I am going to renew my home insurance policy. Previously I had signed 5-years contract with this insurance agent and this year is the last year. I just got a new offer from them and again it says that the contract will be for another 5 years. Is this common in Germany when someone buy home insurance policy? While in the US I had my home insurance valid and renewed on a yearly basis.
Thanks for the advise!
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Length of contract for a home insurance policy
Is five years normal for Germany?
Allianz offered a better deal to anyone prepared to sign up for five years with them, which may be what you have got. I forget the terms exactly but the cover was better in the five year deal than just re-signing each year, although of course you still pay year on year. The contract could be broken on leaving Germany, however.
I assume that with home insurance you refer to an insurance which covers the contents/valuables of your apartment/house, right?
While there can be reasons for a 5year contract (for instance: rebate on the premium) like with any other contracts where you get better pricing for longer contract time, there is no legal need to go for that, loads of good insurances are available for 1year contract time. Usually it is rather the increase of commission paid to the agent for 5y contract that causes them to convince you to go for it. If it is a 1y-contract, the agent only gets commission now on the premium for one year (roughly 30% of the premium) and will receive the same commission whenever you renew, while for a 5y-contract he gets the commission for all 5 years upfront now.
You might also want to check with an independent broker rather than with an agent who can only offer you servies and products of his particular insurance he represents. In addition check FINANZTEST for independent testing and rating of "Hausratversicherung". If you do not have one you should also consider to get yourself a third party liability insurance NOW because it is even more important then property and valuables insurance with regards to the financial risks. Befor erenewal you should also check if the insured coverage still is sufficient. You should have a coverage of about 650.- EUR per squaremeter of your place in order to avoid being "under-insured" which could cost percentage of coverage in case of a claim.
Cheerio
While there can be reasons for a 5year contract (for instance: rebate on the premium) like with any other contracts where you get better pricing for longer contract time, there is no legal need to go for that, loads of good insurances are available for 1year contract time. Usually it is rather the increase of commission paid to the agent for 5y contract that causes them to convince you to go for it. If it is a 1y-contract, the agent only gets commission now on the premium for one year (roughly 30% of the premium) and will receive the same commission whenever you renew, while for a 5y-contract he gets the commission for all 5 years upfront now.
You might also want to check with an independent broker rather than with an agent who can only offer you servies and products of his particular insurance he represents. In addition check FINANZTEST for independent testing and rating of "Hausratversicherung". If you do not have one you should also consider to get yourself a third party liability insurance NOW because it is even more important then property and valuables insurance with regards to the financial risks. Befor erenewal you should also check if the insured coverage still is sufficient. You should have a coverage of about 650.- EUR per squaremeter of your place in order to avoid being "under-insured" which could cost percentage of coverage in case of a claim.
Cheerio
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