Home fire insurance is seen as budgetary solution
First proposed two years ago by the International Association of Real Estate Management in Belarus, apartment owners can, and will be required to, now insure their homes. However, this applies only to apartments; exteriors, porches, and similar structural items will not be included in this new compulsory fire insurance scheme.
“The rest of the world has compulsory fire insurance for apartment buildings,” said Gennady Kalenov, chief executive officer of the International Association of Real Estate Management in Belarus. “Here, however, tenants have come to rely on an assurance by the state that if something happens, they will not be abandoned and that apartment owners will be financed for home repairs.”
“But this system is very unstable, so insurance companies sought to introduce the practice of compulsory home insurance to cover at least fire.”
At a meeting of the working group on problems of housing and communal services, a government commission gave the Ministry of Finance and the Ministry of Housing and Communal Services until May 1 to consider the issue. However, there were no further discussions on the matter.
The Ministry of Communal Housing considers this type of insurance necessary, but not particularly timely. “Public utilities say that first you must explain everything to the public,” said Kalenov. “People do not realize that communal property actually belongs to them, even though this is written clearly in housing codes. The Ministry of Finance also does not mind seeing an insurance scheme come in to place, but they would work with any scheme only when the Ministry of Housing gives them the data on the number of apartments to be covered, their footage, and other pertinent data.”
Insurance companies recommend home insurance as strongly as they recommend life insurance to their clients, however, it is extremely under utilized. Which is why they strongly support it becoming compulsory. It is also supported by real estate developers due to the fact that for the first five years of occupancy, the developer is held responsible for things that go wrong. If something happens that requires repairs, developers are required to compensate the apartment owner during this period. If the house is insured, then all costs will be shouldered by the insurance companies, as it normally is in other countries.
“If there is mandatory home insurance, the insuring company will pay compensation, reducing the load on the state budget,” said Kalenov. “So this kind of insurance is very necessary in Belarus. The ministries generally agree, and the insurance agencies do not mind, but what follows is dealing with the mentality of Belarusians, who typically do not seem to understand why insurance is needed.”
Home insurance has been successful over the past 20 years in Germany, where entire apartment buildings are insured as single objects. If there is a house fire, the insurance company settles the tenants in a hotel, pays them compensation, and makes home repairs. However, if it is found that the cause of the fire was the fault of a specific tenant, then compensation will be paid to all victims except the person who, through carelessness or intent, caused the fire to start.
By Elena Shevchenko