Home insurance: Understand and optimize comprehensive protection for your home
4 Apr 2025
7
Minutes
Katrin Straub
CEO at nextsure
A storm uncovers your roof, a burst pipe floods the basement – damage to your home can quickly become prohibitively expensive. Discover what a homeowners insurance covers and how you can protect yourself against unexpected costs.
The topic in brief and concise terms
A residential building insurance protects against financial consequences from damage caused by fire, tap water, storm, and hail to the building and its permanently attached parts.
The elemental damage insurance is an important additional component against natural hazards such as flooding, heavy rain, and landslides.
Pay attention to a sliding new value insurance, the inclusion of gross negligence, and regularly check your contract.
Home Insurance: An Overview of the Key Benefits
A home insurance policy is essential for homeowners to protect themselves against the financial consequences of damage to their own home. It typically covers the costs of repairs up to the complete reconstruction of the building. The insured parts of the building include the roof, masonry, foundations, as well as permanently installed elements like heating systems or sanitary installations. The insurance covers a wide range of risks.
The Core Benefits: What is Typically Insured?
The basis of any home insurance policy usually includes three core risks that are covered. This basic coverage protects against the most common and often most expensive causes of damage to a building. It is important to know the exact terms of your contract, as there can be slight differences depending on the provider.
Fire, Water Damage, Storm, and Hail: The Cornerstones of Protection
The fundamental risks that home insurance protects against are fire (fire, lightning strike, explosion, implosion), water damage (burst pipes, frost damage), and storm (from winds of force seven or eight, depending on the contract), as well as hail. In the event of storm damage, for example, which removes the roof, the insurance covers the repair costs. Even consequential damages, such as rain penetrating after storm damage, are often covered. The home insurance is therefore a fundamental protection for your property.
Real-life examples: When does the home insurance provide coverage?
To make the benefits more tangible, concrete examples from practice help. Imagine a burst pipe in your kitchen not only floods it but also the floor below. The costs for drying and renewing the flooring can quickly amount to several thousand euros. Another scenario: A severe storm uncovers parts of your roof and damages the gutter. Here too, the building insurance kicks in and covers the repair costs. These examples illustrate how quickly significant financial damage can occur, which without insurance would be life-threatening.
Typical claims and cost coverage
Building insurance covers a variety of cases. Here are some typical situations where you can expect coverage:
A fire caused by a technical defect destroys parts of the living room; the insurance pays for windows, doors, and flooring.
After heavy rain and storms, the basement is flooded; the costs for pumping out and drying are covered.
A lightning strike causes a power surge that damages the permanently installed heating system.
Leaking water from a defective washing machine damages the parquet in the utility room.
Hailstones smash roof tiles and lead to water ingress into the roof truss.
It is important that parts firmly attached to the building are insured, in contrast to movable furniture, which is covered by home contents insurance.
Enhanced Protection: Know the Meaningful Additional Modules
In addition to the basic dangers, there are other risks that are not automatically included in every policy but can often be insured as additional modules. One of the most important extensions is the natural hazard insurance. This covers damage caused by natural events such as flooding (including heavy rain), backwater, earthquakes, subsidence, landslides, snow pressure, and avalanches. Given the increasing occurrence of extreme weather events, this addition has become indispensable for many homeowners; it is often available for just a few extra euros per month.
Natural hazards and additional optional coverages
Protection against natural hazard damage is particularly important in vulnerable regions, for example, along rivers or in areas with a high snow load. However, even outside these zones, heavy rain events can lead to significant damage. Further optional modules can include:
Glass breakage insurance for building and furniture glazing.
Cover for drainage pipes on and off the insured property.
Co-insurance of outbuildings such as garages or garden sheds, if these are not already included in the basic protection.
Insurance for photovoltaic systems, solar systems, and heat pumps.
Carefully consider which of these additional services are sensible for your individual situation. A combined protection can often offer benefits.
Expert knowledge: What you should know about the sum insured and conditions
One central aspect of home insurance is the sum insured. Nowadays, the standard is the adjustable new value insurance. This ensures that in the event of a claim, the costs for rebuilding a similar house at current prices are covered, thereby avoiding underinsurance. The premiums adjust annually to the construction price development. Pay attention to the so-called underinsurance waiver in your policy; this ensures full cost coverage up to the agreed sum, even if the actual value of the house is higher than initially assumed.
Insurance Conditions in Detail: What to Look Out For?
In addition to the sum insured, the specific insurance conditions are crucial. Here are a few points to consider:
Gross Negligence: Many modern policies also cover damages caused by gross negligence, such as if you leave a candle burning unattended. This is an important point as otherwise, the payout could be reduced.
Deductible: A deductible can reduce the premium but means that you have to bear part of the costs yourself in the event of a claim. Weigh up the costs and benefits here; a deductible of no more than 500 euros is often recommended.
Clearance and Demolition Costs: These costs should be adequately covered, as they can be significant after a major damage.
Hotel Costs/Loss of Rent: If your house becomes uninhabitable, the insurance should cover the costs for alternative accommodation or loss of rent for a certain period.
Our expert tip: Regularly review older contracts. These often no longer meet current needs, or newer policies offer better benefits under comparable conditions. Especially if you take over the insurance after purchasing a house, it's advisable to review it.
Costs and obligations: What influences the contribution and what do you need to consider?
The cost of a residential building insurance policy depends on several factors. These include the location of the property (risk zone for natural hazards), the year of construction and the type of construction, the living area, as well as the building's amenities. The chosen scope of coverage and any deductibles also play a role. A detached house with 180 square metres, built in 2020, in Coburg can, for example, be insured from around 539 euros annually (including natural hazard protection). It is important to know that the costs can be passed on to tenants.
Duties of the Policyholder and Behaviour in the Event of a Claim
As a policyholder, you have certain obligations. This includes keeping the building in proper condition and heating it sufficiently in winter to prevent frost damage. In the event of a claim, you must report the damage immediately and take steps to mitigate it (e.g. turning off the main valve in the event of a burst pipe). Document the damage carefully with photos. Keep damaged items until released by the insurer. Special considerations apply for landlords, as well as when the policyholder is not the owner.
Understanding legal aspects and current rulings
Insurance law frequently sees new rulings that may be relevant for policyholders. For instance, in August 2024, the Kassel Regional Court ruled that the breakage of a drainage pipe in the garden does not constitute a water damage incident under the terms of the residential building insurance (Az. 5 O 1901/23). Such judgments highlight the importance of a precise understanding of the insurance conditions. Another ruling by the Federal Court of Justice (BGH, Az. V ZR 69/21) from 16 September 2022 addresses the deductible for condominium associations: it must be borne jointly, even if the damage occurs solely in the private property.
Important Clauses and Court Rulings Pertaining to Residential Building Insurance
The insurance conditions often contain specific clauses whose meanings should be understood. Here are some examples and relevant legal aspects:
VAT: A clause stating that VAT is not reimbursed if the policyholder is entitled to deduct input tax or has not actually paid the VAT is generally permissible.
Expert Procedure: Even if the conditions provide for an expert procedure regarding the amount of the claim, a declaratory action against the insurer may be permissible.
Leaky Joints: The Cologne Regional Court ruled that leaky tiles in a shower do not constitute a covered water damage under the residential building insurance.
Exclusion Deadline: The insurer's reliance on an exclusion deadline may be voided if the insurer unjustifiably refrains from fulfilling their duty over an extended period.
Our expert tip: In cases of uncertainty or disputes with the insurer, legal advice can be beneficial. Many law firms offer collections of current rulings on residential building insurance.
Find the optimal insurance coverage: Here's how to proceed
Choosing the right residential building insurance requires a careful analysis of your needs and a comparison of available offers. The cheapest policy isn’t always the best. Pay attention to a balanced price-performance ratio and insurance coverage that suits your property and risk situation. Review your contract at least every five years and adjust it as necessary to reflect any changes, such as renovations or extensions. Depending on your fittings, glass insurance can be advisable.
Request an individual risk analysis now: Have your insurance situation reviewed for free and receive specific optimization suggestions.
More useful links
The Wikipedia provides a comprehensive overview of homeowners insurance and its key aspects.
The insurers (Gesamtverband der Deutschen Versicherungswirtschaft) offer detailed information about homeowners insurance.
FAQ
What exactly does a homeowner's insurance cover?
It covers damage to the residential building itself as well as to permanently attached parts (e.g. heating, windows, doors, fitted kitchens, sanitary installations) caused by insured risks such as fire, tap water, storm, and hail. Outbuildings such as garages can also be included in the insurance.
Are damages from heavy rain and flooding always covered by insurance?
No, damage caused by heavy rain, flooding, backwater, and other natural hazards are generally not included in the basic cover. For this, you need additional natural hazard insurance.
What is the difference between contents insurance and building insurance?
The residential buildings insurance covers the building itself and permanently installed parts. In contrast, the household contents insurance covers damage to movable items such as furniture, clothing, and electrical appliances.
Does the home building insurance also cover if I caused the damage through gross negligence?
Many modern plans also cover gross negligence, such as when a burning candle is forgotten. Older contracts or basic plans may provide for reduced benefits in such cases. Please review your contract conditions.
What should the deductible be?
A deductible can reduce the insurance premium. Experts often recommend a deductible of no more than 500 euros. Consider what amount you can comfortably cover yourself in the event of a claim.
Do I need to have a home insurance policy?
A legal obligation no longer exists in Germany. However, if you are financing your house through a loan, banks usually require proof of a home insurance policy as security.
