is a personal financial consultant, founder of NN finances. She has over 17 years of experience as a manager in the largest international companies in Bulgaria in the field of insurance, pension and health insurance, investments, leasing and lending. She has been awarded Manager of the Year 8 times.
My home is my castle, say my English friends. Real estate all over the world is part of our personal wealth. We have invested in it not just money, but the days of our lives devoted to earning it. That is why it is extremely important to protect them.
In Bulgaria, less than 10% of households use property protection in the form of insurance.
Among the reasons for this low rate is the misconception of many people that the state should help them repair their damage in the event of a disaster.
According to the laws in Bulgaria, however, the state is obliged to compensate property owners only if it is the fault of it or its bodies, when they do not have insurance.
In case of natural disasters, the state can provide material assistance of up to BGN 300 and accommodation of the victims. In some cases, the socially disadvantaged are supported by rehabilitation activities.
Other reasons for the low insurance penetration of property insurance in Bulgaria are the relatively low insurance culture and the distrust of the companies in this sector.
On the other hand, Bulgaria has the greatest potential for growth, especially with the vagaries of the weather and the frequent natural disasters.
The situation is different with the foreign citizens who have chosen Bulgaria as a new home – there the insurance penetration of the property policies is over 70%.
In this article we take a closer look at the main characteristics of this type of insurance in Bulgaria, what risks they cover, what benefits they bring and what pitfalls it is good to be careful about when concluding a contract.
Having so many things to think about and pay for, it is a pure temptation to go for some of the cheapest offers. As we cannot expect to find meat in cheap meatballs, we cannot have our home protected with a cheap insurance, too.
One of the main principles in insurance is that the owner should not be enriched by the amount received in the occurrence of an insured event, but only to be compensated the losses incurred and to restore the property in its previous form. That’s why it’s called compensation.
And here we have three possible scenarios, the first two of which bring the risk of negative consequences for the insured.
Over insurance is perceived by insurance companies as an attempt (willingly or unwillingly) to be misled and they react according to this presumption. For example, if the home costs BGN 75,000, but the owner insures it for BGN 100,000, in case of complete destruction, the experts of the insurance company will determine compensation up to the amount of the actual value of the losses. But the insured will have paid a higher price on his policy.
In the case of underinsurance, an insurance amount is agreed, which is lower than the actual value of the property. If it is insured for BGN 50,000 and its price is BGN 100,000, in case of its total destruction the owner will receive only half of the real price.
The situation is similar with minor damages. In case of damages for BGN 8,000, then BGN 4,000 are due because there is underinsurance. This is one of the main reasons why owners receive lower compensations from insurers and remain disappointed. In fact, they have chosen a lower sum insured to pay a lower price (insurance premium).
Insurance of the actual amount You can find out the actual amount on real estate sites or discuss with the insurance consultant.
Fire is a basic coverage. The policy cannot be concluded without it. This usually includes risks such as explosion, implosion, lightning strike, collision or fall of piloted aircraft, its parts or cargo.
Short circuit / electrical shock Even a good electrical system does not guarantee that short circuit damage can be avoided. And the electrical shock does not depend at all on the serviceability of your property.
Earthquake covers damage associated with minor consequences, such as cracking of walls, falling plaster and others. But total losses are also compensated. Certain parts of the country are particularly risky, and this is reflected in the annual coverage premium. The risk is concluded additionally.
Glass breakage Although this is an additional risk, there should be no policy concluded without it, whether we live on a low floor or in a house. Windows can be broken not only by vandals, but also by falling branches and other natural perils, shock or sound wave. Damages caused by unclosed doors and windows are not covered by the general principle that insurers do not cover damages caused by us and our (in)actions.
Third party liability is usually concluded when insuring apartments. In the event that you flood your neighbors or cause a fire and thus damage or destroy their property, the insurer will pay them for the damage suffered instead of you.
Loss of rental income You can negotiate coverage for cases where any of the risks involved are realized. It is up to a certain limit and term (usually three months – the maximum time required to renovate the home and put it in a condition suitable for rental.
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Home services Some of the large companies offer the possibility to cover the cost of basic necessities and 24/7 assistance to the insured and his family in emergency situations in case of an event covered by the policy – electrical, drainage, plumbing, locksmith, glass and other services. This can guarantee you a quick fix and cover the cost of the service itself. It is most suitable for large cities, where there is a good network of providers of these services. Before concluding this risk, ask how it will be realized.
Fence insurance is usually taken out when insuring a house.
Expenses for temporary accommodation The costs for temporary accommodation of the insured and the members of his / her family / household are reimbursed in case the main residence becomes totally unfit for habitation as a result of an occurred insured event from a risk covered in a policy and provided that the insured has taken all necessary measures to eliminate the consequences. from the event.
Online security has recently been offered in Bulgaria but not by all companies. It includes actions and coverage of costs by the insurer in the event of identity theft, harm to the online reputation, a dispute related to a product purchased from an online retailer and legal protection upon the occurrence of a covered risk.
Accident This one could be included for the persons living in the same household with a permanent or current address specified as „address of the insured property“. It is valid in the territory of Bulgaria and abroad. Covers loss of life, permanent and temporary disability due to an accident.
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Here are all movable contents, everything that cannot be separated from the property so that it can be used again – furniture, lighting, household electric appliances. Exceptions that cannot be protected in thee policies are books, valuables, cash, manuscripts, works of art, animals, plants, weapons, intellectual property and more.
The insurance options are either through an inventory or through a general limit of liability.
The second is the most common. When an event occurs, you must find sufficient evidence (invoices, receipts, warranty cards, etc.) to receive compensation from the insurer.
In all cases, it may not exceed the predetermined limit.
In addition to the risks already listed for real estate, theft protection may also be included. In some companies, this risk is divided into burglary, technical theft and robbery, as defined in the Criminal Code.
In addition to the risks covered, it is of importance to find out what are the exceptions to your policy. They are an integral part of the general conditions and the volume is not small at all. Be sure to discuss them with your insurance consultant.
Insurers will not pay indemnities in cases of intentional actions, gross negligence and failure to take due care by the insured.
It is not paid in case of old damage, too.
Excluded risks are also riots, revolutions, hostile invasion, eviction, strikes, war and acts of terrorism.
Serious insurers also exclude events that occurred in uninhabited or unused premises – left unattended or unguarded for more than 30 consecutive days, except for homes located in apartment complexes under the supervision and / or security of companies managing them by contract.
The period to notify the insurer usually starts since the moment of becoming aware of. It is usually 24 or 72-hour. Always discuss with your insurance agent how to fill in the documents – in definitions of the events is everything!
This is another pitfall. The amount of compensation or its payment in general depends on the deductible clauses in the contract. It is defined as the percentage or fixed amount below which the insurer does not owe compensation.
The most important criteria for choosing insurance:
Property insurance offers are very difficult to compare. Different insurers use various, often confusing terminology. It is advisable to choose large stable companies. The price is one for basic coverage and for each additional risk an amount is added to it.
For this amount you can protect your biggest asset from natural forces and human actions and sleep a little bit more peacefully. And to prevent unpleasant surprises in the payment of compensation by the insurance company in the event of an accident, it is good to read the policy carefully before signing.
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