Higher deductibles can lower insurance premiums.
(Photo: dpa)
Karlsruhe Apartment owners may be obliged to jointly pay for damage in the complex that only affects a single third-party apartment. Such a regulation for building insurance is fundamentally legal, the Federal Court of Justice (BGH) ruled on Friday. A higher deductible means lower insurance premiums, and everyone benefits from that. So everyone would have to bear the costs together. However, there may also be reasons for a different regulation (Az. V ZR 69/21).
The division of the deductible has apparently been the subject of heated arguments for years, as the presiding judge Bettina Brückner said in the hearing on July 1st. Many homeowners associations are therefore likely to follow the judgment with interest.
Homeowners insurance covers you if your home is damaged or completely destroyed. Damage caused by mains water, fire and natural hazards such as storms and hail are usually covered.
In this specific case, it was a large complex in Cologne with many smaller apartments and a large commercial unit. Water damage often occurs in apartments due to defective pipes. In 2018 alone, these amounted to around 85,000 euros.
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Due to the large amount of damage, the apartment owners now have to pay a deductible of 7,500 euros per claim, and the insurance company only reimburses about a quarter of the damage. The owners of the commercial unit have to pay a particularly large amount because of the large proportion of space they have, although they say they have never had water damage – and that’s why they complained.
Changing the cost allocation key could be justified
The Karlsruhe judges consider the previous regulation to be lawful in principle. The decision to include a deductible in the insurance contract is regularly associated with the fact that the community, as the policyholder, has to pay a reduced premium. This makes economic sense for homeowners because of the associated reduction in housing allowances.
>> Read here: As a community of owners, you should pay attention to these rules for the property tax return
In addition, the payment of the deductible is a manageable and precisely defined risk. This risk, taken by majority decision, would have to be borne jointly, no matter where the damage occurs.
According to the decision of the judges, the same applies if the deductible is set so high due to unusually frequent damage: Even then everyone would benefit from the fact that the system was insured at all.
Nevertheless, a future change in the cost allocation key could be justified, according to the BGH. That would be the case if the occurrence of pipe water damage in the residential units is due to structural differences in the residential and commercial units. On the other hand, it would not be sufficient if the construction is the same and only the individual owners use the residential and commercial units differently.
The Cologne district court must now examine the situation again in this case.
More: BGH announces judgment on building insurance for September