Guide Insurance - Comprehensive insurance coverage for private residential property

Builder’s liability and construction sector insurance

Many builders are unaware that they are liable for damages that occur due to their construction site even if they are not directly to blame for the cause. This can involve personal injury or property damage causally related to the new construction or property conversion.

Possible damages can include:

• Slippage of excavated ground onto the neighbour’s property due to heavy rainfall.

• A neighbouring property subsides as a result of construction work.

• Pipelines are damaged on the neighbouring property.

• Cracks appear on the neighbouring building as a result of vibrations.

• Crane load falls onto the neighbouring property and injures a third party or damages property belonging to third parties.

• A pedestrian falls into the excavation pit and is injured.

• A nearby stream is contaminated by construction work.

• Legal action against unjustified claims is required.

Builder’s liability insurance covers justified claims for personal injury or property damage for these and similar events in connection with a construction site. In any case, the builder is responsible for ensuring that the construction site is properly secured and, ideally, monitored.

Construction insurance provides protection in cases not covered by the liability insurance of the party causing the damage. Construction insurance involves the theft of building components and can cover all workers involved in the construction.

Insurance coverage is provided for the following types of damage:

• Damage to and destruction of new construction work (construction accidents / installation errors)

• Theft of new or installed components

• Theft of contractors’ tools and machinery

• Ground slippage

• Acts of malicious spray-painting and vandalism

• Delays in construction

In the case of conversions or renovations, construction accidents at the existing building can also be insured.

Loss of income and death insurance

The planning of the building project has been completed, the financing has been approved by the bank, the construction work can begin and nothing remains to burst the dream of owning a new home.

Especially at this point, however, it may be worthwhile to consider a private pension plan in the event of income loss following an accident or illness. After all, even in the event of loss of income or disability, there should be a way to maintain ownership or, in the event of death, for surviving dependants to retain the property.

Private pensions are a central element of personal financial planning that should stand behind every major financial project throughout life. This is a complex matter that requires options individually tailored to a person’s financial possibilities. A review can indicate where income gaps may arise as a result of an accident or illness; these should ideally be addressed. Illness in particular is often accorded much less coverage than are accidents. This is where a private plan can be of great assistance.

In any case, disability and term life insurance provides you with the pension or capital you need so that, even where the primary breadwinner is unable to work, your income is guaranteed and the affordability of your financing is ensured. A pension is primarily intended to compensate a lack of income, while capital allows the mortgage to be amortised and in this way reduced.

Fire and natural hazards insurance

Natural events, which are likely to increase in frequency and severity in the future due to climate change, are generally well covered by building insurance in Switzerland. This can be explained by the fact that, in addition to fire damage caused by:

• fire, smoke, heat

• electrical energy

• lightning strike

• explosion, blast

• aircraft crashes

• missiles

A broad list of natural hazards is also insured. These include damage caused by:

• flooding, inundation

• storms

• hail

• avalanche, snow pressure

• rockfall, rock slides

• landslides

Building insurance is compulsory in 22 cantons and is often a prerequisite for obtaining a mortgage, which means that the proportion of insured is probably close to 100%. Because of this, fire and natural hazard insurance for buildings covers the costs of damage to the structure during construction or to the functioning building.

Insurance coverage against natural hazards is relatively comprehensive in Switzerland. Nevertheless, property owners should be aware of the gap in this coverage. As a rule, damage caused by an earthquake is not included in natural hazards coverage as a part of building insurance. The only exception is the canton of Zurich, where earthquakes of magnitude 7.0 or higher on the MSK-64 seismic scale are also covered by building insurance.

Building water damage insurance

Property owners are particularly well advised to consider taking out building water damage insurance. This is because building insurance only covers part of the water damage, namely the portion caused by “above-ground water” resulting from a disaster (floods, inundation).

Not covered, however, is damage caused by rising groundwater, sewage backup, burst pipes, defective floor heating or a broken backwater valve in the laundry room. Since such events often result in expensive repairs, it is advisable to consider taking out building water damage insurance.

Building water damage insurance covers damage caused by the following:

• Water from pipes installed in the insured building

• Rain, snow and melt water that has penetrated through the roof, gutter, exterior downspouts or leaky windows, doors and skylights

• Backups from sewage systems as well as groundwater and slope

• water seeping into the interior of the building

• Exposure, repair and sealing of burst water or gas pipes both inside and outside the building

• Costs for deploying leak detection equipment

Earthquakes insurance

In Switzerland, earthquakes are covered by building insurance only within the canton of Zurich. However, only about CHF 1 billion is available to the earthquake fund and to related reinsurance resources to cover the damage. In the event of a severe earthquake, this amount would hardly be sufficient to compensate for all the damage that could be incurred.

Where damage exceeds available funding, homeowners are compensated on a pro rata basis. Regardless whether money from the earthquake fund is sufficient to cover the damage, the required contribution by the insured amounts to at least CHF 20,000.

Since an earthquake is an existential threat, it certainly makes sense to be insured against the financial consequences. With earthquake insurance, you can choose between basic coverage for emergency aid and extended coverage of the difference between the basic policy and the full insured value. Both types (basic and extended coverage) provide benefits in the event of destruction, damage or loss due to an earthquake. In addition, around 20% of the insured sum insured also covers clean-up and disposal costs. There is no minimum earthquake intensity level.

Third-party liability insurance

Owners of buildings are responsible for these. If their property is poorly maintained, they can be held liable for damages claimed by third parties. Poor maintenance can include, for example:

• ​icy driveways

• snow falling from the building roof

• Unbolted stair railings

Third-party liability insurance comes into play in these cases. It provides assistance by:

• covering the damage in the event of justified claims by third parties

• and defending against unjustified claims.

Cooperation partner

We have created this guide with the support of die Mobiliar in Zug, the oldest private insurance company in Switzerland. www.mobiliar.ch