In April 2022, a fire destroyed an apartment building at Pae 25 in Lasnamäe, Tallinn. Since the incident more than a year has passed, but instead of reconstruction, a legal dispute with the insurance company is still on.

The entire house was insured, but before any repairs can be performed, the roof and outside surfaces and walls must be also rebuilt or fixed. However, the homeowner's insurance firm, Gjensidige, terminated the policy one year after the incident, arguing that there was a shortage of fire safety measures.

"AK" could not obtain a further comment from Gjensidige Forsikring ASA, a Norwegian insurance company.

The total cost of renovation would be between €4 and €5 million.

"It will cost somewhere between €4 and €5 million to make this building habitable or restore it to its condition before the fire, while the total amount of damage could range even higher between €10 and €15 million," Mikk Sepp, a member of the council of the Pae 25 housing association, said.

In addition to the bank loan for the apartment on Pae tänav, many tenants also pay monthly rent. According to a member of the Pae 25 housing association, family expenditures have increased by €1000 on average.

The housing association said that there is also a broader problem, namely that the insurance contracts were not drafted with the policyholder's interests in mind.

"If you purchase insurance today and the risk materializes, the policy will show that you violated these, these and these terms. However, when you are issued a policy, you are normally advised that you are well covered. As a customer, you understand that all necessary insurance coverage is in place and that you property is well protected," Sepp said.

Because the insurance arrangement is between two parties, the insurance industry organization believes nothing is wrong and blames the homeowner. They also believe that government regulation is unnecessary.

"The dispute over the insurance contract and the insurance indemnity still stems from what is stipulated in the insurance contract, namely the insurer's presumption at the time of contract conclusion that the building is in a certain condition and that each person is required to follow certain rules. The easiest is to adhere to fire safety regulations. I do not believe it is a legal issue, as everyone is aware of and follows fire safety regulations. And the second question when it comes to insurance is, what the agreed-upon insurance contract states," Lauri Potsepp, director of the Estonian Insurance Association (EKsL), said.

According to the leader of the Pae housing association this is not right. "If fire inspectors arrive to assess the risk in the building and issue prescriptions requiring the housing association to be even more competent than the fire inspector and examine the technical state of the building much more precisely, this is also not entirely normal," Sepp said.

The Ministry of Justice declined to comment. The written response from the Ministry of Finance states that the insurance provider must always act in the policyholder's best interests and provide a comprehensive explanation so that the customer can make an informed decision. The specific content is determined by an agreement between the parties and cannot be mandated by law.

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