What is the value of your property? Are you adequately insured?
The rise in property prices and the associated increase in asset value highlight the importance of regularly updating property insurance. Here are some steps to take to minimize risks and ensure adequate coverage.
What is your property worth? Are you adequately insured?
Regularly review your insurance policy and check whether the estimated property value corresponds to current market prices. When evaluating the policy, changes in the prices of building materials and labor should also be taken into account. For example, if your property's real value has increased to 8 million in recent years, but your policy still covers only 4 million, this could lead to insufficient coverage in the event of damage. This is one of the responsibilities that property owners must monitor themselves. Owners are responsible for determining the correct insured value, even by law. The insurance company does not compel owners to regularly update their data, but in the event of an insured incident, it acts in accordance with market principles.
Therefore, work with an expert to determine your property's value. This will establish the current replacement value of your property. This calculation must also include current building material prices, which will then allow for the insurance sum to be updated. Furthermore, inform the insurance company about any structural modifications or extensions to the property. New additions or improvements can increase the property's value and should therefore be included in the insurance coverage.
One way to avoid concerns about underinsurance is to include automatic indexation. This measure means that the insurance premium automatically increases in line with the property's replacement value, consumer price growth, and other factors. Thanks to this automatic adjustment, the insurance amount will always correspond to the current value of your property, which effectively protects you from underinsurance. This is also directly stated in Section 2854 of the Civil Code: “If, at the time of an insured event, the insured sum is lower than the insured value of the insured property, the insurer shall reduce the insurance benefit in the same proportion as the insured sum bears to the actual insured value of the insured property; this shall not apply if the parties agree that the insurance benefit shall not be reduced.”
Property insurance is a complex matter, so we recommend consulting an expert about your insurance like Eurovalley. This will ensure you get precise and adequate coverage for your specific situation.
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