Only a Fifth of Czech Property Owners Update Insurance Annually

A recent survey reveals that Czechs prioritize safeguarding their properties over their lives and health. However, many property owners fail to address the issue of insurance for their households and properties—even those with insurance coverage neglect to update their policies regularly, which can lead to underinsurance. With the continuous rise in property and construction costs, it is crucial to consider updating insurance policies annually.

More than four-fifths of Czech citizens reside in their properties, whether apartments or houses, while others possess recreational properties worth millions or even tens of millions of Czech koruna. Safeguarding these valuable assets against unexpected events is of utmost importance. While most individuals recognize this and have insurance coverage for their homes, a survey by the Czech Insurance Association (ČAP) indicates that Czechs prioritize protecting their property over their lives and health.

Nonetheless, property owners still do not perceive insuring their homes or apartments as necessary. A survey conducted by Ipsos for ČPP Servis highlighted that more than a quarter of Czech households (27 percent) consider insurance for their homes superfluous. Many people rely on the state for assistance, but the state’s support is limited, particularly in the case of major natural disasters. Unfortunately, in most instances, people realize too late that they won’t receive compensation for damages incurred without insurance coverage.

Attempting to save on property insurance premiums is not advisable. Eduarda Hekšová, director of the consumer organization dTest, cautions that the mere existence of an insurance contract does not guarantee adequate coverage. The accuracy and completeness of the information provided by the policyholder to the insurance company are crucial in determining the effectiveness of the policy.

It is a common practice among property owners to deliberately report a lower value for their assets to insurance companies. This is driven by the misconception that it will lead to cost savings, as lower insured values correspond to lower premiums. However, property insurance policies should always reflect the precise value of the property, including its contents.

Due to the significant escalation of property prices, construction materials, and labor costs in recent years, insurance policies taken out several years ago may no longer cover the property’s current value. Consequently, a considerable number of properties are underinsured. Data from ČAP indicates that only around one-third of Czech households have adequate insurance coverage, while approximately 70 percent of properties are underinsured, often by more than 50 percent.

There are cases where individuals secure insurance coverage for their properties but neglect to update their policies regularly or remain unaware of the potential insufficiency of their range in the event of a claim. Additional surveys, such as the recent Ipsos survey for Broker Consulting, highlight the lack of regular policy updates. The findings reveal that one-fifth of respondents do not update their insurance coverage, while a quarter do so every five years or less frequently. Less than two-fifths of respondents reported updating their policies once a year to every three years, and less than one-fifth updated their insurance annually.

Given the current inflation rate, property owners must regularly update their insurance policies. The survey results indicate that even those who update their property insurance at least once every three years are still underinsured. In the prevailing inflationary environment, updating insurance policies annually or considering automatic policy indexing to safeguard against underinsurance is crucial.