Apartment structure insurance: what is it, how much does the policy cost?

Is it worth getting insurance?

This question never occurred to me until, when purchasing an apartment in Korolev, a realtor (and, as it turned out, part-time insurance agent RESO) gave me an insurance policy. Shrugging, I put it in the desk drawer along with all the unnecessary rubbish and drove off to England for 2 months.

Structural insurance - what is it?

Already from the name it is clear - this is insurance of the structural elements of the apartment. We can say that this is the protection of the “box” of the apartment itself, and damage to it actually makes the housing uninhabitable. Its restoration will either be impossible or extremely expensive for the owner.

Structural elements of an apartment for insurance:

the walls of the housing themselves, partitions and ceilings;
window and balcony openings, the balcony itself;
entrance doors and windows (interior doors are usually not included in the policy);
stairs that relate to the housing itself (for example, if we are talking about a two-level apartment, a private house);
roof and foundation, if we are talking about private houses and cottages.

It is clear that if, due to circumstances, these structural elements are damaged, they are severely damaged or lost, the housing becomes uninhabitable. And if an insured event occurs, the insurance company pays the victim money in the amount specified in the contract.

Apartment flooding – insurance helped

While I was away, my apartment was flooded twice: flooded by neighbors upstairs and a sewer blockage (apartment on the first floor). To be honest, when I entered the apartment, I was glad that I didn’t have time to do the renovations. Remembering the policy, I called the agent, who told me the sequence of actions: calling emergency services if necessary, reporting an insured event on the RESO website, photographs of the consequences of the flood, and calling representatives of the management company to draw up a report. That’s what I did, after which I waited for an expert from RESO and after 2 weeks I received compensation for the damage (and in my case, funds for the repair of a recently purchased apartment).

It is important to note that the flood from above had dried up by the time I returned, and the management company refused to record the damage in the report, claiming that the flood had occurred much earlier. In turn, I went to the emergency service, where, together with the dispatcher, we looked at the floods that had happened in our house over the past 2 months, and found an emergency call a month ago just for the riser above my apartment. With documentary evidence, I went to the head of the management company with a demand to include the bay in the act. I was not refused.

About insurance cases

Structural insurance involves a list of insured events, upon the occurrence of which the owner or the bank as a beneficiary receive compensation from the insurance company.

There is no single list; each company creates its own list. It is approximately identical everywhere, but there may still be some differences. As an example, let’s look at the insurance of the structure of an apartment or house, which is relevant for Sberbank mortgage borrowers. The service contract specifies the following insured events:

fire. We are talking about losses caused by the fire itself and from the fire extinguishing process;
lightning strike - a direct lightning discharge that passed through the structural elements of the insured property and damaged them;
household gas explosion both in the apartment/house and among neighbors;
complete or partial loss of property due to a natural disaster. This could be an earthquake, flood, strong wind, hail, landslide, landslide, volcanic eruption, hurricane, tsunami, mudflow, flooding, avalanche, subsidence, tornado, typhoon;
explosion of gas pipelines, cars, boilers, etc.;
destruction or loss of property due to a break in sewerage or heating systems;
illegal actions of third parties;
a fall on the subject of insurance of various objects, a collision with a vehicle.

For each individual insured event, a full explanation is given, specified in the service agreement. And in each individual case we can talk about either a complete loss of property or a partial loss. For example, if a burglar knocked down the front door, there would clearly be a partial loss of property, not a complete loss. And if the apartment was severely damaged by the explosion, we will talk about a complete loss.

If the incident occurred due to the fault of the policyholder himself, his losses will not be covered. For example, if he was grilling kebabs in an undesignated place and there was a fire.

I'll be back

But this is not the end. The next flood occurred approximately 1.5 years later, during the departure to Lithuania. After two weeks of absence and 800 km of continuous travel by car, I ran into the apartment to feed the baby I was holding in my arms... and realized that I would never see the apartment in the form in which I remembered it. The entire time we were not at home, the apartment was monotonously flooded with sewage (at that time the hot water was turned off, otherwise the flood would have been discovered much earlier). Further according to the scheme: emergency service, management company, application to RESO, photos, videos.

This time, there was almost nothing intact in the apartment, and due to the specifics of the bay, it was not possible to wait for a RESO expert to arrive, so it was necessary to take photographs and make videos of the consequences of the flood in as much detail as possible, having previously coordinated your actions with the insurance company. It was also necessary to draw up a very detailed report from the management company and an inspection report from the RESO expert, because The amount of payment depended on this.

Structural insurance for mortgages

When concluding a mortgage agreement with a bank, the borrower is always faced with the need to insure the property that remains as collateral. The bank protects itself financially: if the pledged property suddenly suffers, it must get its money back. Read more about this - Mortgage insurance.

When concluding mortgage agreements, it is the insurance of the apartment structure that is taken out, but the term “property protection” appears most often. It is impossible to refuse to purchase a policy; without it, according to the law, a mortgage cannot be issued.

According to the agreement, the bank becomes the beneficiary. If an insured event occurs, he will receive compensation from the insurer and cover the debt; the borrower will not owe anything.

Features of insurance of the apartment structure with a mortgage:

payment of the cost of the policy is borne by the borrower;
the policy is issued for 1 year, the borrower must renew it every year;
if there is no extension, the bank, according to the terms of the agreement, greatly increases the rate and may demand full early repayment of the loan;
as a standard, banks offer the purchase of a policy from a partner or subsidiary insurance company;
by law, the borrower can choose any insurer, but he must meet the bank’s requirements (in fact, he rarely does);
In addition to the mandatory insurance of the structure, additional insurance may be offered.

Additionally, borrowers are always offered to purchase a life and health protection policy, insurance in case of job loss, or some kind of comprehensive insurance. The client may refuse to purchase, but then the bank increases the mortgage rate, as his risks increase.

How much does a structural insurance policy cost?

We looked at what the structural elements of an apartment are, what type of insurance it is, and how it works. The key question for everyone is how much this service costs. We are talking about the complete loss of property or severe damage to it, so the price of the policy will be rather high.

The cost of the service directly depends on the amount insured, which can be:

For a mortgage, the remaining amount of debt owed to the bank. That is, every year it decreases, the cost of the policy decreases.
With standard insurance of a structure without a mortgage, the insured amount is the price of the apartment or another amount stipulated by the contract, for example, 3,000,000 rubles.

The insured amount is the amount of compensation upon the occurrence of an insured event. If the property is partially lost, then an assessment of the damage is made.

For example, consider the tariffs for this service from the insurance company VSK:

apartment. If only the structural elements of the apartment are protected - 0.15% of the insured amount. If standard finishing is additionally insured - 0.25%. If high-quality finishing and equipment - 0.35%;
house. Protection of the structure only - 0.4%, with standard finishing - 0.6%, with high-quality finishing and equipment - 0.8%. If the house has wooden floors, the fee increases by 0.1 point;
land plots - 0.1%.

As you can see, home insurance is more expensive, which is logical - they carry more risks. In addition, insurers can apply increasing and decreasing coefficients when calculating the price of a service. For example, if a house is located near a river, it will obviously have more risks.

As a result, it turns out that if the insured amount is 3,000,000 rubles, then protecting only the structure with a fee of 0.15% will cost the owner 4,500 rubles. In general, the fee cannot be called categorically large.

When taking out a mortgage, only the structural elements of the apartment are usually insured, but some banks sell policies that also protect the finishing. If the borrower does not need this, he has the right to refuse extended protection. Of course, banks are interested in selling the policy at a higher price, but only structural protection will be mandatory.

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Types of apartment insurance

Depending on the initiator, apartment insurance may be mandatory or voluntary. If housing is the object of collateral in a credit relationship with a bank, then insurance of the apartment is mandatory, and the property must also be insured if it is purchased under a mortgage. Other types of insurance are not regulated by law and are voluntary.

Insurance conditions depend on the list and frequency of risks covered by the policy. Thus, the most popular is insurance of an apartment and property against flooding, in second place is insurance of an apartment and property against fire, followed by insurance of the title of the apartment - this type of protection against potential losses is resorted to by owners of housing claimed by relatives or third parties. Even if, as a result of the proceedings, the apartment has to be given away, the insurance company will compensate the amount specified in the contract.

When considering the draft agreement, it is necessary to pay attention to the clauses that stipulate cases in which compensation for damage is not made, because they are not insured events. After all, compensation is paid based on a combination of factors, including the causes of the emergency, the conditions under which the incident occurred, as well as the consequences of the event - each stage must be described and documented. Only if all conditions are strictly observed will the victim receive compensation.

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FAQ

Insurance of structural elements of an apartment, what is it?

This is protection of the box of the apartment itself: walls, balcony, front door, window opening. That is, the main elements.

Is it possible to protect both the structure and the finish?

The policyholder is free to choose the option of home protection. You can protect only the structure, or you can add finishing to it and even everything that is in the home. It is clear that the price of the issue will be higher.

Mortgage constructive insurance, what is it?

This is compulsory property insurance, which the borrower leaves as collateral. Without purchasing this policy, concluding a contract is impossible.

What happens if an insured event occurs?

If the property was damaged by an event specified in the contract, the client contacts the insurance company and, after inspection and assessment, receives the compensation required under the contract.

What determines the cost of the policy?

First of all, the insured amount is the price of the property or another amount specified by the client. The price is also influenced by the type of object, its location and additional elements of protection, for example, if in addition to the design, finishing is also specified.

Sources:

Sberbank: Mortgage insurance for real estate.
VSK: Insurance policy “Constructive”.

about the author

Irina Rusanova - higher education at the International East European University in the direction of "Banking". Graduated with honors from the Russian Economic Institute named after G.V. Plekhanov with a major in Finance and Credit. Ten years of experience in leading Russian banks: Alfa-Bank, Renaissance Credit, Home Credit Bank, Delta Credit, ATB, Svyaznoy (closed). He is an analyst and expert of the Brobank service on banking and financial stability. [email protected]

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How much did they pay this time?

This time we exhausted the limit on the insurance policy - we were paid the entire amount, about 600 thousand rubles. In addition to property damage, the insurance company covered the costs of cleaning services, disinfection, mold treatment and dry cleaning of clothes. The money received was enough to make partial repairs. It must be said that during the repairs another flood occurred, which did not cause any damage, but gave reason to contact the management of the management company (with a copy to the administration and the prosecutor's office) with a request to eliminate deficiencies in the work . The apartment was taken over by higher authorities, but that’s a completely different story.

Comments: 2

Your comment (question) If you have questions about this article, you can tell us. Our team consists of only experienced experts and specialists with specialized education. We will try to help you in this topic:

Author of the article Irina Rusanova

Consultant, author Popovich Anna

Financial author Olga Pikhotskaya

Lprisa Vasilievna
10/26/2021 at 3:33 pm This is not about mortgage insurance. Recently, insurance companies have been increasing the cost of insurance policies for apartment insurance by significantly increasing the share of insurance of structural elements. They even highlight insurance of structural elements as a separate line. Do I need to insure structural elements for the cost of the apartment? How often do explosions occur, i.e. destruction of an apartment structure in Moscow? Or is this just a marketing ploy on the part of insurance companies? Thank you!
Reply ↓ Anna Popovich
10.26.2021 at 18:00
Dear Larisa Vasilievna, the structural elements of the apartment are load-bearing and non-load-bearing walls, floors (floor/ceiling), partitions, window units (including glazing), doors (excluding interior doors), as well as balconies and loggias (walls, floor and ceiling (top) ) floors, including glazing), excluding engineering equipment and interior decoration available at the time of conclusion of the contract. An insured event means a gas explosion in an apartment or with neighbors, resulting in damage to the collateral property. Fire, flooding or fall of a construction crane onto a residential building. And these are just a few options for damage to collateral, from the number of problems that regularly occur on the territory of the Russian Federation. Insurance companies have statistics on this category of insurance cases. In addition, insurance of collateral (structure) for a mortgage is mandatory in accordance with Federal Law No. 102-FZ “On mortgage (real estate pledge)”.
Reply ↓

Continued story

A year has passed. My insurance agent called me and offered to renew the policy, but at my expense. After thinking a little, I decided to play it safe, besides, the repairs had already been completed. Having received the policy, I put it in the same desk drawer (deciding that they couldn’t flood me again) and left for Germany, but this time for only 3 days. When I returned, I discovered a strange picture: my new suspended ceilings had dropped almost to the middle of the room... filled with water!

Wet walls, partially swollen furniture... The sight is not for the faint of heart. At this point I already knew what to do. The flood of hot water happened the day before, and it was the suspended ceilings that saved me from the global flood; almost 100 liters of water from which my future husband and I poured through the hole for the chandelier, after which they quickly recovered. The insurance company paid compensation in good faith this time too.

The peculiarity of the bays from above was that the apartment above me was rented out, and the tenants did not notify its owner about the incidents, and they did not give him letters from the insurance company or the court. As a result, the owner of the apartment had money withdrawn from his account by court decision at the same time for both bays. The sum was considerable.

Naturally, angry, he decided to come to me and sort it out, but in this story my representative was the insurance company, so he had to deal with it. Needless to say, since then I haven’t had any questions about property insurance?