Minister Hubig proposes compulsory insurance for residential properties in Germany

Almost a year after the flood disaster in southern Germany, Federal Justice Minister Stefanie Hubig (SPD) announced mandatory insurance against natural hazards for residential properties. "We need better protection against natural hazards, and this includes broad insurance coverage against natural hazards," Hubig told the "Augsburger Allgemeine" newspaper (Friday edition). "In the coalition agreement, we therefore agreed to expand insurance coverage against natural hazards," explained the SPD minister. According to the minister, the details will now be carefully examined.

‍

The law, "which protects, provides for, and provides solidarity security," should be passed during this legislative period, Hubig continued. However, the project is "challenging": "Neither homeowners nor tenants should be financially overburdened, but doing nothing is not an option," she emphasized. Because the "consequences of flooding and heavy rain are often a nightmare for those affected," Hubig said, and "climate change makes such extreme weather events more likely and more severe."

‍

Currently, natural disasters such as flooding or backwater are not covered by many policies, which is why the state often comes to the rescue with taxpayer money "when weather devastates entire regions," the minister told the "Augsburger Allgemeine" newspaper. "However, assistance for those affected must not depend on ad hoc political decisions," she added. 

‍

According to the coalition's plans, the requirement will initially apply to the insurance industry, the newspaper reports. New residential property insurance policies will only be offered with natural hazard coverage, and all existing residential property insurance policies will be expanded to include natural hazard insurance as of a specific date. State reinsurance is intended to keep the cost risks for private insurance companies and premiums for homeowners under control. It remains to be seen whether private owners will be able to waive insurance coverage under certain conditions, the "Augsburger Allgemeine" continues.

‍

According to the German Insurance Association (GDV), slightly more than 50 percent of all private homes in Germany are insured against natural hazards such as flooding. There have been repeated calls for mandatory insurance, particularly after the flood disaster in Bavaria and Baden-Württemberg in June 2024.

‍

The GDV (German Association of German Insurance Associations) supported the federal government's proposal in an interview with the "Augsburger Allgemeine," but the implementation depends on the specifics, GDV Deputy General Manager Anja Käfer-Rohrbach told the newspaper. "Compulsory insurance does not prevent extreme weather," she emphasized. "We need a clear legal ban on building in flood zones," Käfer-Rohrbach demanded. 

‍

The flood disaster of early June 2024 caused a total of €4.1 billion in damage in southern Germany, according to the Augsburger Allgemeine Zeitung. According to the insurance industry, about half of this damage was uninsured. According to the German Insurance Association (GDV), extreme weather caused a total of €5.5 billion in damage last year—the losses were split between property insurance and motor insurance.