Real estate: insurance at every level!

May 28, 2018

In Luxembourg, the rate of construction is not keeping up with the growth in population. And yet 3,500 new dwellings are being built every year. Amongst all these new constructions, it should be noted that from construction through to promotion and occupation, Luxembourg's insurers (including Baloise Assurances) are involved at every level

Contractors' All Risks Insurance (CAR)

As the contracting owner, GoodBuilder SA will have the good sense to take out a "Contractors' All Risks" insurance policy. for its own construction site. This classic policy for construction and public works makes it possible to cover against all accidental damage to the goods insured (apart from the exceptions stated in the insurance policy), such as, for example, fire, flood or storm (thinking of the 833mm of rain which fell in Luxembourg in 2017...).

It also covers against theft and vandalism for the items already incorporated in the building, which reassures the manager of GoodBuilder SA, as he has read in the 2017 report by the Grand-Ducal police, that "construction site premises, offices and commercial establishments" have experienced an increase of 16% in burglaries over just one year.

The public liability insurance included in the CAR

GoodBuilder also takes out Public Liability cover as part of the CAR in order to insure the contracting owner's liability and comply with article 544 of the Luxembourg Civil Code (issues with neighbours), as, for example, he wishes to cover tangible and intangible losses which his works might cause to third parties during the construction phase. One example here, could be cracks in neighbouring buildings subsequent to ground-levelling work.

Residence insurance, chosen by the property manager

Then, once the project is finished, our TopProperty residence will choose itself a manager. This manager will take out a residence insurance policy for the walls and communal components (such as the foyer, the roof, the community heating, the lift, etc.), covering them against home risks such as fire, water or storm damage, theft, broken glass, etc.

Outstanding balance insurance: insurance cover which repays the rest of the borrowing in the event of tragedy

Finally, the quality of the TopProperty residence has won over the public and all the apartments have sold. So let's take the Schmidt family, who buys the lovely two-bedroom apartment on level 2; in order to finance their investment, Mr and Mrs Schmidt have borrowed 500,000 euros from their bank. This bank has asked them for a security in case the family is no longer able to repay their mortgage. Of course, we could think of a tragedy such as a death, or an accident which would make it difficult to practise a professional activity, thus making it impossible to repay the borrowing. With outstanding balance insurance, it will be the insurance company who repays the bank.

Private individuals' home insurance

Lastly, for day-to-day living in their apartment, the Schmidt family have thought to sign a home insurance policy, which covers them against fire, electrical damage, falling trees, natural catastrophes, water damage, and also, of course, theft.

As the Schmidts are of a far-sighted nature, they have also included the option of private public liability, which will protect them, for example, when little 3-year-old Steve decides to give his ball a mighty kick in the direction of the neighbours' conservatory.

In conclusion, as Alexander Sebastian, the Head of Baloise's Non-Life Corporate and Special Risks Department, says, "Through its role in giving confidence to all the players in the real estate chain, Luxembourg insurance enables the growth of a sector which is crucial for the country's economy, as it represents 12% of employees in Luxembourg in 2017, according to Statec, Luxembourg's Central Service for Statistics and Economic Studies.