows will fall under home insurance, what remains falls under condo insurance. Sometimes individual insurance companies can differ on the details. A point of contention is usually the kitchen, for example.

Again for the above reason , it is advisable to take out a home insurance policy with the same insurer as a home insurance policy. For one thing, you can get a discount for multiple policies and you also know that the policies will complement each other.

Tip: Check with your HOA how your house is insured. If you have a really good insurance for the whole house, you may not need further insurance for the unit itself. However, banks require insurance for the housing unit when arranging a mortgage for the purchase of a home. In this case, a reference to the house insurance is definitely not sufficient. In addition, in the case of a mortgage, it is advisable to separate the home insurance policy from the apartment policy (i.e. do not take out both as a package) in order to be able to dispose of them more easily.

Household insurance

As we have already mentioned, household means the furnishings in your home, i.e. wardrobes, tables, sofas, carpets, but of course also valuable paintings, electronics, coins or precious metal jewellery.

The basic insurance may also include items located in the basement or liability for damage caused by the policyholder, persons living in the same household or pets.

It pays to read the policy conditions carefully as they may hide other tricky details. In the case of home theft insurance, the payment of the policy may be conditional on the existence of security doors or at least security fittings, and in the case of home lightning insurance, the existence of a lightning rod, etc. If the condition is not met, the insurance company may refuse to pay.

Tip: If you are renting out your property, it is recommended that a home insurance policy is taken out by the tenant. If the policy is taken out by the owner or landlord, it usually only insures the equipment owned by them. Equipment acquired for the home by the tenant is not insured.

What to look out for in home and home insurance policies?

If you’re considering a new policy, it’s certainly not enough to just type the value of your home into a home insurance comparison tool or calculator and choose the policy that’s cheapest. In the end, it may not pay off at all. When taking out a policy, you need to know:

  • The price of the insurance – i.e. the amount you will pay (usually annually).
  • The scope of the insurance – what all your policy will cover. The fact that they will insure your home for just a few hundred crowns a year is certainly no prize. Subsequently, it may turn out that many insurance claims are not covered at all. Conversely, at other times you may have additional benefits to your home insurance, such as pet liability insurance. However, having the highest possible cover at all costs is also pointless. Insuring a fifth-floor flat in a house on a hill for the risk of flood or falling tree is really nonsense.
  • Insurance exclusions – you usually find out about exclusions at the very end before you sign the contract. Although you may be happy with your policy choice at this point, don’t rest on your laurels and study the exclusions. You may end up discovering that half of the events you anticipate are not covered. For example, items of unusual value, items located in the basement, and the like may be excluded from the policy.
  • Therates at which the insurance company provides a claim when a claim occurs. Either new, usual or time prices are used. New prices mean that the insurance company will actually pay you what you subsequently spend when you buy the item again. So, for example, a new wardrobe of similar quality to the one that burnt down. Normal and time prices are quite similar categories, with time prices being affected by depreciation and therefore based on what the item was worth immediately before it was destroyed. On the one hand, it may seem fair to be paid for what has been depreciated by the insurance claim, but on the other hand, you are usually buying new things, which are of course much more expensive than what the insurance company has paid in this case. Normal prices take into account what you would have been able to sell the item for on the market at the time of the claim. The market situation at the time is therefore also taken into account, which may well mean a further fall in price.

Factors such as location (city, location on a hill, near a river in a floodplain, etc.), the floor of the apartment, etc. can also affect the amount of the policy.

Need some advice?

Do you need legal advice regarding insurance for apartments and condominiums or other types of real estate? Do not hesitate to contact an Dostupný advokát. Email us with your question and you will have an answer from one of our attorneys within 48 hours.

Underinsurance and overinsurance

Overinsurance and underinsurance are situations where you underestimate the value of your property and report a different price than the reality to the insurance company. In the case of underinsurance, you report a lower price to the insurance company and pay a lower premium, but the insurance company bases the claim on the price you have reported. If you insured your flat a long time ago when you bought it for two million, it’s probably time to check your policy, as it may have increased in value many times over since then.

With the 2022 tornado disaster, it has only just become apparent how big the underinsurance problem can be. That’s why last year the government passed a proposed change to the Civil Code. This should ensure that insurers pay out the amount stated in the insurance policy in the event of underinsurance. Until now, the insurance company has been able to reduce this amount, thus penalising the insured twice.

If, on the other hand, you overvalue the property, you may end up paying an unnecessarily high premium. However, in the event of a claim, the insurance company will only pay an amount equal to the actual damage to the insured item. So it makes no sense to insure a three-bedroom home for 1 million when there are 300,000 worth of things in it. The result is only a high amount you have to pay to the insurance company for the premium.

Insurance claims handling

If an insurance claim has occurred and you are claiming from the insurer, you should have everything properly documented and leave no room for disputing or reducing the claim.

In practice, this means that if you have a bicycle or pram stolen from your basement, it is a good idea to have a receipt for such items and a receipt from the police stating that the theft happened at all.

If you are unhappy with the handling of your claim, your primary complaint should be to contact your insurer directly and ask for the claim to be reinvestigated. Other options for resolution include a motion for out-of-court dispute resolution if you are a consumer in the dispute. Theoretically, you can also file a complaint with the Czech National Bank, which supervises the insurance company’s compliance with its obligations. However, your specific problem will not be resolved here. The Czech National Bank is not a substitute for a court or an arbitrator. If you do not know how to proceed in your case, you should seek advice from an attorney who can help you with your filing.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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