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If you are a house owner in Switzerland, you will likely have heard about building insurance. But the information about this insurance is very confusing.
For instance, most people think building insurance is mandatory. But this is not the case in every canton. Also, even in cantons where this is mandatory, only the base insurance is mandatory, but many people think supplementary insurance is also mandatory, while it is not the case.
So, in this article, I want to clear out all the information about building insurance.
Cantonal Building Insurance
The first part of this insurance is the cantonal or base building insurance. This base insurance will cover damage to your house by fire or a natural disaster. The coverage of this insurance is very high. It protects your entire house in such cases.
The canton covers the building insurance in most cases. It means you will not have the choice of which insurer you will use.
This cantonal building insurance is mandatory in most cantons. Cantonal base insurance is not compulsory in Geneva, Tessin, Appenzell Inner-Rhodes, and Valais.
In three cantons, Uri, Schwyz, and Obwald, base insurance is mandatory but can be taken from a private insurance company, not only the cantonal insurer.
The exact events covered by the cantonal insurance can vary slightly from canton to canton, but generally, these events will be covered:
- Snow slides
- Rock falls
There are some notable exceptions:
- Volcanic activity
- War events
And it is also important to note that the cantonal building insurance will not protect you if your house is improperly maintained. For instance, damage caused by a leaky roof will not be covered. So, do not use it as an excuse for not maintaining your house correctly.
So, to summarize, cantonal building insurance is almost always mandatory and will cover large destruction events to your house. It is good insurance because it covers rare events with considerable potential damage.
For instance, in Fribourg, ECAB is responsible for the cantonal building insurance. We pay less than 400 CHF to cover our house and the parking shed. For me, this is a fair price to pay for such insurance.
Supplementary building insurance
On top of the mandatory coverage of the cantonal insurance, you can also conclude supplementary building insurance. Many homeowners have this additional insurance.
This insurance is never mandatory. However, insurance advisors often insist that people get it, insinuating that it is almost compulsory. But is that the case? We need to know exactly what this insurance will cover to answer that question.
This supplementary building insurance covers things the base cantonal insurance does not cover. But this does not mean it is good.
It is essential to know that cantonal building insurance only covers your house but not things around and not everything inside. The cantonal building insurance will cover the building and what is attached to the building. The kitchen appliances are included, but not your garden shed. The insurance covers everything that comes with the house (heating, boiler, kitchen appliances, bathtub, and such). But anything that you added later into the house will not be covered.
So, in case of fire, the cantonal building insurance will reimburse your house, but not your garden shed, for instance (unless it is considered a building by the local law). Another example would be a tree falling onto your house but not because of a strong natural event like a hurricane. Or something falling against your window and breaking it.
Since it is not mandatory insurance, it falls in the hands of private insurance companies. This means there is much choice if you want to conclude such insurance. And it also means they have a lot of money to make and that insurance advisors have a good incentive to sell these insurance policies.
As a result, many people have such insurance without really knowing why.
Should we take supplementary building insurance?
We need to ask ourselves when insurance is beneficial to answer this critical question.
Insurance is valuable when you cannot cover the event by yourself. This happens in three cases. Either the event is way too expensive to be covered. For instance, nobody wants to cover the cost of the entire house. Or, the person has limited money and cannot cover even a limited event.
There is also the third case where some people simply prefer insurance. However, we should consider the financial aspects first.
This insurance is not usually interesting if you have an excellent financial situation. Covering emergencies in your house should be part of your emergency fund.
In most cases, the damage covered by this insurance is quite limited. Also, the events that are covered are infrequent. So, unless you have some valuable things around your house not covered by the mandatory cantonal insurance, this supplementary insurance makes little sense.
Of course, I cannot say this insurance is useless for everybody. There are probably some cases where it is useful. If you do not have emergency money, you should keep the insurance (and build emergency money). If you have valuable things around your house not covered by the cantonal building insurance, you may also want to keep it. Finally, if things are riskier where you live and make this insurance more interesting, you could consider it.
What triggered this article is that I was reviewing my insurance policies. When we bought the house, we took supplementary building insurance. I was led to believe this was very important insurance. I was also led to believe that the cantonal building insurance did not cover major things to the house.
After reviewing the cantonal building insurance, I realized that it does not cover very few important things. And very few essential things are covered by supplementary building insurance.
So, after studying these two building insurance in detail, I have decided that we will cancel our supplementary insurance. This will save us 420.80 CHF per year. This is not huge, but we would pay it into retirement. Unfortunately, the next cancellation date is far in the future, but we will still cancel it now so we do not have to think about it later.
The cantonal building insurance is excellent because it covers events that could destroy your house. However, supplementary building insurance is likely useless in most cases.
In Switzerland, we have many insurance policies available. And many Swiss people are over-insured. We are always recommended to take all possible forms of insurance. Building insurance is one example of insurance that most homeowners have, but that is not well known in detail.
It is also very important to read all the conditions of your insurance. Many insurers are adding some complicated conditions under which they will not reimburse you. So, you must ensure you know the contract and when you will be covered. Otherwise, you may run into surprises.
Writing this article came from the realization that my supplementary building insurance was not as useful as I thought. Now, I plan to cancel it.
What about you? What do you think about these two building insurance policies? Do you recommend supplementary building insurance?
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