Real estate insurance documents

If you are owning / buying a real estate there are numerous risks, which may occur, thus, damaging or destroying your property. Not all of the possible risks are always predictable or even avoidable, however, there are certain ways how you can evaluate risks and gain financial compensation, if something happens to your property. The best way to achieve this is to purchase real estate insurance.

However, insurance companies are quite demanding when it comes to buying an insurance policy – usually, they request full information regarding the insurance object as well as documentary evidence and written statements.

When applying for a property insurance, you may be asked to present the following (usually scanned copies are permitted):

• Property ownership title certificate;
• Grounds for insurance application (this is just a formality, if you are a tenant or authorized person – you will need to provide a copy of rental agreement or power of attorney);
• Your passport copy and residence address;
• Passport copy and residence address of the property owner (in case you are not the owner);
• Full technical information regarding property and its qualities;
• Property evaluation done by certified property appraiser (if any);
• Cost of the property (self-evaluated or purchase price according to contract);
• Risks you wish to insure your property against;
• Technical documents and plans of premises (if any);
• Information regarding previous property insurance (if any);
• Information regarding movable property inside the property (only if you apply for a moveable property insurance policy together with property insurance).

Please keep in mind, that list of requested information documents and information may differ depending on specific insurance company, cost of property, applicant and risk evaluation factors. Nevertheless, there are some common requirements, which every insurance broker must follow.

Also, keep in mind that provided information is used to evaluate risks and determine cost of the annual premium amount. If you provide false or not full information – insurance company may decline you compensation application and refuse compensating damages later.

Insurance companies

An insurance company, generally speaking, is a licensed company providing coverage, in the form of financial remuneration for any damages resulting from action or inaction of third parties as well as from force majeure events in exchange for premium payments. The company calculates the risk of occurrence then determines the cost to replace (pay for) the loss to determine the premium amount.

According to the provision of the Insurance law of the Republic of Latvia (Apdrošināšanas un pārapdrošināšanas likums), insurance company is a joint-stock company incorporated on the territory of the Republic of Latvia or European Union, or, alternatively, a mutual joint company, which according to the legal acts of Latvia is permitted to operate and grant insurance.

Property insurance

Real estate property insurance is a legal private document providing financial compensation to the ownership title holder of the property and, in certain cases, its contents and moveable property, in case of damage done by third parties or by force majeure events. In case an insurance claim application is filed, the property insurance company will either compensate the policyholder for the estimated volume of the damages done, or the restitution costs necessary in order to rectify the breach and remedy the damages done fully or partially.

Source of potential hazard for your property can be nearly anything: fire, leaked water and flood, boiler explosion, act of terror, burglary, constructional deformation, weather, improper actions / inactions of your neighbours or tenants, electricity malfunction, incorrectly executed reconstruction work, wrongdoings, earthquakes, corpus delicti of third parties, other perils and mishappenings.

Property insurance policy application

According to the laws of the Republic of Latvia, absolutely any person has rights to file for a property insurance, however, regardless of the policy applicant, policy holder in any case will be considered an official owner of the real estate property and only he can apply for a compensation and receive it. Such legal provisions gives room for flexibility, allowing property tenants, maintenance personnel, authorized persons to file property insurance.

According to the legal provisions of the Republic of Latvia, insurance agreement can be concluded electronically. It is possible to file an insurance policy application without leaving your house – all you need is to contact an insurance broker company via e-mail. Insurance agent will send you a list of documents and information they require. Once everything is provided, agent will send you a copy of agreement with invoice for annual premium amount to be paid. As soon as you pay annual premium and send agent a copy of receipt – your insurance application will be considered active.

It is also possible to visit office of an insurance company and sign everything in paper format, if you wish.

Types of property insurance

Different insurance companies provide different insurance products and commercial offers. Modern insurance system is flexible enough to allow each customer customize his insurance package based on his individual needs and financial possibilities. Therefore, below you can find information about several most popular property insurance products often offered by insurance brokers in Latvia.

General property insurance

Generally, property insurance allows you to seek for compensation or restitution payments, if a certain accident have occurred and your property is damaged. Such insurance is called real estate property insurance and is one of the most common types of property insurance. It is possible to insure your real estate from different risks, each of which must be selected and evaluated by the insurance broker company prior to calculating annual premium amount.

Most common risks include fire, leaked water and flood, boiler explosion, act of terror, burglary, constructional deformation, weather, improper actions / inactions of your neighbours or tenants, electricity malfunction, incorrectly executed reconstruction work, earthquakes, wrongdoings or delict of third parties.

Guaranteed temporary residence

With most of the companies it is also possible to apply for a temporary residence guarantee. It means that in case your residential property is damaged, making it temporary uninhabitable, or if the property will be uninhabitable while the insurance company renovates it and rectifies damages – the insurance company will cover your temporary residence (rented property or a hotel) for this period.

Moveable property insurance

It is also possible to insure your belongings and furniture located inside the premises for a certain amount. If the occurred accident will damage any of the insured moveable objects (for example, widescreen TV, expensive PC, custom sofa, designers brand mirror, book collection, antique vase, set of action figures, etc.) – insurance company shall compensate for these items. However, such product should be specifically selected as well as all insured items must be listed with their value indicated.

Personal liability insurance

Another one of the most popular (and in our opinion most practical) insurance products – is personal liability insurance. This means that if any damages are done to the third parties, while the source of damages originated from your apartment (flood, fire, leaked water etc.), normally – you would be considered liable for such mishappening and would have to compensate damages to the third party.

However, if you insure your personal liability for a certain amount, in such case – your insurance company will cover damages to the third parties in such amount for you. However, you need to keep in mind that this involves only covering damages, personal liability insurance does not legally condone you in any way, meaning that if mishappening causes health damage or otherwise falls under competence of the Criminal law and criminal investigation – you will still be held liable for your actions / inactions.

If the insurance company has to cover damages to the third parties due to errors caused by yourself – the amount of the annual premium paid for the next year most probably will become higher.

Minimum risk and deductible risk

When you are applying for property insurance – your policy will have minimum deductible risk indicated. Minimum deductible risk – is the amount of damages done to your property, which insurance does not cover. For example, if minimum deductible risk is 100 EUR – it means that you may apply for an insurance compensation only, if the damage done exceeds 100 EUR, otherwise – you have to pay it yourself.

Also, minimum deductible risk is deducted from any compensation you are being granted, in other words – this is the amount you will have to cover yourself regardless. For example, if your minimum deductible risk is 100 EUR and you suffered damages for 200 EUR – the insurance company will grant you only 100 EUR.

Regressive lawsuit and liability in case of an insurance accident

The way insurance system works, is that liable person still pays for the damages done. However, if you have your property insured – you do not need to file a lawsuit against liable party and wait for several years of litigations to claim compensation, providing you with compensation and damage remedy today and not after several years.

If insurance accident happens and damages to your property are done – insurance company will appraise damages, perform quick investigation and determine liable parties. After this is done – insurance broker will compensate your damages and fulfill its legal obligations. Instead – you will transfer rights to claim damages from liable party to the insurance company, and they will file a lawsuit and start litigation against liable party – such claim is called “regressive lawsuit”. As a result, after some time, insurance company will claim its money back.

Please keep in mind, that if during insurance investigation it will turn out that you are liable for an accident, due to certain actions / inactions – no compensation will be granted whatsoever.

Document preperation and real estate financing services

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