Property insurance now needs to be updated every year, only a fifth of owners do so – News

More than four fifths of Czechs live in their own property, apartment or house. Another non-negligible number of people own some sort of holiday property. At the same time, these are assets in the order of millions and tens of millions of crowns. It is therefore highly advisable to protect it in case of any unexpected event. Most people are aware of this and have both home and property insurance.

In fact, as last year’s survey of the Czech Association of Insurance Companies (ČAP) showed, Czechs have traditionally prioritized the protection of property over the protection of life and health.

Even so, there are still quite a few property owners who do not take care of insuring their house or apartment at all, as shown, for example, by a survey by the Ipsos agency for the ČPP Servis company.

“More than a quarter of Czech households (27 percent) still consider it unnecessary to insure their own roof over their heads. Many people still want to rely on the state, but it will only help to a limited extent, e.g. in case of major natural disasters. But in the vast majority of cases, people realize too late that without insurance they won’t get any compensation for damage anywhere,” pointed out David Krňávek from ČPP Servis.

“However, the mere existence of an insurance contract does not necessarily mean that your home is sufficiently covered by insurance protection,” pointed out Eduarda Hekšová, director of the consumer organization dTest. The effectiveness of the insurance is mainly determined by the data that the policyholder reports to the insurance company, so the contract can fulfill its purpose only if all its parameters are complete and true.

As dTest points out, for many years, property insurance has been accompanied by a phenomenon where property owners deliberately report a lower property value to insurance companies than it actually has. The main reason is the idea that they will save money because a lower insured value means lower insurance premiums.

“However, with property insurance, the sum insured should be set so that it always exactly corresponds to the value of the property itself – in our case, that is, the property, the household or the things in it,” added Hekšová.

In the event that your insurance company discovers a significant discrepancy between the chosen insurance amount and the real value of the property, it is entitled to refuse to conclude the insurance contract or to terminate it during its duration for non-fulfillment of obligations to the client.

There are also cases when people take out real estate or household insurance, put the insurance contract in a drawer and live in blissful ignorance that in the event of an insured event, the insurance company will pay for the damage. They thus forget to regularly update their contract.

Real estate prices in the Czech Republic have risen significantly in recent years, especially in the last year the prices of construction work and materials have also risen sharply. It is therefore understandable that insurance contracts concluded a few years ago do not cover the entire current value of the property and thus underinsurance occurs. ČAP data show that only about a third of Czech households are properly insured, while roughly 70 percent of properties are underinsured, often by more than 50 percent.

“It is no exception that we come across contracts that clients do not want to modify in the long term, many of them for more than 10 years. Subsequently, in the event of an insurance event, the client may be unpleasantly surprised, because his insurance does not correspond to the current property conditions and may be insufficient,” pointed out Roman Jandík from the Maxima insurance company.

Surveys also draw attention to insufficient updating of insurance contracts, for example, according to the current agency Ipsos for Broker Consulting, a fifth of people do not update their insurance policies, and a quarter once every five or more years. Less than two fifths mentioned amending the contract roughly once every year to three years, and less than a fifth then annually.

“The result showing that more than half of people with property insurance regularly update it at least once every three years unfortunately confirms that even these people are still underinsured at the current rate of inflation. In the current inflationary environment, it is really necessary to update your contract ideally every year, or to have agreed automatic valorization of the contract, which protects against possible underinsurance,” commented Dušan Quis from Allianz pojišťovna on the results of the survey to update real estate insurance.