In apartment buildings, apartment owners insure their own apartment interiors – walls, floors, furnishings, and appliances – with home insurance. However, this home insurance does not cover parts of the building that are in joint ownership, such as the roof, stairwell, load-bearing structures, etc. According to Andres Piirsalu, a board member at the Estonian Insurance Association, only around half of housing associations have insurance contracts covering jointly used property.

Piirsalu said: "Looking narrowly at the context of housing associations, there are dozens and dozens of fires each year, and the sums involved are large. And if we include other damages – natural disasters and pipe leaks – we definitely run into the hundreds of such cases per year in apartment buildings, in which the housing association is at risk if it hasn't signed a housing association insurance contract."

This means that, for example, if a fire damages the building's load-bearing structures or roof, then in the absence of insurance coverage for shared property, all restoration costs for the structural elements or roof must be borne by the housing association itself.

On the other hand, some stakeholders say the issue lies with insurance companies themselves.

According to Andres Jaadla, chair of the Housing Associations Union, such associations do often understand the importance of communal insurance. For example, last year over 200 housing associations contacted the union seeking to insure their building, yet were unable to do so.

"Mostly, these were reasonable-risk buildings in terms of basic insurance – brick buildings, concrete buildings. And when we forwarded this information with the data of these associations to all major insurance companies across Estonia, to our surprise we did not receive a single offer," Jaadla said.

Piirsalu, however, found that this particular procurement was poorly organized. Among other things, insurers believed that there were also some legally questionable aspects in how the tender was conducted, which discouraged insurers from taking part in the process.

According to Jaadla, the interest of housing associations is also influenced by past experiences, where processes have also been delayed.

"We know of examples here in Tallinn in which paying out insurance compensation and covering damages has dragged on for years, and such bad practices certainly do not increase insurance interest," he said.

Jaadla also stated that there are apartment buildings on the market with which it is difficult to obtain an insurance contract due to, for example, poor structural condition or low fire safety facilities.

"It's harder for wooden buildings, while if they are also in a poorly renovated condition, then from the associations' point of view, the insurers' interest tends to be lukewarm. They want relatively low-risk [clients]," Jaadla added.

Piirsalu conceded that there are indeed buildings on the market in such poor condition that they cannot be insured at all, but these are exceptions, and in general, most housing associations are able to apply for and receive insurance coverage, he said.

"For example, a recent funding campaign organized by the insurance association just concluded, where housing associations could apply for support to improve fire safety in apartment buildings. There are certainly other such measures, and if the fire safety situation improves, then there is definitely also the possibility of signing an insurance contract," Piirsalu noted.

--

Follow ERR News on Facebook and Twitter and never miss an update!