Home insurance against earthquakes, floods and landslides is mandatory in name only, given that for 13 years no penalty has been charged as required by law, but a maximum of 20 euros per year, how much does such insurance cost, hundreds Last year Romanians received millions of lei for damaged houses. Others were refused and complained about it to the ASF.

What complaints have been received by the ASF regarding non-payment of compensation from mandatory housing insurance

Any insurance contract provides for some situations, called exceptions, when you are denied compensation, and complaints filed with the Financial Supervisory Authority (ASF) show that there are Romanians who have gone through this unpleasant experience with compulsory home insurance or with the so-called PAD insurance.

• Natural disaster insurance (PAD) covers damage caused to the home due to floods (due to natural causes), earthquakes or landslides.
• Cost a maximum of EUR 20 (100 lei) per year for houses made of modern materials and EUR 10 (50 lei) per year for houses made of adobe and other less durable materials, for which in the event of a disaster you can receive a maximum of EUR 20,000 and EUR 10,000 respectively , depending on the annual premium paid.
• Issuance of this insurance, as well as payment of compensation, lies exclusively Disaster Insurance Pool (PAID)an insurance and reinsurance company with private capital, established by an association of insurance companies to provide compulsory home insurance, in accordance with Law No. 260/2008.
• PAID was founded in November 2009 through the association of 12 insurance companies (ABC Insurance, Astra Insurance, Carpatica Asig, Certasig, City Insurance, Credit Europe Insurance, Euroins Romania, Generali, Grawe Romania, Groupama Romania, Platinum Insurance and Uniqa Insurance). , PAID by shareholders. Meanwhile, three of them – Astra, Carpatica and City Insurance – went bankrupt.

Returning to complaints from Romanians to the ASF regarding problems with compulsory home insurance, data from the authorities sent to HotNews.ro show that in 2021, Romanians filed 26 complaints, of which 11 related to non-payment of compensation, while last year there were 13 complaints, of which 5 for non-payment of compensation.

In the first month of this year, Romanians have already filed 7 complaints, one of which is about non-payment of compensation.

How many complaints were resolved in favor of the insured

The ASF does not say exactly how many non-compensation claims it has ruled in favor of policyholders, but shows that in most cases it rules in favor of claimants.

So, in 2021, 14 out of 26 complaints were resolved in favor of the applicants, while last year the policyholders were right in 8 out of 13 complaints.

What complaints has PID received: what do people accuse

On the other hand, the insurance company PAID told HotNews.ro through its development director Cosmin Tudor that it registered 16 complaints in 2021 and the same number last year, while it received 3 petitions in the first month of this year.

“In general, the petitions concern:

• Denied compensation due to non-covered risk (claimed loss/damage caused by risks other than 3 in PAD)
• Objections to damage assessment
• Refusal to indemnify previously existing losses

The method of resolution is different in each case, but the materials are re-analyzed by a special commission for the consideration of complaints and an appropriate reasoned response is provided. PAY officials said.

“Traps” in mandatory home insurance: when compensation is denied

At the beginning of the article, I said that any insurance contract provides for some situations, called exceptions, when you are denied compensation.

Up to exceptionsyou should know that according to law 260/2008, certain houses were exempted from the obligation of insurance on the grounds that this property “could not be insured” by insurance companies:

• “The dwellings located in the houses have been examined in accordance with the legislation by certified technical experts and assigned to risk class 1 may not be insured against any risk included in the PAD policy. Likewise, outbuildings, outbuildings, structures and engineering communications that are structurally unrelated to the building in which the insured dwelling is located, as well as the property in it, cannot be insured,” the law states.

Situations in which PAID does not pay compensation in part or in fullprovided for by Article 22 of Regulation 7/2013 regarding the form and provisions contained in the contract on compulsory insurance of buildings against earthquakes, landslides and floods, ASF officials clarified for HotNews.ro.

We reproduce the provisions of the specified article:

Compulsory home insurance against earthquakes, landslides or floods does not cover damages caused by:

• 1.1. floods formed during the formation of reservoirs or during the artificial alteration of watercourses; the time of formation of the reservoir is understood as the filling of the reservoir with water up to the spillway level;
• 1.2. in cases of sudden threat of collapse or landslide, as well as in the case of impossibility of use even by repairing or strengthening buildings, if these phenomena were caused, facilitated or intensified by earthwork or construction work of any kind, exploration work, exploration or extraction of minerals or oil, on the surface or in depth, regardless of the time that has passed since their termination or abandonment;
• 1.3. settlement (abandonment) of land for establishment as a result of construction or for other reasons;
• 1.4. the formation of cracks in the foundation or in the ground around the building due to changes in the volume of the ground as a result of contraction/expansion caused by freezing/thawing;
• 1.5. a plot of land that surrounds housing and that is not related to the concept of housing and is not an object of insurance;
• 1.6. to outbuildings that form or do not form a common body with a building intended for residential use (garages, sheds, sheds, stables, planters, pergolas, fences, etc.), as well as to structures and special devices (swimming pools, saunas, car ramps, etc.);
• 1.7. for any goods, except construction goods intended for housing (goods or items necessary for housing, securities, etc.).

(2) PAID does not provide compensation for:

• 2.1. houses built in areas where legislative bodies have prohibited it by state acts or notified the insured;
• 2.2. destruction of buildings solely due to construction defects, even if it is related to the occurrence of an insurance risk;
• 2.3. expenses for temporary accommodation pending the restoration of a dwelling which is the subject of PAD insurance and which has been damaged as a result of the occurrence of a covered risk.
• The financial watchdog also notes that “PAID cannot refuse to take out PAD insurance on grounds related to the risk of buildings, except when they are located in buildings that have been examined in accordance with the law by certified technical experts and are classified as seismic class 1 risk”.

ASF also stated this for HotNews.ro there have been no complaints about refusal yet PAY or insurance companies to take out PAD insurance as the house will be at risk.

PAID also provides clarification that some homes require a building permit after the damage is paid

• “With the exception of buildings assigned to the 1st class of seismic risk, which cannot be insured, all other buildings that are on the tax register – with the purpose of housing and for which the use of housing is preserved – can be insured.
• If the relevant houses were built after the advent of Law 260/2008, it is mandatory that they also have a building permit, the insured is the only person responsible for this aspect, which is checked by PAID only in case of damage.
• Thus, there are no situations in which, even though the PAD policy was properly executed, the insured could not be compensated. Please note that compensation can be requested by the insured – who must be able to confirm ownership (insurable interest),” PAID representatives said.

Are there cases where insurers refuse to take out a PAD insurance policy on the grounds that a person lives in areas prone to floods, landslides or earthquakes?

• “Except for buildings that are assessed and assigned to the 1st seismic risk class, if the above conditions are met (housing registered for taxation purposes with the purpose of residence, with preservation of the intended purpose, the presence of a building permit, if we are talking about constructed buildings. after the appearance of Law 260 /2008) insurers are required to issue PAD policies.
• There is a possibility that certain insurance companies that issue add-on policies may have some of the restrictions that you have mentioned, but these restrictions do not apply to PAD policies,” say PAID officials.

What money can be received in case of disaster: Average time – 44 days

Another question that HotNews.ro addresses to PAID officials is how to determine what money you can receive if your PAD-insured home is affected by one of the 3 natural disasters and for how long.

• “In the event of an insured event, the compensation will be equal to the value of the loss, but not more than the insured sum (20,000 euros or 10,000 euros, depending on the type of construction). The principle of insurance is to restore the initial state within the limits of the sum insured, and not to automatically provide the entire sum insured as compensation.
• PAID pays compensation in a range 5 working days from the date of filling/addition of the file.
• There are situations where the insured is late in submitting certain documents required to process a claim, but this interval cannot be affected by PAID.
• The average time from the date the customer reports the damage to the completion of the payment is 44 days – the data is valid for the operations of 2022,” PAID representatives said.

Last year, hundreds of Romanians received millions of lei under the PAD policy

Insurance company PAID also reported on the situation with claims opened in the last three years compensation paid on the basis of mandatory home insurance.

In the first month of the current year, 9 cases were opened on damage from floods, 25 – from earthquakes, and 11 – from landslides.

• “During the opening of the claim file, requests for compensation in specific amounts are not made, the insured requests certain damages, PAID, or insurers issuing, establishing, evaluating and offering compensation, which are paid with the consent of the insured.” – PAID representatives explain. .

As for the cases opened this year, the company says it is too early to say how much money it has paid out because this year’s payments also include cases opened in previous years and the requested separation cannot be automatically removed from the company’s reports.

• “This year, up to the current date, we have paid: flood = 21 files, approximately 35,000 lei / earthquake = 49 files, approximately 245,000 lei / landslide = 0.
• In 2022, we paid: flood = 484 cases, approximately 1.56 million lei / earthquake = 22 cases, approximately 417,000 lei / landslide = 93, approximately 983,000 lei,” said PAID representatives.

At the end of January this year, they operated in Romania 1,850,373 PAD policies mandatory home insurance representing 19.30% of the country’s housing stock.

• Read more: Only two out of ten houses in Romania are insured against earthquakes: Why Romanians do not insure their houses, even though it is required by law

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