Natural hazards insurance: comprehensive protection against natural hazards and what it really covers
15.06.25
6
Minutes
Katrin Straub
Managing Director at nextsure
Natural disasters are increasing and can threaten financial livelihoods. Natural hazards insurance offers protection, but what exactly does it include? This article explains in detail which damage is covered and what you need to look out for.
The topic in brief and concise terms
Natural hazard insurance is an add-on to contents or buildings insurance and covers damage caused by natural hazards such as flooding, heavy rain, backwater, landslides, earthquakes, snow pressure and avalanches.
The costs depend on the risk (ZÜRS zones), with only around 1.6 per cent of German properties in the highest risk classes; 99 per cent are insurable.
Court rulings show that terms such as “flood” and “ground subsidence” are narrowly defined; a careful review of the insurance terms and conditions is essential.
Natural hazard insurance at a glance: These natural hazards are covered
Elemental insurance is indispensable additional cover; it extends your contents- or buildings insurance. It usually covers damage caused by specific natural events. These natural perils are usually included:
Flooding, including due to heavy rain and backflow.
Landslides, subsidence and earthquakes.
Snow pressure and avalanches.
Volcanic eruptions (very rare in Germany).
It is important to note that storm and hail damage is often already covered by the standard buildings insurance policy. Elemental insurance focuses on the rarer, but often more catastrophic, events. Without this additional cover, those affected are left to bear costs that can often run into tens of thousands of euros; the protection applies to repairs, restoration or even rebuilding. The exact terms vary depending on the provider. A careful look at the policy is therefore essential.
Cost factors and risk assessment: Understanding the ZÜRS system
The cost of natural hazards insurance depends on several factors. The decisive factor is the individual risk at your place of residence. Insurers use the zoning system for flooding, backwater and heavy rainfall (ZÜRS) for this purpose. It divides Germany into four risk classes (GK):
GK 1: Flooding statistically less than once every 200 years.
GK 2: Flooding statistically once every 100 to 200 years.
GK 3: Flooding statistically once every ten to 100 years.
GK 4: Flooding statistically at least once every ten years.
The higher the risk class, the higher the premium. According to the GDV, only around 1.6 per cent of all properties fall into the higher risk classes GK 3 and GK 4. Sparkasse states that even 99 per cent of all houses can be insured without difficulty. In addition to the ZÜRS zone, construction type, previous damage and the chosen excess also affect the premium. It is advisable to compare buildings and contents insurance, including natural hazards cover. According to the GDV, the average amount of damage from natural hazard claims can exceed 5,500 euros, and individual losses can even exceed 300,000 euros.
Coverage exclusions: When natural hazard insurance does not pay
Despite comprehensive cover, there are situations in which the natural hazards insurance does not pay out. It is important to know these exclusions. A common exclusion concerns damage caused by groundwater. If groundwater rises into the basement from below without reaching the surface, many insurers will not pay. The situation is different if groundwater reaches the surface and then causes flooding. Damage caused by storm surges is also usually not covered. In the event of backwater damage, insurers often only pay if a functioning backflow preventer is in place. Subsidence caused by human activity such as mining is also usually excluded. In such cases, the liability insurance of the person responsible may apply. Damage caused by snow falling from trees is often not insured as snow pressure damage. Read your policy conditions carefully so that you are prepared in the event of a claim such as a reported hail damage claim.
Legal pitfalls: recent rulings and definitions
The interpretation of insurance terms often leads to legal disputes. Courts then have to clarify what exactly is meant by terms such as „flooding“ or „subsidence“. The Bamberg Higher Regional Court ruled (case no. 1 U 87/14) that, for the purposes of the policy terms, a „flooding“ requires inundation of the entire insured property. Seeping layered groundwater into the cellar after heavy rain was not sufficient in this case. The insured location comprises more than just the building. On the issue of subsidence, the Deggendorf Regional Court (case no. 23 O 445/19) ruled that damage caused by settlement in soft subsoil is not covered. An insured „natural subsidence“ exists only where the ground sinks above naturally formed cavities. These judgments show how important precise wording and an understanding of the Insurance Contract Act (VVG) are. Advice from Haus und Grund or experts can be helpful here.
Mandatory natural hazard insurance: The political debate in Germany
In view of the rising damage caused by extreme weather, there is intensive debate in Germany about a requirement to take out natural hazard insurance. At present, only around 52 per cent of households have such cover (as of the end of 2022). In Baden-Württemberg, where there used to be a requirement, the figure is around 94 per cent. In December 2022, the Federal Government published a report on the key points of a possible compulsory insurance scheme. This emphasises the need for risk-based premiums and that owners should not be overburdened. Supporters argue that a requirement would relieve the public purse of ad hoc assistance and safeguard livelihoods. Opponents see constitutional hurdles and call for stronger preventive measures. The coalition agreement of the current Federal Government provides that residential building insurance in new business should only be offered with natural hazard cover. Whether an opt-out option will be introduced is still open. The question of whether you have to have buildings insurance could therefore soon be extended to include the natural hazard component.
Optimal protection: recommendations for action and expert tips
The decision for or against natural hazard insurance should be carefully considered. First, assess your individual risk. Do you live in a known risk zone (GK 3 or 4)? Even if only 1.6 per cent of addresses are affected, heavy rain can occur anywhere. Our expert tip: clarify what your buildings insurance covers and which additional modules make sense. Pay close attention to the exact definitions of loss events and exclusions. Compare offers from different insurers, as premiums and conditions can vary. Also take the level of the excess into account. A waiting period of two to six months after conclusion of the contract is usual. For comprehensive cover, it is important to know who pays for the buildings insurance and how natural hazard damage is integrated into it. An individual risk analysis helps to find the right cover.
Now request an individual risk analysis: Have your insurance situation reviewed free of charge and receive concrete suggestions for optimisation.
More useful links
The German Insurance Association (GDV) offers a data service on natural hazard reports that contains important statistics and analyses.
The German Environment Agency (UBA) provides comprehensive information on adapting to climate change, including strategies and measures.
The German Meteorological Service (DWD) provides detailed information on climate change, its causes and expected impacts.
The Federal Office of Civil Protection and Disaster Assistance (BBK) offers important information on risk management and preparedness for natural disasters.
The Federal Statistical Office (Destatis) publishes current environmental statistics that provide insights into various environmental areas.
The Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV) presents the German Climate Change Adaptation Strategy, which outlines measures to reduce risks.
The Flood Centres provide up-to-date information and warnings on flood situations in Germany, including water levels and forecasts.
FAQ
What exactly is covered by natural hazards insurance?
Natural hazards insurance covers financial losses to your insured property (buildings or contents) caused by certain natural events. These include flooding (including due to heavy rainfall), backflow (as a result of precipitation or flooding), earthquakes, ground subsidence, landslides, snow pressure and avalanches. It is usually an optional add-on to buildings insurance or contents insurance.
Do I need natural hazards insurance if I do not live in a flood-prone area?
Even if you do not live in a designated flood-risk area (e.g. ZÜRS GK 3 or 4), natural hazard insurance may still be worthwhile. Heavy rainfall events can occur anywhere and lead to local flooding or backwater. Only a small percentage of buildings are located in the highest-risk zones, but damage caused by heavy rainfall is a growing threat.
What is the difference between flooding and backwater in the insurance terms and conditions?
An “flood” in insurance terms usually occurs when water reaches the insured property at ground level and floods it. “Backflow” means that water from the building’s drainage pipes is forced back into the building as a result of rainfall or flooding. For backflow damage, a functioning backflow preventer is often a prerequisite for insurance cover.
How do insurance companies define insured “subsidence”?
Court rulings have shown that an insured “natural subsidence” is interpreted narrowly. As a rule, it only applies when the ground above a naturally formed cavity subsides. Damage caused by settlement due to the nature of the soil (e.g. soft clay) or by drying out is often not covered.
Does natural hazards insurance also cover the costs of clean-up work or a hotel stay?
Yes, under natural hazard insurance as part of buildings insurance, costs for repairs, drying out, remediation and, where applicable, demolition and rebuilding of an equivalent house are usually covered. Necessary costs for temporary accommodation (hotel costs) or loss of rent may also be covered if the building becomes uninhabitable. The individual policy terms and conditions govern the details.
Is there a waiting period before the natural hazard cover takes effect?
Yes, waiting periods are common in natural hazard insurance. These can, depending on the insurer and tariff, be between two and six months after the contract is concluded. This means that damage occurring within this period may not yet be covered.
