Building insurance: costs, benefits and comparison

1. Who needs building insurance?

Taking out insurance for your home makes sense – and is often required by law.

Whether homeowners insurance is mandatory for your house in Switzerland depends on its location. Homeowners must comply with the canton's legal requirements.

Compulsory or voluntary?

Building insurance is obligatory in 22 out of 26 cantons. Insurance is only voluntary for properties in the cantons of Geneva, Ticino, Appenzell Innerrhoden (except for the Oberegg district) and Valais.

In cantons with voluntary insurance, condominium apartment owners should also take care of joint insurance or ask administrators to do so.

Where are private insurers responsible?

Insurance is organized by private providers in the “Gustavo” cantons (Geneva, Uri, Schwyz, Ticino, Appenzell Innerrhoden, Valais and Obwalden). This also applies in Liechtenstein.

Where are cantonal insurers responsible?

Buildings in the other 19 cantons must be insured by the respective cantonal building insurance. The service is mandatory and provides basic insurance against financial damage from natural hazards.

2. What damage is insured?

Cantonal building insurance covers damage by fire and natural hazards. Natural hazards must arise from force majeure, i.e. natural events. Insured risks include lightning strikes, high water, flooding, storms above a certain level, hail, avalanches, snow pressure, falling rocks and landslides.

In the Gustavo cantons, the Insurance Oversight Act (IOA) regulates the scope of coverage on the building. As with cantonal building insurance, the minimum coverage encompasses fire and natural hazards.

Earthquakes are generally excluded from coverage. The same applies to water damage due to broken pipes. You can take out additional home insurance to cover this. Also not insured are collateral damage and heat damage due to high summer temperatures – for example, if the building sinks due to dry soil or fluctuating groundwater levels.

3. What parts of the building are insured?

Coverage includes the building itself, the surrounding area and fixtures such as built-in cupboards, ovens, stoves, bathrooms and shutters. However, the coverage and coinsurance upon damage may vary across cantons.

As a rule, moveable items (chattels) are not considered permanent fixtures. One example is a tool shed. Moveable structures are usually counted as part of your household belongings, and are covered by your home contents insurance.

As a rule, insurance companies cover the replacement value of damaged items. If a building was insufficiently maintained and subject to high depreciation due to age and use, the insurance applies at the current market value.

4. How high is the insured sum or insured value?

For cantonal building insurance, the maximum amount paid by the insurance company depends on the insured value – for private insurance (Gustavo cantons), it depends on the sum insured.

Insured value for cantonal building insurance

Insured value describes the amount required to restore the building completely. In cantons with cantonal building insurance, this value is determined at regular intervals by an expert.

Sum insured for private building insurance

In Gustavo cantons, the maximum compensation for damages corresponds to the insured sum agreed in the policy. Insurers usually ask for relevant documentation on the building and building value to calculate this.

Reductions in the event of a major loss event

In the event of major damage, cantonal building insurance companies have unlimited liability. Reductions are possible for private building insurance: if a single natural event in Switzerland causes building damage exceeding 1 billion francs, private insurers may reduce the compensation.

For example: a major loss event (e.g, flooding) in Switzerland causes building damage totalling 2 billion francs. Private insurers may reduce the compensation due by 50%

6. How often should I have the insurance value reappraised?

The insured value of the building should be reappraised every 12 to 15 years. Cantonal building insurance companies will contact the owner in due course. Estimates must also be made after renovations, additions and conversions. This helps you avoid underinsurance in the event of a claim.

7. Can I cancel building insurance?

Cantonal building insurance policies cannot be cancelled because they are compulsory. In the Gustavo cantons, however, you are free to choose and policies can be terminated. Please note the notice period in the insurance conditions.

8. What happens when the house is sold?

When a building is sold, the new owner automatically takes over the building insurance. In the Gustavo cantons, homebuyers can cancel the policy in writing within 30 days of buying the house.