Did you just buy land in Germany to build your home? You might want to learn more about liability insurance for landowners in Germany.
As we left the Notar’s office after signing our contracts for our newly bought land, our Mackler congratulated us and promptly told us that we must get landowners liability insurance. It was just the beginning of winter and he warned us that if someone slips on our sidewalk because of the frost we will have to pay for any related expenses.
And he had a point.
As we all know, there’s really insurance for everything in Germany – landownership is no exception. 😉
In this post, you can learn about some of the most important insurances for landowners in Germany.
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1) Why do you need landowners insurance in Germany?
A home builder in Germany bears a lot of responsibility. You can protect yourself against any damages that occur during construction with insurance that covers all potential risk.
German Civil Code regulates that every private home builder is liable for damages caused by the building activity (§ 823 BGB).
“Anyone who willfully or negligently violates the life, body, health, freedom, property or any other right of another unlawfully is obliged to compensate the other for the resulting damage.”
The German Civil Code also requires every house and landowner to ensure the road safety of their property and to be liable for any damage caused (§ 836 BGB).
“If the collapse of a building or other work connected with a property or the detachment of parts of the building or work kills a person, injures the body or health of a person, or damages a property, the owner of the property, if the collapse or detachment is the result of faulty construction or poor maintenance, is obliged to compensate the injured person for the resulting damage. The obligation to pay compensation does not apply if the owner has observed the care required in traffic for the purpose of averting the danger”.
These laws have far-reaching consequences in Germany – enough to lead to lifelong bankruptcy.
If some damage is caused then the home builder is liable to compensate unlimited amounts AND with their entire current and future assets. A claim for such damages can basically lead to complete financial ruin.
As a brand new property owner in Germany you should absolutely invest in good liability insurance for the private home developers and landowners.
2) Must have insurance for landowners in Germany
2.1) Homebuilders Liability Insurance (Bauherren-Haftpflichtversicherung)
A house builder’s liability in Germany covers all the risk that can appear on your home building site.
This insurance coverage is an absolute must because you as a house builder are responsible for everything that happens on the construction site:
- securing the construction site
- complying with all building regulations
- selecting experienced handymen and service providers
You should take out a house builder’s liability insurance in Germany BEFORE the start of construction because you are liable for damages as soon as the architect or construction company starts planning. The builder’s liability insurance usually ends with the completion of the construction work. The insurance premium for the builder’s liability is paid as a one-off payment.
Here you can calculate the one-time fee for CosmosDirekt’s Bauherren-Haftpflichtversicherung
GEV offers Bauherrenhaftpflicht starting from 35 EUR per year. Calculate your insurance quote here!
2.2) Building Construction Insurance (Bauleistungsversicherung)
Not everything always goes according to plan on a construction site.
During the construction phase, fires, lightning or explosions can ruin weeks or months of work. Natural hazards such as storms and floods can damage the partially-finished house facade.
In such cases, a building construction insurance (Bauleistungsversicherung) can cover any additional expenses. Some banks in Germany even require such insurance from mortgage applicants and will not grant a loan otherwise.
This insurance compensates for unforeseeable damage caused by:
- natural causes (storms, floods etc)
- negligent actions of construction workers, for example, if they break a windowpane during construction
This insurance includes all construction work, building materials and the building’s facade extensions. Damage caused by the theft of permanently installed assets can also be covered.
Bauleistungsversicherung should last for the entire construction period, but here is usually a max limit of 12 or 24 months.
The amount of the insurance premium depends on the construction budget. In addition, a deductible is usually agreed upon.
(GEV) offers Bauleistungsversicherung starting from 160 EUR (one-time fee).
3) Optional Insurance for landowners in Germany
3.1) Residential Buildings Insurance (Wohngebäudeversicherung)
Residential building insurance is a must for any homeowner in Germany – especially if you intend to live in the house for your entire lifetime.
This insurance protects against the financial consequences of property damage to your home. A residential building insurance works in the following ways:
- This insurance kicks in if your home is damaged or completely destroyed.
- Basic coverage with homeowners insurance offers protection against the risks of fire, tap water and natural hazards (for example, storm and hail).
- Additional coverage with this insurance include:
- Clean-up and demolition costs
- Moving costs, protection costs and costs for removing fallen trees.
- The costs of removing graffiti damage can also be insured.
In some policies, you can also add extra protection against natural hazards such as damage caused by flooding, landslide, volcanic eruptions, earthquakes etc. Obviously, you do not need these ‘add ons’ if you live in a geographically stable area.
GEV offers Wohngebäudeversicherung starting from as little as 4.85 EUR!
3.2) Home and Landowners Liability Insurance (Haus- und Grundbesitzerhaftpflicht)
This insurance is not necessary for every homeowner in Germany.
You need homeowner’s and landowner’s liability insurance in Germany only if you rent out property or are part of a homeowners’ association.
A homeowners liability policy provides cover in the event of personal injury, property damage or financial loss. In the case of property damage, only the current value is reimbursed. The insurance also covers construction work to a limited extent.
3.3) Liability Insurance for Undeveloped Land
The owner of an undeveloped land in Germany is also responsible for ensuring that third parties do not suffer damage.
Landowners in Germany have to adhere to something called ‘duty of care‘ which means they are liable for any damage that occurs on their property.
This risk can be covered with liability insurance for undeveloped land.
It applies in case if a landowner fails to comply with his obligation to grit in winter and a passer-by falls on the slippery pavement and is injured. Or if a tree on the property falls and crushes a nearby parked car.
However, liability insurance for undeveloped land only makes sense you have not started construction on the land or are not planning construction for the next few years.
You can insure an undeveloped plot of land up to 2,000 square metres through your private liability insurance. Larger plots of land should be covered by a homeowners’ and landowners’ liability insurance policy.