When purchasing a property, the seller's building insurance is transferred to the buyer. Natural hazards, outstanding premium payments and conversion - things the new owner should pay close attention to.
“Well-maintained second-hand buys” are popular: and not only when it comes to cars, but also property. Whether as an own home or long-term investment, there are good reasons for buying used property: Existing houses, for example, are often quicker to move into and cheaper than new buildings.
Is there any building insurance?
In the course of purchase negotiations, it is important to clarify what insurance protection exists for the property. “A building insurance policy that covers the property in the event of damage caused by fire, mains water, storm and hail is indispensable,” says Michael Schwarz, Head of Property Insurance at MLP.
When water levels rise…
Many insurers also offer to cover so-called natural hazards such as earthquakes, flooding and backwater. In view of the damage that can be caused by flooding after heavy rainfall, this protection is worth considering, for example, for property near larger rivers. This is because building insurance does not apply to natural hazards such as these – but it can be specifically extended if the tariffs are good.
Policy takeover: How comprehensive are the services?
Important: When purchasing a house, the seller’s building insurance is automatically transferred to the buyer. If the buyer does not wish to take over the old policy, they can terminate it with immediate effect within one month of entry in the land register or at the end of the current insurance year.
“But they should first read the conditions carefully,” advises the MLP expert. Sometimes policies that have existed over a longer period of time are more advantageous than current tariffs. On the other hand, insurers today offer more extensive insurance cover with regard to compensation for damage caused by gross negligence. “With their market knowledge, our consultants can assist in the decision for or against the existing insurance,” says Schwarz.
What about apartments? Buyers need to find out whether the property management company has already concluded building insurance for the entire building. It is not possible to conclude a contract for a single apartment.
Are there any premiums outstanding?
Whether for a house or apartment: Anyone who decides to take over the existing insurance must still check whether the previous owner always paid his premiums. Otherwise, there is a risk of a gap in the insurance cover. “If the previous customer has already been reminded by the insurer and the set payment deadline has expired, the provider does not have to pay in the event of a claim,” explains Schwarz. According to the Insurance Contract Act, the buyer is obliged to pay the premium that the previous owner failed to pay immediately upon registration as the owner. If the buyer does not settle the outstanding invoice, there will be no insurance cover in the event of damage.
Conversions: Is the personal liability insurance adequate?
If the buyer wants to rebuild the house, they should also ask the insurance company about existing liability cover. Depending on the extent of the planned conversion, it may also be worthwhile to conclude a special owner’s liability insurance. Reason: During the conversion work, the unoccupied house may not be covered by the normal residential building insurance. “This is why it is advisable to take out what is known as ‘Contractor’s all risks insurance’, to cover damage to the old and new buildings during the conversion phase,” advises Schwarz.
This article was published in german language from MLP. You can read the original article here.