Compulsory insurance for flood protection: What this means for homeowners and tenants

Compulsory insurance for flood protection: What this means for homeowners and tenants

According to a report by www.merkur.de,
Parts of northern Germany are flooded - and the debate about the introduction of compulsory insurance for homeowners has been reignited. The discussion revolves around the necessary protection against natural forces such as floods, heavy rain, hail or storms. Previously, insurance against natural hazards was voluntary for homeowners. Now states, consumer advice centers and the Association of Insured Persons are pushing for compulsory insurance. A possible compulsory insurance could also affect tenants, as building owners could pass on the costs to the tenants.

The discussion about the introduction of compulsory insurance has not subsided for over 20 years and received new impetus after the flood in the Ahr Valley in 2021. Lower Saxony's Prime Minister Stephan Weil recently pushed for the rapid introduction of compulsory insurance. However, Federal Justice Minister Marco Buschmann has already stated that the federal government thinks little of compulsory insurance. Furthermore, the General Association of the German Insurance Industry (GDV) also took a critical stance towards compulsory insurance.

If compulsory insurance is introduced, the costs for tenants could depend heavily on what the legal structure is. The consumer advice centers are calling for tenants to avoid burdens. With regard to voluntary natural hazard insurance, consumer advice centers advise homeowners to pay attention to the danger zone of the building and, if necessary, to take out appropriate insurance. In the event of damage, insured parties must comply with their obligations, such as installing non-return valves in rooms at risk of flooding.

The introduction of compulsory insurance could have a significant impact on the insurance market, costs for homeowners and tenants and the entire real estate industry. The rejection by the Federal Minister of Justice and the GDV shows that an agreement at the federal level will be difficult. If some federal states independently introduce compulsory insurance, there could be regional differences and the insurance costs could vary greatly depending on where you live.