Insurance

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bshatttock
Posts: 33
Joined: 07 Mar 2022 19:46

Insurance

Post by bshatttock »

Hi Nigel

have just recieved a copy of the Complex Insurance total of
44 Units in 4 blocks at around 50 M2 per unit,

there is a Public liabity that states for any one event or period od insurance Euro 200000.00 Cost about Euro 290 per Annum

and a "Common use Area" insurance (Earthquakes,Explosion ,Flood ,Burst Pipes Aircraft,cover for Euro 500000,00 cost about Euro 550 per Annum

This seems very low to me and does it anyway cover the Insurances required by law ?

Regards Barry
Nigel Howarth
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Re: Insurance

Post by Nigel Howarth »

Hi Barry

The only insurance required by law is described on page 7 para 38L (1) of the law (which I have linked twice in earlier questions.)

You should also read Insuring Buildings under Joint Ownership.

And my article You have insurance but are you insured?

Regards,
Nigel Howarth
Independent information & advice for Cyprus property buyers
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bshatttock
Posts: 33
Joined: 07 Mar 2022 19:46

Re: Insurance

Post by bshatttock »

Hi Nigel

Thanks for the prompt reply,the policy states "building including commonly owned areas" is this the same as a jointly owned building insurance ?
if so my question is realy do you think Euro 500000 cover is enough for a complex of 40 odd appartments at circa 50 -60M2 each.Whilst at my Insurance brokers I asked for an estimate for a Communal Properts insurance based on the above criteria they estimated a premium of Euro 7000 PA (We are currently paying Euro 500 per annum)

Regards
Barry
Nigel Howarth
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Re: Insurance

Post by Nigel Howarth »

Hi Barry

I cannot say whether "building including commonly owned areas" is the same as "Jointly-Owned Building".

EU Directive (EU) 2016/97 requires insurers to provide an 'Insurance Product Information Document (IPID)' that states precisely what is insured and what is not insured. (Your broker should provide you with one of these for the buildings insurance.)

Here's one I have for travel insurance stating precisely what is insured and what is not insured.

Make sure your broker is licenced by the Register of Insurance Intermediaries. Visit the Insurance Companies Control Service and see if you can find the broker's name in one of the Regulated Entities sections.

Regards,
Nigel Howarth
Independent information & advice for Cyprus property buyers
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JMot
Posts: 14
Joined: 03 Dec 2020 15:56

Re: Insurance

Post by JMot »

bshatttock wrote: 30 Apr 2022 13:43 Hi Nigel

have just recieved a copy of the Complex Insurance total of
44 Units in 4 blocks at around 50 M2 per unit,

there is a Public liabity that states for any one event or period od insurance Euro 200000.00 Cost about Euro 290 per Annum

and a "Common use Area" insurance (Earthquakes,Explosion ,Flood ,Burst Pipes Aircraft,cover for Euro 500000,00 cost about Euro 550 per Annum

This seems very low to me and does it anyway cover the Insurances required by law ?

Regards Barry
Hi, I hope I can help you on this one since I just went through many quotes from Cyprus insurance brokers for a small mixed use building (9 units - 5 commercial and 4 residential) in Limassol. My suggestions:
1) Your public liability insurance premium is a bit on the high side for the (relatively) small sum covered of 200k (per event I guess). I got a few quotes just for just 200 eur per year for the same sum and even cheaper when combined with the building insurance
2) The law that Nigel linked is very clear and I shall quote it here and in bold the fundamental point:
(1) The Management Committee must insure and always keep insured the jointly owned building against fire, lightning and earthquakes with a licensed underwriter for the sum which the Management Committee considers as corresponding to its replacement value. For any other risks insurance is Compulsory, only if this decided by a percentage of the owners above fifty percent (50%).
(2) The Management Committee shall contract any other insurance required by any other Law.
I do not know where your building is located but the replacement value in Limassol for a medium quality build is approximately 1200 eur x sqm (this is what many insurance brokers use). For balconies and garages sqm they halve the value. So if you are insuring the whole of the Jointly-Owned Building, with 500k you are seriously underinsured. However your insurance broker should provide you beforehand a policy wording where they define "Common use Area". Some buildings in Cyprus are insured in a non compliant way (according to my real estate lawyer) where they insure only the common area square metres (staircases, lifts, passages, ...) and then each separate owner will insure the replacement value of each unit. This is very risky because if some of the owners do not insure or underinsure, in case of a big adverse event, the owners will be jointly liable for the replacement.

The best quote I got (out of 9 quotes) for a jointly owned building combined with public liability was from AIG Cyprus, one of the few also that provided me a quote for the minimum required by law and then gave me the option to purchase other risks covers, while many others were only quoting very comprehensive risk covers in order to get fatter premia.
JMot
Posts: 14
Joined: 03 Dec 2020 15:56

Re: Insurance

Post by JMot »

bshatttock wrote: 01 May 2022 11:14 Hi Nigel

Thanks for the prompt reply,the policy states "building including commonly owned areas" is this the same as a jointly owned building insurance ?
if so my question is realy do you think Euro 500000 cover is enough for a complex of 40 odd appartments at circa 50 -60M2 each.Whilst at my Insurance brokers I asked for an estimate for a Communal Properts insurance based on the above criteria they estimated a premium of Euro 7000 PA (We are currently paying Euro 500 per annum)

Regards
Barry
Sorry I just read your second message now. Jointly owned building insurance is not an off the shelf insurance, a couple of brokers actually visited the building before providing a quote and most requested photos of the building. So you can ask the broker to add a clause to the quote and to the policy particulars where they define in detail the meaning of "building including commonly owned areas". In order to be a compliant a Jointly owned building insurance policy has to include at least: every roof, every pillar, whole floor area, every staircase, every elevator, every common wall, ...
Now for the surface area of the building you are describing you are insuring as a minimum 40 units x 50sqm = 2000sqm x 1200 eur = 2.4M EUR and there is no way that a premium of just 500 eur will cover such a replacement value. My AIG quote (the best one I got) insured 850k for building replacement + 170k public liability + 8.5k legal expenses for 990eur. The minimum premium for 2.4M eur is likely to be at least 3000 eur for a compliant insurance (but very likely more than this).
Nigel Howarth
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Re: Insurance

Post by Nigel Howarth »

Hi JMot

Thanks for your input. I published an article about the problems with insurance a couple of years ago - You have insurance but are you insured?.

Many committees penny-pinch on insurance and end up with worthless cover. Others ignore the law and only insure the common areas.

Committees need to be very careful as there are many dodgy companies and individuals selling insurance. Two or three years ago the law changed and insurance premiums had to be paid directly to the insurance company as some brokers were pocketing the premiums leaving many uninsured.

I've insured with AIG - it's a good, reliable insurance company.

Cheers,
Nigel Howarth
Independent information & advice for Cyprus property buyers
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bshatttock
Posts: 33
Joined: 07 Mar 2022 19:46

Re: Insurance

Post by bshatttock »

Hello Nigel

as I understand it the committee MUST take out a "Joint Building Insurance" covering Earthquakes Fire and Lightning to comply with the law,Only when they wish for any additional cover for example Public Liability for the committee Alternative Accommodation Firefighting Expenses etc etc

Must they have the approval of 50% of the owners They do not require a 50% approval for the basic cover
Is that correct ?

Regards Barry Shattock
JMot
Posts: 14
Joined: 03 Dec 2020 15:56

Re: Insurance

Post by JMot »

bshatttock wrote: 23 May 2022 13:23 Hello Nigel

as I understand it the committee MUST take out a "Joint Building Insurance" covering Earthquakes Fire and Lightning to comply with the law,Only when they wish for any additional cover for example Public Liability for the committee Alternative Accommodation Firefighting Expenses etc etc

Must they have the approval of 50% of the owners They do not require a 50% approval for the basic cover
Is that correct ?

Regards Barry Shattock
No requirement for any quorum for the "Joint Building Insurance" covering Earthquakes Fire and Lightning. The committee MUST purchase this type of insurance to be compliant with the law I quoted above.
Nigel Howarth
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Re: Insurance

Post by Nigel Howarth »

Hi Barry

From the law, which you can find at https://www.news.cyprus-property-buyers ... gs-law.pdf

"The Management Committee must insure and always keep insured the jointly-owned building against fire, lightning and earthquakes with a licensed
underwriter for the sum which the Management Committee considers as corresponding to its replacement value.

"For any other risks insurance is compulsory, only if this decided by a percentage of the owners above fifty percent (50%)."


They do not require 50% approval from owners for the basic cover - it's mandatory.

If they want additional cover, 50% of owners must vote in favour.

I wrote an article on the subject of insurance - see You have insurance but are you insured?

Also note that the ‘jointly-owned building’ refers to the whole complex and not just the ‘jointly-owned property’. Even some of the ‘professional’ property management companies and lawyers, who should know better, get this wrong!

Regards
Nigel Howarth
Independent information & advice for Cyprus property buyers
Contact Nigel Howarth
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