Protection against service charge defaults
As a homeowners' association (HOA) or landlord, safeguard against missed maintenance fee payments and protect your liquidity with the maintenance fee default insurance from nextsure.
Ensure liquidity
Protect the WEG
Cushion disruptions
What is a service charge loss insurance and who benefits from it?
Protects homeowners' associations from financial damage due to missed service charge payments by individual owners.
Ensures the necessary liquidity for ongoing costs such as maintenance, management and operating expenses.
Housing associations and their administrations, as well as indirectly all solvent owners, can benefit.
Prevents special levies or benefit reductions due to payment defaults by individuals.
The most common causes of service charge arrears and how to protect yourself
Service charge defaults pose a serious financial threat to homeowner associations (HOAs). The causes of this are varied: unemployment, illness, or the over-indebtedness of an owner can lead to insolvency just as much as deliberate refusal to pay or the bankruptcy of a co-owner. Vacancy due to difficulties in selling or renting can also cause service charge arrears. To protect themselves as an HOA, preventive measures such as a careful (albeit limited) review of new owners and consistent dunning procedures are essential. Timely legal actions in the event of late payment are equally important. However, the most comprehensive protection is provided by service charge default insurance, which bridges financial gaps and secures the liquidity of the association before a serious crisis occurs. This way, the HOA remains capable of acting and necessary maintenance can continue to be carried out.
Your Safety
Benefits of the Homeowners' Association Fee Default Insurance
Protection Failure
Reliably protects against missed service charge payments.
Liquidity in the Homeowners' Association
Ensures the financial operability of the community.
Digital Process
Simple online completion and quick claims reporting.
Reduce conflict
Reduces conflicts within the homeowners' association.
Fair costs
Transparent contributions, tailored rates for your security.
Expert Advice
Expert advice from our specialists at nextsure.
Maintenance
Enables scheduled repairs despite potential payment defaults.
Value Retention
Contributes to the long-term preservation of your property's value.
Flexibility
Individual solutions for different sizes and needs of homeowner associations.
Comprehensive protection for your homeowners' association
Worry-free as a homeowners' association?
Secure your service charge now!
Legal Fundamentals: What Landlords and Homeowners Associations Need to Know About Service Charges
Paying the service charge is a key obligation for every property owner, as outlined in Section 16 Paragraph 2 of the German Condominium Act (WEG). The amount of the service charge is determined by a resolution passed at the owners' meeting based on the budget plan. This covers all community costs, from operating expenses and maintenance reserves to administration costs. If an owner fails to fulfil their payment obligation, they are liable for the arrears. In the event of selling the property, the responsibility for paying the service charge transfers to the buyer from the point of possession transfer; however, the seller can still be held accountable for existing debts. The WEG has legal means at its disposal to enforce service charge claims, such as dunning procedures, obtaining a judgment, and ultimately enforcement actions (including forced auction or administration of the unit). Service charge loss insurance can mitigate this often lengthy and costly process for the WEG.
Leistungsfall Hausgeldausfall: How settlement works at nextsure
When the worst happens and a homeowner fails to pay their service charges, swift and straightforward handling is crucial. With nextsure, you can report the claim digitally through our portal. To do this, simply submit the relevant documents such as minutes of resolutions from the homeowners' association proving the claim for service charges, past reminders to the defaulting payer, and evidence of the actual shortfall. Our experts will promptly assess your claim, taking into account contractually agreed conditions such as waiting periods or coverage limits. Once the claim has been positively assessed and acknowledged, the insurance payout is made directly to the homeowners' association. In many cases, nextsure then takes over the recovery from the defaulting owner, so the association doesn’t have to manage it. Transparent communication throughout the entire process is a given for us, ensuring you are always informed of the current status.
Costs and Pricing of Loss of Service Charges Insurance: An Overview
The cost of insurance against house charge defaults depends on several factors and is calculated individually for each homeowners' association (WEG). Key factors include the number of residential units in the complex, the amount of the average monthly service charge per unit, as well as the desired insurance sum and the agreed maximum benefit duration per claim. Choosing a deductible can also influence the premium: a higher deductible usually leads to lower contributions. Nextsure offers various tariff options that can differ in terms of coverage and limits to meet the specific needs of smaller and larger WEGs. We value a transparent contribution structure without hidden costs. Request an individual quote to find out the exact costs for the optimal protection of your WEG.
Homeowner's Damage Insurance vs. Rent Loss Insurance: The Differences Explained
Although both types of insurance cover financial losses in the real estate sector, they are aimed at different target groups and risks. The community charge default insurance protects the condominium association from the financial consequences if one or more co-owners fail to pay the due community charge. The insurance benefit is paid directly to the condominium association to secure its liquidity. In contrast, the rent default insurance is designed for individual landlords. It comes into play if the tenant of an apartment or house does not pay the rent (including ancillary costs, which often include the community charge for the condominium association). In this case, the payment goes to the landlord. For an owner who has rented out their flat within a condominium association, both types of insurance could theoretically be relevant: The community charge default insurance secures the condominium association if they themselves cannot pay the community charge (e.g., because their tenant fails to pay), and the rent default insurance protects them against the rent loss itself.
Loss of rent
Insurance
Landlord
Legal protection
Residential building
Insurance
Tips for Preventing Housing Allowance Defaults: More Than Just Insurance
A service charge default insurance provides important financial protection, but preventive measures can already minimise the risk of payment defaults in advance. This includes a careful credit check of potential new owners conducted within the legally permissible framework. A solid and forward-looking economic plan for the homeowners' association (HOA) with an appropriate maintenance reserve is also fundamental to avoiding financial bottlenecks. Consistent and early reminders at the first signs of default are crucial. Often, clear communication within the community and offering mediation procedures during disputes help to prevent escalation. Regularly reviewing and adjusting the service charge to reflect actual costs is also an important aspect of good management. While these measures do not replace insurance, they can reduce the likelihood of a claim.
The role of property management in safeguarding against service charge defaults
The property management plays a central role in the prevention and management of service charge defaults. Among its core responsibilities within proper management is the comprehensive monitoring of all owners' service charge payments. In the event of late payment, it is responsible for implementing a structured dunning process, which can range from the first payment reminder to the initiation of legal action. The management also advises the residential community (WEG) on the necessity and options of service charge loss insurance and obtains appropriate offers. In the event of a claim, it assists the WEG in filing the claim and compiling the necessary documents for the insurer. A proactive and competent property management is thus an important partner in minimizing the risk of service charge defaults and ensuring the financial stability of the WEG.
Case Studies: Successful Protection with the Service Charge Loss Insurance
The theory is important, but concrete examples best illustrate the benefits of a maintenance fee insurance. Case 1: A smaller WEG with 10 units. An owner files for personal bankruptcy, and maintenance fee payments cease. Thanks to nextsure's maintenance fee insurance, the liquidity gap was closed, and a planned façade renovation was carried out on schedule without burdening the other owners with special assessments. Case 2: A larger residential complex with over 100 units struggled with repeated payment defaults by several owners in financial difficulties. The maintenance fee insurance stabilised the WEG's finances, prevented a reduction in the maintenance reserve, and enabled management to focus on resolving the underlying issues instead of constantly having to fill financial gaps. These examples show how the insurance serves as a safety net and ensures the continuity and preservation of the property's value.
What exactly does the home insurance cover?
The market for home charge default insurance is constantly evolving, driven by an increasing awareness of risk among condominium associations and administrators. A clear trend is the ongoing digitalization: online sign-ups, digital claims reporting, and integration into property management software are increasingly becoming standard and significantly simplify processes. Insurers often expand their offerings with preventive consulting services to support condominium associations in minimizing risks. The general economic situation and developments in the real estate market, such as rising interest rates or energy costs, may further influence the demand for insurance solutions. In the future, even more flexible tariff models tailored to the size and specific risk structure of condominium associations can be expected. The use of data analysis for better risk assessment is also likely to increase.
