Property insurance: what it is and when it is mandatory

After purchasing or renting a property, taking out insurance is underestimated despite it being an asset of a certain importance, especially if you carry out your work there. Usually, when you think about insurance the first thought falls on cars or other means of transport, but never on a building.

However, property insurance is essential to protect yourself from unexpected expenses caused by theft, fires and unexpected events.

The property, whether owned or rented, is not immune to unpleasant events that can surprise us at any moment. Therefore, taking out a property policy means guaranteeing compensation for damages in the event that atmospheric events, natural disasters or damage caused by third parties occur.

In Italy, to date, those who have decided to take out an insurance policy for real estate do not exceed 35%. On the other hand, insurance for the property is mandatory only when the building constitutes an economic guarantee, for example when a mortgage is stipulated and therefore the property is mortgaged and is the only asset through which the Bank, which provides the capital, has the possibility of recovering the sum of money granted in cases of insolvency.

When the mortgage is signed, the Bank requires you to take out the so-called Explosion and Fire Policy to protect yourself from possible events that could destroy the property and cause very serious economic damage to the owner. This type of insurance not only covers damage caused to the building but also to the contents, i.e. furniture, objects, systems, equipment, etc. It is in fact also called Property and Contents Damage Policy.

However, no bank can dictate which insurance company the policy must be taken out with. The borrower will choose which company and above all which type of policy is most suitable and specific for his needs. The bank will be able to carry out an inspection of the property to verify that the policy proposed by the customer covers the actual value of the building in the event of unforeseen events.

In all other cases, insurance on a property is optional. For example, for those who have inherited a building from a family member and therefore do not need a mortgage or renovations, property insurance is not mandatory.

Aware of the fact that insurance on a property is mandatory only in the case of a mortgage, if you decide to take out it even if it is not mandatory you are certainly making a far-sighted and conscientious decision.

It is in fact very important to protect the property and its contents, both when it is a workplace and when it is a home. Very often the importance of protecting a property is underestimated. For example, in the case of a business, any damage to the property or its contents can cause a suspension of the activity and therefore economic damage which can sometimes lead to permanent closure.

Although there is no obligation to take out insurance for damage to the building and contents to carry out one’s work activity, it becomes a natural consequence in the company’s risk management policy: the greater the connections between professional activity and the place where one’s work is carried out and the equipment with which it is carried out, the greater the need to take out a policy for Damage to Building and Contents.