Basic damages and the insurance coverage for them: When are they applicable?
In recent years, Germany has faced significant challenges due to elemental damages, encompassing both physical and societal impacts.
Physical damages have resulted from various hydrometeorological extremes, with substantial economic losses reported. For instance, the average direct biophysically induced damage from droughts from 2016 to 2022 was approximately €781 million per year. The years 2018 and 2022 were particularly severe, with losses estimated at €1.7 billion and €850 million, respectively.
The agricultural sector in eastern and northern Germany has been disproportionately affected by these extreme weather events, highlighting the need for targeted policies to mitigate these impacts.
Societal and security damages have also been on the rise. Antisemitic incidents have been increasing, with both verbal and physical abuses reported. Recent incidents include a violent assault on a Jewish student in Berlin and an arson attack on a synagogue in Oldenburg. Individuals experiencing hate-motivated violence or harassment often suffer psychological harm and feel unsafe, which is part of a broader context of discrimination and violence affecting various groups in society.
When considering "elemental damages" in a broad sense, it is crucial to address both physical and societal impacts. To help individuals assess their personal risk, the German Insurance Association (GDV) has developed an interactive website called "Compass Natural Hazards," which can be used to determine one's risk at a specific address.
In the realm of property ownership, it is recommended that homeowners take out an elemental insurance as part of their building insurance, regardless of whether they live in a risk zone for natural hazards. For tenants, living in a risk area increases the recommendation to take out an elemental insurance as part of their contents insurance. If a tenant does not live in a risk zone, it is recommended to consider additional coverage if they could not financially afford the loss of their contents.
In terms of natural disasters, Germany has experienced several severe incidents in recent years. The 2021 flood disaster in North Rhine-Westphalia and Rhineland-Pfalz, for example, resulted in estimated damages of up to €5 billion. The 2002 flood disaster caused property damages of €1.8 billion, and the 2013 flood disaster resulted in damages of €1.65 billion.
The debate on the introduction of a mandatory insurance against elemental damages for building owners is ongoing. Extended Element Insurance covers damages caused by flooding, overflow, heavy rain, backwater, ground subsidence, landslide, snow pressure, avalanches, earthquakes, and volcanic eruptions, but it does not cover damages caused by human error, such as mining or earthworks, damages caused by snow falling from trees, and damages to holiday homes, garden houses, or detached garages.
As extreme weather events have been increasing for years and are expected to continue due to climate change, it is essential to consider the benefits of Extended Element Insurance for property owners and tenants alike. Whether an Extended Element Insurance is useful depends on the individual's assessment of the risk of being affected by elemental damages and the financial consequences of such damages.
In 2023, insured storm damages amounted to almost €5 billion, which is still significantly above the long-term average. As Germany continues to face challenges from elemental damages, it is crucial to stay informed and take the necessary precautions to protect both property and personal safety.
- The increasing number of severe weather events in Germany underscores the importance of considering Extended Element Insurance, especially for property owners and tenants, as it covers damages from flooding, heavy rain, and other hydrometeorological events that may impact sports facilities, adding yet another dimension to the elemental damages challenge.
- Given the growing occurrence of antisemitic incidents and the need to address societal impacts alongside physical damages, it would be beneficial for organizations such as the German Insurance Association to develop insurance policies that cover damages arising from hate-motivated crimes and incidents, just as they have done for elemental damages, to provide a comprehensive and supportive safety net for all individuals in Germany.
