Mandatory Elemental Damage Insurance: Homeowners Ready to Cover Additional Costs
Homeowners Prefer Mandatory Insurance for Elementary Destruction Coverage
Following years of debate, a mandatory insurance policy for elemental damage is now part of the coalition agreement. A majority of homeowners in Germany seem to be in favor of this, with the average homeowner willing to pay around €286 per year. However, concerns about affordability have been raised.
According to a survey by Verivox, 78% of homeowners support the introduction of an elemental damage insurance policy, with 79% of tenants voicing their support. The concerns about an increase in natural disasters in their region are shared by 61% of homeowners, with 86% of this group advocating for the mandatory insurance.
While there is broad support for the mandatory insurance, there are also financial implications to consider. 16% of homeowners stated in the survey that they cannot afford any further costs for their residential property, and a quarter (29%) do not want to bear any additional costs. Among homeowners who currently lack elemental damage insurance, 20% cited cost as the main reason for their decision.
The cost of protection varies based on factors such as the value, size of the house, and the danger zone in which the building is located. Verivox expert Aljoscha Ziller commented that, in endangered areas, the annual costs could amount to thousands of euros. In France, where a similar mandatory insurance policy exists, the premium does not depend on the risk for the place of residence, but on the value of the insured property. Only 20% of German homeowners support such a system, while 33% reject redistribution in principle.
A large majority of homeowners (79%) also support a building ban in areas prone to flooding. The federal government plans to make residential building insurance only available with elemental damage coverage in the future, and all existing contracts are expected to be supplemented with such protection by a certain date. The details are currently under review, and Federal Minister of Justice Stefanie Hubig has stated that these should be examined carefully.
It was noted that slightly more than 50% of all private households in Germany are insured against elemental damages such as flooding. The industry fears that a mandatory insurance policy could eventually result in neglect of flood protection in Germany. Currently, policies are often not even offered in high-risk areas or only at very high premiums.
Financial Implications
Mandatory insurance against elemental damage can have significant financial implications for both individuals and the broader economy in countries like Germany, France, and areas prone to natural hazards. Increased costs for homeowners can affect property values and overall housing affordability, while the economic impact of such insurance can influence investment and development decisions. On the other hand, mandatory insurance can encourage better risk management practices and reduce the overall financial impact of natural disasters.
Public Opinion
Public opinion on mandatory insurance varies, with many people supporting financial security, while others may view it as an additional financial burden. Mandatory insurance can also influence housing choices, with individuals opting to live in areas with lower insurance costs.
Regional Perspectives
In Germany, comprehensive insurance coverage is common, and mandatory insurance for specific types of damage, such as flood insurance in high-risk areas, is becoming more prevalent. The French public generally supports strong insurance regulations, while the industry in Germany has expressed concerns about the potential neglect of flood protection due to increased costs. In areas highly susceptible to natural disasters, mandatory insurance can be seen as essential for financial protection but may also act as a deterrent to development due to increased costs.
- The financial implications of mandatory elemental damage insurance may impact both individuals and the broader economy, as increased costs for homeowners could affect property values and overall housing affordability, and the economic impact of such insurance could influence investment and development decisions.
- In the realm of investing and business, particularly in real-estate, mandatory elemental damage insurance could affect the housing choices of tenants and landlords, as they may opt for properties with lower insurance costs, which could potentially influence the council's housing policies and the foundation of future building regulations.
