. Like car insurance contracts with various small print conditions, a similar situation exists with property insurance terms (very few people read and even less understand them).
Even if one insured their building for “all purposes” including acts of God (rain floods etc.) be sure that the insurance firm has its back covered in order to avoid or reduce your claim.
Recent events have come to our knowledge, some of which we have reported in this paper some years ago, which we enumerate as follows:
· Excess – There is an excess (i.e. any damage amount which will not be compensated) and it is up to the insured to pay the amount of the excess. The higher the excess, the lower the insurance premium. Do not be lured by this dear readers and we suggest a minimum amount of €100-€500 depending on the value of your property. A recent experience of ours for an apartment with an excess of €1,000, happy as the insured was for a lower fee, but recent damage was more or less not covered.
· Vacant properties – Properties which are vacant for more than 30 days are not covered. So, holiday homes, notwithstanding that you think that they are covered, if you cannot prove that your property was occupied for at least 30 days, you are not covered. Opt for the clause to cover this as well be it for a slightly higher amount for your insurance fees.
· Bushfire – If your property is damaged by fire caused by the surrounding area – e.g. from a neighbour, bushfire etc and your property is damaged, your property will most likely not be covered – opt to have this included.
· New for Old – A client of ours who had his parquet floor damaged as a result of flooding, the insurance company would not pay for its replacement cost since the (parquet) floor will be new, as opposed to the existing one (4 years old). The standard approach is for the insurance to discount a percentage from the present replacement cost, say around 20%-50% of the new/replacement, in order to cover the damage. However, our client’s damage of €4,000/replacement cost was covered only for €2,500, despite our client’s protest that he could not replace the damage for this amount. Opt to have clearly the reinstatement cost as new, or even depreciated provided that amount you receive can cover the damage.
· Electrical goods – Electrical appliances that cause damage to the property are not covered if a property is unoccupied and you should have all electrical appliances turned off (refrigerators etc) while you are away – opt to have it covered.
· Third party insurance – A major issue for all owners is to have insurance cover in the event of a visitor suffering harm from protruding tiles, shiny floors, poor access and these notwithstanding that the visitors may be trespassers. In a recent case the husband of the owner, who was rushing to get out of the building being late for work slipped, sued the owners’ committee of the complex for €20,000 in medical bills. The first question is whether the husband is a visitor of the building or an owner of a unit. The second is the insurance company’s response since the administrative committee has received no response at all. Now the committee will report the matter to the Registrar of the Insurance Board not only to cover itself but to get the company to respond so that other unfortunate insured do not experience the same.
On another occasion, and due to heavy stormwater, the drains could not cope, and the unit was flooded. The insurance mentioned that this is the cause of not cleaning the drains (who does?) and that the insured should regularly inspect the drains to make sure that they are free of leaves etc. (see holiday homes in particular).
· Tree Damage – An old tree fell down into the neighbour’s property, but no building damage was caused, but the neighbour demanded compensation for the damage to his garden. It is not a matter of a major amount but both being stubborn the case is leading to the courts and the tree owner’s insurance does not recognize any responsibility.
· Illegal buildings – Buildings without a permit (and by projection buildings without a certificate of final approval) the insurance may claim that it will not cover, notwithstanding that they are happy to take on the fee and without asking if a building has some illegalities or not beforehand.
· Administrative Committees – Damage caused to a comprehensive development project including apartment buildings should be managed by an administrative committee (a major issue is what is an administrative committee if it needs to be so registered with the Land Registry Office – a mess). So, in a recent case, the administrative committee sued its insurance company for the amount of excess for the residents. A major issue since some of the residents did not pay (and the insurance claims that the building was not insured as such).
By projection, if a block suffers from fire/earthquake and says out of 10 apartments some do not pay their insurance how is the building going to be repaired?
· Subsidence – As we have reported before, the owners claim for damage caused by the soil subsidence. Now the insurance claims it is not covered, and compensation should be sought from the developer/architects/contractors. A mess dear readers since no one believes that this will happen to his own property.
· Yet eight years ago a small military plane fell onto a house in the Limassol suburbs. The insurance submitted the reinstatement cost to the extent that it thought proper, but then who on earth will buy a house which has had such damage?
· Overinsured – If a property is underinsured (e.g. a house has a replacement cost of €300,000 and you insured the property for €100,000), the insurance will pay 1/3 of the whole cost of replacement for any item. If insured for more the insurance has no problem to take the fee on and bother with it later coming up with all sorts of excuses.
The list is endless, and we wish we had some sort of a comprehensive list of things to watch out for. It reminds me of when one of our cars did not have an MOT test (expired for 3 days).
As a result, our insurance cover did not exist, and we were accused of driving without insurance.