All-risk insurance of residential buildings and contents – a marketing gimmick?

– Why everything is never insured against every conceivable risk –


When an insurer describes its product as “all-risk insurance”, this sometimes resembles the advertising promise of “guarantee certificates”: A close examination of the policy terms and conditions may reveal it to be “marketing cheese with massive holes” in the insurance coverage


Coverage gaps in home contents and buildings insurance

There the Pfefferminzia insurance promises as perfect protection for the home, everything inclusive, so that the customer feels well and gets confidence to the mediator and insurer.

This is followed in the subordinate clause by a reference to all-round protection against all dangers, unless these are expressly excluded. In Germany, there is freedom to build, which means that anyone can build anything they want anywhere, unless there is a provision prohibiting it – whether this makes building law clearer remains to be seen.

In the event of a claim, the policyholder’s lawyer reads the fine print for the first time. However, the insurance conditions exclude gradual damage and damage due to contamination, which is difficult to decipher. At most, a specialist can explain to the customer that this also excludes sudden damage, if this is due to a longer lasting effect.
of precipitation (smoke, soot, dust), temperatures, gases, vapours or humidity. For the duration of the necessary influence there are judgements, which let several days suffice until
to decisions where it’s a matter of years of exposure. Since no customer can overlook such a thing, every insurer and broker would have to force himself to inform separately about it.


Free-Lunch: Alternative cover also from abroad?

Some industrial and commercial brokers, for example, suggested that the self-employed should open a second office abroad and then save on insurance premiums by up to more than
2/3 to save and perhaps get closer to the AllRisk idea. However, such “sales advice” involves risks and side effects, so that the term “all-risk” could well be appropriate from this perspective. In the USA, an actor was advised to buy shares before the stock market crash because he should do something for his aging. After the crash, he said this was…
wasn’t lying, he had actually aged 20 years due to the loss of his fortune.


Insurance from abroad is one thing, foreign law another. EU international insurance contract law may refer to a different legal culture than that which may be assumed, which means that costly legal opinions may have to be obtained at a later stage and greater risks of litigation costs.

To be able to purchase insurance cover in the EU on a cross-border basis in all cases under only very simplified conditions is, first of all, the aim of the EU regulations in the first place – in reality, however, many insurers will not want to do this because they are unable to assess the legal and insurance risks, and conversely there are also uncertainties on the part of the customer.


Surprises with foreign insurance policies

There can be other surprises – e.g. a US insurer does not investigate the claim itself (it is up to them whether they investigate anything, if they suspect fraud they will
sure to want to do so), but expects to be provided with proof of loss in such a way that he can finally convince himself of his obligation to pay on the basis of these documents. Some
The German branch of a foreign insurer never settles claims for amounts in the 5-digit euro range itself, but always lets a court decide after the customer has filed a lawsuit.

Certainly, this also exists internationally in different ways in courts: That is, the principle that the plaintiff must provide everything necessary to prove his claim, and only rarely rather in German social law the so-called Amtsermittlungsgrundsatz (principle of official investigation). Abroad, one must also partly take care of the execution of sentences oneself, i.e. it is judged that the person in question is to be stoned, but there are no officially appointed stone throwers, but one must take care oneself that there are enough interested parties and stones, and someone who pays the truck driver who dumps the required paving stones. But in return, even in Saudi Arabia, no convicted perpetrator is beheaded with a sabre in the marketplace if the family
of the victim stated that she had come to an agreement with the family of the perpetrator.


Insurance brokers on the slippery slope by brokering foreign coverages?

The valve for direct insurance or private health insurance cover outside the EU could also be the broker, if one listens to some voices from the scientific community. Because these
believe that the broker, who only acts for his client, is thus not an intermediary through which the insurer conducts insurance business in Germany, so that he would need to be licensed here as an insurer. According to the Insurance Supervision Act, however, the term “intermediary of the insurer” is not used, as some people read. Just like the insurance
broker may not only be the “fiduciary trustee” of the insurance customer, but also the commissioned vicarious agent of the insurer for the brokerage itself, for portfolio management, for contract administration, for the collection of premiums, as well as for claims settlement and other marketing tasks.


Advice for customers and insurance brokers

Since there is never an all-encompassing insurance cover in life, the gaps in cover must be painstakingly read from the insurance conditions and the offers on the market compared. It should give pause for thought that many insurers, when asked, are unable to say exactly what the insurance conditions mean in terms of what is insured. Therefore, as an insurer in such cases one is grateful when customers sue and at some point a supreme court tells the insurer what they must have meant. According to the motto “How should I know,
What I think before I read what others judge of what I have written?”

The next step will be to tailor the insurance coverage by having the broker enter into negotiations with insurers in order to clarify and clarify as much as possible any ambiguities.
to make it absolutely clear Insofar as the insurance broker refers to widespread ratings or rankings from “the day before yesterday & yesterday” and does not explain them for lack of understanding
he’ll lose in the liability suit at the latest. For he has to report on coverage gaps that cannot be closed, i.e. he has to give an account of them, instead of covering them with a cloak of silence.
to broad, that he only uses software when comparing insurances, without reading small print and looking for individual solutions. Later, an expert will determine,
that the undisclosed loophole could certainly have been closed, that the damage could therefore have been avoided, and that the broker would therefore also have had to compensate for it.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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