Forgotten Square Meters: What Happens When You Provide Inaccurate Information When Taking Out Home Insurance?

Insuring one's home is a common practice among Estonians and according to last year's data from the Estonian Insurance Association, over 80% of homes here are covered by an insurance policy. Although insurance is the best way to protect your home and concluding a policy usually takes only a few minutes, it is still important to pay attention to the accuracy of the information before signing the contract.

When concluding home insurance, you must share various information with the insurance company – from the size of the dwelling and the year of construction to the building materials used. This information is used to calculate the insurance premium, taking into account typical restoration costs and identified risks.

"If this information is approximate, it may happen that the contract is also concluded on inaccurate grounds. This in turn means that the insurance policy may cover less than expected, or conversely, too much is insured and the insurance premium is unnecessarily increased as a result," said Sandra Dõba, head of home insurance at Swedbank.

Why do accurate facts matter?

If the area of the home is entered significantly smaller when concluding the contract, it may affect the reconstruction value of the building or result in the denial of compensation altogether. Therefore, it is worth remembering that if you build, for example, a previously unused attic floor in your home over the years, this change should be updated in the insurance policy immediately.

In addition to area, the accuracy of other technical information is equally important. Remember that if you provide the wrong construction or renovation year when concluding the contract, or incorrect information about the building materials of the house, and this has affected the amount of damage incurred, the insurance provider is entitled to use various legal remedies.

You should also keep in mind the intended use of the apartment. Namely, people have become increasingly financially savvy and often decide to rent out their apartment for a short period, for example when traveling or during the summer season. In doing so, you should check whether the insurance conditions still apply in such a situation. For example, with Swedbank's home insurance, a home that is rented out for a period shorter than one month is not insured.

"Therefore, it is very important that when concluding insurance, you take the time to verify the information and, if necessary, seek advice to avoid misunderstandings after damage occurs," said Dõba. "We assume that the information provided is correct and accurate. If false information is deliberately provided to us, we may reduce the insurance compensation, refuse to pay it, or terminate the insurance contract according to the terms of the insurance policy," she explained.

Don't forget the documents!

In addition to the accuracy of the information mentioned, the expert also emphasized the importance of correct documentation. With home insurance, you can only protect property that is legal. "The most critical element here is the building permit, if the law requires it. For small buildings under 20 square meters, this may not be necessary, but in other cases it is. The existence of a usage permit is not a prerequisite for concluding home insurance, but we certainly recommend obtaining it, as it provides assurance that the building is safe for use. During the process of applying for a usage permit, compliance with fire safety requirements is checked, among other things, and any deficiencies are noted."

Review old contracts

It is also worth regularly reviewing previously concluded insurance contracts. According to Swedbank's home insurance, the insurance amount of the building is indeed its reconstruction value and therefore the customer does not need to worry about updating the building's insurance amount, but it is worth reviewing the insurance amounts for household property and liability insurance, as these may no longer fully cover the losses of an accident at the current price level.

To ensure that home property protection is sufficient, Dõba suggests mapping out all movable household items and thinking about how much equivalent new items would cost. When choosing household property protection, one certainly thinks of larger items, such as furniture, appliances and smart devices, but most often one does not think of clothing and shoes, as well as kitchen utensils, the purchase of which can become expensive after an accident.

As a final reminder, the expert emphasizes the necessity of liability insurance. Especially for those who live in apartment buildings. "If a fire damages neighbors' property, damage claims can be substantial. This is where adequate liability insurance helps," concluded Dõba.