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Property insurance – what types of insurance do we know?

Property insurance is typically taken out when you become a property owner, as it protects your property against unforeseen events such as fires, floods, theft or other damage. There are different types of insurance to suit specific needs and property types. Which policy to choose and how does the insurance process work? That’s what we’ll focus on in today’s text.

záplavy v Praze, pojištění nemovitosti
7 minutes of reading

Chapters of the article

Property insurance vs. home insurance

The most common type of property (building) insurance covers damage to the building itself, whether it is a family home, a cottage, a garage or even an apartment. It protects them against floods, fires, vandalism or various natural disasters, for example. Of course, the protection does not consist in the fact that big water or fire cannot fall on them, but if this happens and the house lies in ashes, you will recover a significant part of the damage caused.

The second most common type of insurance that covers property is home insurance. However, this protects the movable items inside the home or apartment. This typically includes furniture, electronics, and personal belongings. This insurance covers damage caused by theft or property damage, for example.

Often, third-party liability insurance is also associated with these types of policies.

When choosing insurance, it is important to consider the value of the property and furnishings, the risks associated with the location (e.g. flood zones) and the specific needs of the owner. Insurance companies offer various packages and extensions, such as natural catastrophe insurance or rental property liability insurance.

Choosing the right insurance ensures peace of mind and protection for your investment. But it is not enough to choose an insurance company, take out a policy and just pay for years and decades to come. You also need to regularly review and update your policies to match current values and needs.

Tip: It is advisable to insure your property at any time and in any situation. Such a proclamation could conclude this topic. However, we have focused our article on specific situations such as insuring someone else’s property, insuring a home when arranging a mortgage, or insuring a house that is yet to be built. What are the differences between these policies?

I’m taking out an insurance policy – what to look out for?

There are several key aspects to pay attention to when taking out an insurance policy. First, read the whole contract thoroughly , including any small print addendums. These usually contain exclusions that change the situation. Understanding exactly what is covered and what falls under exclusions is essential. You may believe that your home is fully protected (at least financially) against fire, but the exclusion on page nine of the policy covers situations where the insurer will not pay anything because the fire originated from your kettle, your minor child or a storage stove that does not meet the latest technical specification. It is also important to check the limit of cover to ensure it matches the value of your property and possessions.

Deductibles define your financial liability in the event of a loss, so you need to pay special attention to them. Find out how and within what timeframe you need to report the damage to the insurance company. Be sure to inquire about any additional fees and automatic renewal terms.

Check the options and rules for changes to the insurance policy. Finally, do not neglect the reputation and financial stability of the insurance company, which guarantee its reliability and ability to meet its obligations in the event of claims. Careful selection of the insurance policy and the insurance company can save you many problems in the future. When insuring a property, it is also worth checking the experience of other customers with the insurance company.

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What can I insure?

In the case of property, a wide range of assets can be insured. As well as the house itself, you can also insure greenhouses, wells, land, gardens, sheds, various outhouses and other fixtures and fittings of the property. However, it’s a good idea to keep everything in mind and specifically mention it in the policy so that you won’t be unpleasantly surprised in the event of a claim. It is important to consult with your insurance company about your coverage options to ensure complete protection for your property.

What should I do in the event of an insurance claim?

When an insured event occurs (for example, a fire, flood or windstorm), the first priority is obviously to ensure the safety of everyone and to minimize further damage. Document the extent of the damage as thoroughly as possible, which will facilitate your communication with the insurance company. Take pictures of everything and make an inventory of what is destroyed or lost.

Contact the insurance company as soon as possible to report and accurately describe the damage. At this stage, it is crucial to follow all instructions from the insurance company, especially regarding repairs and claim procedures. Do not make any repairs until the insurance company has approved it. It is also important to retain all documents relating to the claim for any claims handling. Following the correct procedure can speed up the claims process and minimize complications.

It is important to follow the insurance company’s instructions and meet all deadlines and requirements for reporting the claim.

Tip: In some cases (typically a mortgage), there will be what is known as an insurance claim or property insurance claim. This is actually a restriction on the right of disposition, which in effect means that the insurance claim or other insurance benefit will not be paid to the insured party, but to the insured party’s creditor. Thus, in the case of a property, if the house burns down, the money from the policy will belong to the lender; the lender may be, for example, a bank.

What mistakes to avoid when taking out a policy?

When taking out a property insurance policy, it is essential to study the policy thoroughly. It is important that you fully understand all the terms and conditions of the cover, including becoming thoroughly familiar with the exclusions from cover.

It is also important to properly assess the value of your property. Underestimating the value of your property can lead to underinsurance. In this case, your policy will not cover the full value of the loss in the event of a claim. Conversely, overestimating the value of your property leads to overinsurance, which may mean you pay higher premiums than necessary.

It is also important to update your insurance policy regularly in the event of any changes, such as home renovations or the addition of new property. These changes can affect the value of your property and therefore the amount of insurance cover.

Finally, be sure to take into account any risks associated with your property. Each property is unique and may require specific insurance coverage. Carefully consider all potential risk factors to ensure that your policy will adequately address all possible scenarios.

Avoiding the mistakes mentioned above can help ensure that your property is properly insured and protected from unexpected events.

Tip: The price of property insurance is based on a number of factors that reflect the risks associated with a particular property. Which ones are fixed and when can you influence the price of the policy? That’s what we look at in our next article.

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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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