Four in five homes in Romania are uninsured despite law making it mandatory

Only 1.8 million (19%) out of the nearly 9.6 million homes in Romania were insured in case of natural disaster at the end of 2021, despite a law making home insurance mandatory it since 2009.

A major earthquake or flood would, therefore, find 81% of homeowners exposed and liable for any damages, according to data collected by Romania’s Financial Supervisory Authority (ASF) and cited by Economica.net.

Moreover, only 300,000 of the 1,8 million existing insurance policies are issued by the government-backed Natural Disaster Insurance Pool (PAID). The rest are optional home insurance policies given out by private insurers. Banks require those who contract loans to purchase a house to take out such insurance policies. The situation highlights the failure of PAID, a government body whose sole purpose is to increase the rate of insured homes.

According to the law, homeowners must have a mandatory insurance policy that covers damages caused by earthquakes, floods, or landslides, for up to EUR 20,000. The mandatory policy costs EUR 20 per year, and, at least in theory, those who do not have one can be fined up to RON 500 (EUR 100). However, no such fine has been given so far.                    

The optional home insurance policies go beyond the mandatory one and cover the risk of fire, and burst pipes, and can include payouts for damages to household goods like furniture. They also cover the entire value of the insured home, as established by the assessor.

Some 450,000 new homes were constructed in 2020, but only 70,000 PAID insurance policies were given out in the same period. To address the issue, the government body created an annual EUR 700,000 fund dedicated to promoting their insurance policies. 

radu@romania-insider.com

(Photo source: Designer491 | Dreamstime.com)

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Four in five homes in Romania are uninsured despite law making it mandatory

Only 1.8 million (19%) out of the nearly 9.6 million homes in Romania were insured in case of natural disaster at the end of 2021, despite a law making home insurance mandatory it since 2009.

A major earthquake or flood would, therefore, find 81% of homeowners exposed and liable for any damages, according to data collected by Romania’s Financial Supervisory Authority (ASF) and cited by Economica.net.

Moreover, only 300,000 of the 1,8 million existing insurance policies are issued by the government-backed Natural Disaster Insurance Pool (PAID). The rest are optional home insurance policies given out by private insurers. Banks require those who contract loans to purchase a house to take out such insurance policies. The situation highlights the failure of PAID, a government body whose sole purpose is to increase the rate of insured homes.

According to the law, homeowners must have a mandatory insurance policy that covers damages caused by earthquakes, floods, or landslides, for up to EUR 20,000. The mandatory policy costs EUR 20 per year, and, at least in theory, those who do not have one can be fined up to RON 500 (EUR 100). However, no such fine has been given so far.                    

The optional home insurance policies go beyond the mandatory one and cover the risk of fire, and burst pipes, and can include payouts for damages to household goods like furniture. They also cover the entire value of the insured home, as established by the assessor.

Some 450,000 new homes were constructed in 2020, but only 70,000 PAID insurance policies were given out in the same period. To address the issue, the government body created an annual EUR 700,000 fund dedicated to promoting their insurance policies. 

radu@romania-insider.com

(Photo source: Designer491 | Dreamstime.com)

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