Jesse explained that apartment or home insurance does not always cover common areas in apartment buildings.

"In the case of an apartment, (insurance) generally extends to the property excluding load-bearing structures and other common parts of the building, such as the staircase, roof, plumbing, electrical system and so on. That is why, in the case of apartment buildings, contracts must be concluded in a way so that the apartment owner takes out a contract to insure the contents of their apartment, and then the apartment owners act jointly - usually through a co-operative - and take out an insurance policy on the common property," he said.

If all the apartment owners in a building have insured their apartments but the building is not insured collectively and the accident starts outside the apartments, the insurance will cover the damage to the apartments.

However, if there was something wrong with the building's plumbing, roof or somewhere else, the same insurance company can pursue a claim for damages against the cooperative. In other words, indirectly against the injured parties.

"This creates an unfortunate closed circle," said Jesse.

According to Jesse, there are around 50,000 apartment buildings in Estonia and more than 20,000 housing associations. However, just over half of them have insured their properties.

"This is the situation we are living in today. Indeed, there are cases where the cooperative has not insured its assets. There was an unfortunate case in the media recently, where an apartment owner had installed illegal heating equipment and the roof of the house burnt down in Viljandi. It then turned out that the cooperative did not have insurance and so the building's residents had to collectively restore the roof and other damaged parts," said Jesse.

Jesse pointed out however, that large-scale fires are thankfully quite rare in Estonia. "There are only a couple of hundred apartment fires a year in the whole of Estonia, and the damage is generally limited to the apartments themselves and then maybe some water damage during the extinguishing process to neighboring apartments for instance," he said.

While the amount of the insured value of an apartment is often no longer stated and the term 'reinstatement value' is used, contracts for a apartment buildings are usually still for a fixed amount.

"In the case of larger properties, especially for legal entities, including housing associations, an agreed sum to be insured is applied, where it is above all, the responsibility of the policyholder to ensure that the reinstatement value given is as fair and correct as possible. The insurer bases its payments on these calculations and makes an insurance offer on that basis," said Jesse.

He added that experience has shown in recent years, when inflation has been very high and construction prices have also become more expensive, the amounts insured may not be sufficient. if the insurer notices that the amount is no longer sufficient, it is usually announced that revisions should be made.

Jesse also noted that if a co-operative does not wish to take out insurance on a building, a policyholder has options to do so.

"This means that, in addition to the interior finishes, which are usually covered by home insurance, their proportionate share in the common property of that apartment building is also insured. If the building happens to be destroyed, they will indeed get their fair share of [the money] and can move somewhere else with the compensation," said Jesse.

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