Insurance coverage at risk: risk of fire in empty buildings!

Insurance coverage at risk: risk of fire in empty buildings!

A recent ruling by the Schleswig-Holstein Higher Regional Court (OLG) brings important clarity about how empty buildings are valued in residential building insurance. In this specific case, a plaintiff purchased a building in 2018 that had clearly been empty for a long time. The insurance had already refused protection in October 2021 due to fire damage, which was due to the unreported increase in risk.

The situation began when the plaintiff purchased the building and purchased homeowners insurance that also covered fire damage. On October 21, 2021, the empty building burned down completely. The insurance company only paid 40 percent of the fair value loss and claimed a reduction of 60 percent. The justification was that the long-term vacancy represented an increased risk that the policyholder had not reported in a timely manner. According to the insurance conditions, a building must not be unoccupied for more than six months continuously in order to guarantee full insurance cover reports Haufe.

The legal dispute

The Flensburg regional court initially ruled in favor of the plaintiff and ordered the insurance company to pay the full amount. But the Schleswig Higher Regional Court decided differently on appeal. It found that the insurance had become exempt from benefits due to the increased risk. The plaintiff demonstrably had knowledge of the circumstances that were considered to increase the risk for more than a year. In addition, the building was unoccupied for long periods of time and unauthorized persons had access to the premises, creating further risks.

The court viewed the breach of the obligation to report as a grossly negligent act on the part of the plaintiff. The OLG decision also included the finding that it was not just about the vacancy itself, but also about the additional circumstances, such as vandalism, that increased the risk of fire carries out the insurance journal.

Consequences for owners of vacant properties

The ruling clearly shows that owners of vacant properties are well advised to inform their insurance companies about the condition of the properties. The obligation to report an increase in risk is crucial in order to avoid financial losses in the event of damage. This ruling is particularly important for owners who, as in this case, purchase a building that was in use shortly before the purchase but may subsequently fall into a condition that increases the risk for insurers.

In summary, the OLG makes it clear that not only the vacancy, but also the observable behavior of the building and knowledge about it are crucial for obtaining insurance coverage. In this particular case, the building was not taken over as being in disrepair, but serious changes occurred during the plaintiff's ownership period, resulting in increased risk.