Mandatory insurance back on table
As Greece reels from its latest natural disaster, the public debate on the issue of compulsory property insurance has returned. The issue was brought to the table by the prime minister’s economic adviser Alexis Patelis, as the need for universal insurance is also dictated by the low percentage of insured homes, which according to insurance market estimates is between 16% and 20%.
The low insurance rate, which is even lower in provincial areas, has left the vast majority of properties in the country exposed to damage from natural phenomena, despite the high proportion of owner-occupied properties and the fact that the cost of insurance is low.
The average cost for home insurance in Greece ranges between 1.4-1.80 percent for post-2000 constructions and increases to 1.65-2.1 percent for older constructions from 1970 onward.
This is the premium paid to purchase 1,000 euros of insured capital. The ultimate cost is estimated on the basis of the reconstruction value for every 1,000 euros of insured value, which ranges between 1,100 and 1,400 euros based on market pricing, depending on the quality of the construction.
Thus, the cost of insuring a property with a surface area of, for example, 80 square meters, if it was built in 2000, is close to 145 euros per year (calculated at a reconstruction cost of 1,300 per sq.m.). Similarly, for a larger house of 135 sq.m., the insurance cost based on a reconstruction value of 1,400 euros per sq.m. is 260 euros per year if built in 2000 or 310 euros per year if built in 1975.
The basis of insurance coverage is fire, and all additional coverages, such as insurance against natural disasters and earthquakes, is built on this.
Additional natural disaster cover includes damage caused by floods, storms, natural disasters, tornadoes etc, most of which are included in the comprehensive packages offered by insurance companies.
