Moscow Times Real Estate Catalogue, May 2004
by Vladimir Kozlov
Anna Levitova, managing partner at Evans Property Services, talks about the essentials of home insurance
Q: If someone intends to insure an apartment, what should they look for in an insurance contract? What risks are covered by a household insurance policy?
A: There are several types of insurance contracts. A contract can cover the risks of losing ownership rights, the destruction of property, damages caused to improvements and third-party liability. Your choice of insurance type should be based on the risks to which your particular property is likely to be subject. For example, if you buy an apartment that was privatized a long time ago and has changed hands many times since then, it would be a good idea to insure the property rights to that apartment. But if you buy an apartment from a developer, this type of insurance wouldn't make a lot of sense. Similarly, if you know that your neighbors have recently renovated their apartments, it would be reasonable to take out third-party liability insurance.
Q: What fine print should people pay attention to when choosing insurance?
A: You need to study carefully what a company offers, paying special attention to all documentation to find out what the company's requirements are when making a claim, what the procedure is for calculating damages and which documents are required to receive a payout. If a company insists that you should submit a lot of documents, it is likely to prolong and complicate the payout process. The fewer documents required, the easier it will be to deal with the company. It would also be sensible to get advice from realtors and friends who have experience of dealing with insurance companies and making claims.
Q: What documents do you normally need to receive insurance payouts?
A: It depends on the type of insurance contract. In the case of damage to the interior, you will need a report from the local maintenance department, or DEZ. If it's a case of third-party liability, you will need a statement from the plaintiff.
Q: What risks are not covered by insurance companies?
A: Damages caused by the owner or by the tenant are not normally covered. Natural disasters are covered by insurance policies, but damages resulting from military operations are not. Similarly, insurance companies are not responsible for risks associated with acts of terrorism.
Q: In the latter case, who should people turn to for compensation?
A: This is not stipulated in current legislation. Local or federal authorities could voluntarily extend compensation.
Olga Kasivanova. deputy head of the individual insurance department at Spasskiye Vorota, answers questions on insurance issues for tenants.
Q: Is it possible for a tenant to buy a policy if the landlord does not have insurance?
A: It is possible, but the tenant can only insure personal possessions, and not the apartment itself. In such cases, receipts would normally be used to calculate the value of the tenant's possessions. Otherwise a valuer would be used. Some companies make an inventory of all the possessions before issuing a policy. The cost of an insurance policy and the coverage sum are calculated individually in every case.
Q: What kinds of risks does a tenant's contents policy cover?
A: It can cover all types of risks: fire, flooding, explosion, natural disasters, burglary and damage by a third party.
Q: If a tenant has just renovated an apartment, can the improvements be insured?
A: Technically, they can, but such cases are normally complicated and it is important to have a clause in the rental contract stating that the tenant can insure any improvements made. There have been cases when tenants were unable to get any insurance coverage for damage to improvements because this wasn't stated in their contract. In these cases it was the landlord who received the insurance payouts.
Q: What happens if the landlord has insurance and the tenant does not? Is the tenant entitled to any of the insurance payout if the apartment gets damaged and the tenant's possessions along with it?
A: No. In this case the entire insurance payout goes to the owner of the apartment. But the landlord may also be liable for damages to a third party caused by the tenant. Ideally, the landlord should not only insure the apartment itself, but also liabilities linked to it. For example, if a flood is caused by the tenant and the landlord has liability insurance, neither the landlord nor the tenant will have to pay for the damages to the neighbors' apartments. It will all be coveted by the insurance company.
