Property insurance — what it covers

What a property policy may cover

Property insurance is not a uniform product — it usually consists of several modules that can be combined depending on your needs. The basic element is insurance of the structure and fixed elements, that is the building's construction, walls, installations and fittings permanently connected to the unit, such as fitted kitchens or floors.

The second module is protection of movable contents, covering furniture, electronic equipment or clothing. The third, often underrated, is private civil liability, thanks to which the insurer will cover damage caused to other people, for example a neighbour flooded through your fault.

Insurance against random events

The core of every policy is protection against random events. In this category you will most often find fire, lightning strike, flooding, the effects of strong wind or hail. These are risks that can lead to serious damage independent of your actions, which is why they are the foundation of sensible insurance.

The basic scope can be extended with additional risks, such as power surges in the electrical installation, damage caused by wild animals, acts of vandalism or burglary. Each extension usually raises the premium, so it is worth considering which threats are real in your situation and which are unlikely.

Insurance and the mortgage

If you buy the property on credit, the bank will almost certainly require it to be insured for the whole repayment period. The point is to protect the loan security — should serious damage occur, the compensation will allow the property to be rebuilt or the debt to be repaid. Most often insurance of the structure and fixed elements is required.

The standard here is the so-called assignment of policy rights to the bank. This means that in the event of major damage the compensation may go first to the bank as the lender. It is worth comparing the policy offered by the bank with the offers of independent insurers — sometimes an independent choice lets you obtain a broader scope or a lower premium.

Sum insured and exclusions

Two things decide whether the policy will really protect you: the sum insured and the exclusions of liability. The sum insured is the upper limit of payout — if you set it too low, the compensation will not cover the full rebuilding costs. Setting the sum too high, on the other hand, means a higher premium with no real benefit.

Equally important are the exclusions, that is situations in which the insurer will not pay compensation. You will find them in the general terms of insurance, marked with the abbreviation OWU. Before signing the contract, be sure to read this document, especially the parts on exclusions and the obligations of the insured, to avoid disappointment when reporting a claim.

How to match the scope of protection

The choice of insurance scope should match the character of the property and your situation. For a flat in an apartment block different risks will be relevant than for a detached house with a garden. It is worth considering what you really want to protect — the structure itself, expensive contents, or above all guarding against claims from neighbours.

When comparing offers, do not be guided solely by the premium. Pay attention to the scope of risks, the sums insured, deductibles and own contributions, and the efficiency of the claims-handling process. A well-chosen policy is one that will actually cover the losses in the event of a claim, not merely the cheapest item on the list.

Summary: a conscious choice of policy

Property insurance may cover the structure and fixed elements, movable contents and civil liability, and its core is protection against random events such as fire or flooding. With a mortgage the bank usually requires insurance of the structure with assignment in its favour. The real value of the policy is determined by the sum insured and the exclusions written into the OWU. Match the scope to the character of the property and compare offers not only by the premium.