Friedrich Merz, the chairman of Germany’s CDU party, has recently called for mandatory natural hazard insurance for residential buildings. But what does this mean for homeowners and policyholders in Germany?

What is Natural Hazard Insurance?

Natural hazard insurance protects homeowners against damages caused by natural disasters such as floods, landslides, heavy rain, or earthquakes. In Germany, this coverage is currently optional and usually added as a supplement to standard homeowners insurance.

Friedrich Merz’s Proposal

In light of increasing extreme weather events and rising damage costs, Friedrich Merz is advocating for a legal requirement for all residential buildings to have natural hazard insurance. The goal is to distribute financial burdens more fairly in the event of a disaster and to relieve the state of some of the costs.

What Does This Mean for Policyholders?

For homeowners, mandatory natural hazard insurance would mean they could no longer choose whether to insure against natural disasters. Insurance premiums may rise as this coverage becomes compulsory. However, policyholders would benefit from more comprehensive protection and avoid existential risks in the event of a claim.

Advantages of Mandatory Coverage

• Comprehensive Protection: Every homeowner is insured against natural hazards.
• Fair Cost Distribution: The financial burden is shared among many.
• Less Reliance on State Aid: The government would need to provide less financial support after disasters.

Disadvantages and Challenges

• Higher Premiums: Especially in high-risk areas, premiums could increase significantly.
• Insurability: Some properties may be difficult or expensive to insure.

Conclusion

Introducing mandatory natural hazard insurance for residential buildings would be a significant change for the German insurance market. Homeowners should get informed early and review their current coverage.

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