Features of the Russian real estate insurance market

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Buying an apartment, Russian citizens increasingly decide to insure the acquired real estate. However, this raises many questions. Is insurance worth it? How much will it cost? Which insurance product to choose and much more.

Title insurance
Sergey Andriyaka. Fire in the Manege. 2004

Let’s take a closer look at the possible options for real estate insurance, as well as some of the pitfalls in this area..

Title insurance – protection against loss of ownership of real estate

When you buy an apartment in the secondary real estate market, situations may arise as a result of which you will lose your apartment. There are cases when, after the conclusion of the sale and purchase of an apartment, the owners of this real estate previously unknown to you appear. Such owners can find themselves even after quite a long time, even several years after the sale of the apartment..

In this situation, if you want to be insured, the only correct solution is title insurance of real estate. The risk of loss of property as a result of loss of ownership of the acquired property will be insured. Note that this type of real estate insurance is the most effective way to protect your property interests when buying an apartment.

Title insurance is a reliable protection against the consequences of events that happened in the past. By the way, not only residential real estate can be insured in this way, but also commercial real estate, land plots, lease rights and other types of property to which the insured has duly registered ownership rights, and which over time can be challenged by unknown persons at the time of the acquisition transaction this property by third parties.

Title insurance protects against loss of ownership in the event of:

  • violation of the rights of heirs;
  • recognition of previous transactions with property as invalid;
  • fraud or any other illegal actions;
  • making transactions on fake or untrue documents.

Benefits of title insurance:

  • Possibility to insure future risks even at the stage of preparation of the apartment purchase and sale agreement.
  • Coverage of legal costs.
  • Receiving payment of the sum insured, which is equal to the market value of the property at the time of payment.
  • Provides the opportunity to insure for a period from 1 to 10 years.

The cost of this insurance is very different from company to company, and it also varies from the history of the property itself. Voluntary title insurance will cost the owner of real estate per year from 0.5% of the value of the property, and will grow as insurance risks increase. The value of the tariff will still be calculated individually in each specific case, because it is influenced by a lot of factors (the number of apartment resales, the number of owners, the prescription of the purchase and much more).

Choosing an insurance product

Modern insurance companies offer many insurance programs that provide real estate insurance against a wide variety of risks: explosion (domestic gas or as a result of terrorist activities), fire, natural disasters (wind, hurricane, typhoon, tornado, earthquake, hail, flood, rainstorms, impact lightning, landslide, mudflow, avalanches, landslide, tsunami), theft, burglary, damage due to water (flooding by neighbors, failures of water supply systems, etc.).

Separately, there is civil liability insurance against damage to property, life and health of third parties and mortgage insurance.

Choosing an insurance product
Alfred Sisley. Flooding at Port Marly. 1876

Therefore, when choosing an insurance product, the owner of the property must decide what he needs to insure against? For an old wooden country house, the simplest fire insurance policy is quite suitable, if necessary, you can insure the cottage against theft of property located in the house.

If you want to fully insure a new city apartment, then you should choose comprehensive insurance programs. In this case, in addition to fire, your apartment will be reliably protected from a large number of possible risks..

You can find out a complete list of threats that are subject to insurance at the insurance company when concluding a contract. As a rule, the more risks the insurance covers, the more expensive it is. This should also be taken into account when choosing a specific insurance product..

Real estate insurance pitfalls

Let’s look at some of the pitfalls that can be encountered in real estate insurance..

For example, the most common option is that in the event of an insured event, the insurance company does not pay the owner of the apartment the full cost of the lost property, which is in the insurance policy. The fact is that in order to obtain the full value of the object, the property must be completely destroyed. If at least one wall remains intact, the insurance premium will be reduced. You must remember this when concluding an insurance contract and carefully read all the conditions so that later this fact does not come as a surprise to you..

Remember, the customer is always right! Insist on your option, why should you overpay.

Also remember that when reimbursing the property, the property owner will have to provide the insurance company with proof of the amount of property damage. To make it easier to defend your rights in the event of an insured event, it is imperative to keep all documents confirming your expenses (for repair work (the cost of building materials and work), the purchase of furniture, household appliances, etc.).

Another very important point that must be taken into account is that when applying for a policy with an insurance company, take only the one that you need and meets all your requirements. Often, insurers, in order to increase the cost of insurance, and, accordingly, the policy, offer their customers insurance policies, which include additional insurance events, the likelihood of which is extremely small. Remember, the customer is always right! Insist on your option, why should you overpay. If the insurance company stubbornly does not want to meet you, it is better not to deal with it, but to contact another.

How much will the insurance cost

Currently, the capital’s insurance companies offer a number of different programs in the field of real estate insurance. First of all, the cost of an insurance policy depends on the type of insurance, the object of insurance, the estimated insurance amount and a number of additional factors.

The cost of real estate insurance in the capital insurance companies

Insurance Company Insurance program Insurance object Policy cost
“The first insurance company” “Property under protection” Apartment, including technical equipment and interior decoration, as well as property (total value up to 18.7 million rubles);
Country house (worth up to 3.4 million rubles);
Civil liability (up to 800 thousand rubles)
The cost of insurance for apartments from 1900 rubles, country houses – from 3000 rubles
Mortgage insurance Life and health insurance of the borrower (co-borrower).
Real estate insurance.
Property right insurance (Title insurance)
Rates are set individually and depend on various factors that affect the level of insurance risk.
“Alpha insurance” “Though the flood” Finishing and property in the amount of 400 thousand rubles. from fire, water damage and burglary. 799 rubles
Insurance group “MSK” “Flat” Apartment, structural elements, engineering equipment (from 500 thousand to 5 million rubles), interior decoration of the apartment, civil liability of the owner of the apartment (from 50 thousand to 500 thousand rubles) separately or in various combinations. From 400 rubles to 9000 rubles
Uralsib “Insurance” My castle Apartment, incl .:
structural elements;
interior decoration, engineering equipment, other stationary equipment;
residential buildings, incl. cottages, summer cottages and other buildings.
Apartment from 1800 rubles.
House from 500 rubles, depending on the value of the object.
Mortgage insurance Apartment insurance – the subject of the pledge;
Borrower insurance against accidents and illnesses;
Property right insurance (Title insurance).
Rates are set individually and depend on various factors that affect the level of insurance risk.

For title and mortgage insurance, it is very difficult to name a specific price. When concluding a contract, insurers take a very large list of parameters to calculate the cost of insurance: the cost and condition of the apartment, the financial situation of the owner of the apartment, the age and state of health of the borrower, the “legal cleanliness” of the apartment and others.

If we consider the cost of insuring an apartment (house) and the property located there against various risks, then the insurance rate depends primarily on the value of the insurance object (sum insured). On average, to insure an apartment worth from 1.5 million rubles, you will have to pay about 1800-1900 rubles.

Insurance of a country house in different companies will cost a different amount, somewhere the cheapest policy costs 500 rubles, and somewhere from 3000 rubles. Again, it all depends on the value of the object and the perceived risks..

Some Moscow insurance companies offer insurance options for interior decoration and property only. In this case, the cost of an insurance policy in different companies starts from 400-800 rubles.

You can find more detailed information on the rates of some metropolitan insurance companies in the table above..

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