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Compulsory insurance against natural hazards: What homeowners need to know now!
Federal Justice Minister Hubig announces compulsory insurance against natural hazards in order to better protect homeowners.
Compulsory insurance against natural hazards: What homeowners need to know now!
At a press conference today, Federal Justice Minister Stefanie Hubig (SPD) announced the introduction of compulsory insurance against natural hazards for residential buildings. This project is in line with the coalition agreement of the black-red coalition, which emphasizes the need for better protection against natural disasters. Hubig underlined the importance of the project, but was also concerned about the possible financial burdens it could cause for homeowners and tenants. Currently only 54 percent of private homes in Germany are insured against natural damage such as flooding. Current developments, particularly the devastating flood disasters of recent years, have increased calls for legal regulation, reports Deutschlandfunk.
The planned reform stipulates that all residential buildings must in future be insured against heavy rain, floods and other natural events. Last year, billions of euros in damage were caused by extreme weather events, with a forecast of 5.5 billion euros for 2024. An example of the urgency of this measure is the flood disaster in the Ahr Valley in 2021, which caused damage of almost nine billion euros. Despite these risks, natural hazard insurance in Germany is currently voluntary, which will change with the upcoming reform Focus.
Financial impact and risk distribution
The consumer platform Check24 estimates that homeowners have to expect additional annual costs of up to 1,600 euros, although the exact premiums vary depending on the danger zone. In Germany the areas were divided into four zones:
| zones | Danger | Annual costs |
|---|---|---|
| Zone 1 | not at risk of flooding | approx. 120 euros |
| Zone 2 | less frequent floods | approx. 305 euros |
| Zone 3 | Floods every 10-100 years | approx. 1420 euros |
| Zone 4 | Floods at least every 10 years | over 1600 euros |
Over 320,000 addresses in Germany are considered at risk of flooding, including residential buildings, commercial businesses and public buildings. Saxony, Thuringia and Rhineland-Palatinate are particularly at risk. Professor Tobias Just sees compulsory insurance as having advantages for risk distribution and the economy. However, the introduction of high premiums in high-risk regions could lead to significant financial losses for affected homeowners, which will trigger additional discussions.
Opt-out solutions and state reinsurance
The coalition is also considering an “opt-out solution” for existing homeowners, which could provide some flexibility. Planning for state reinsurance could help to further spread the financial risks. Critics, however, warn that compulsory insurance does not solve the fundamental problem of extreme weather damage and could reduce possible government investments in preventive protective measures.
The discussion about compulsory insurance against natural hazards is complex and will certainly generate further interest in the coming months, especially among affected homeowners and the general public.