Today we continue discussing more covers included in community insurance policies. In this case, we explain what total ruin cover for a building means. As with other guarantees, insurers do not always use the same name, so it may appear as “total ruin” or “building collapse due to works carried out by third parties”.
In this article we look at exactly what total ruin cover involves and why it is so important.
What Total Ruin Cover Includes and Excludes
What It Covers
Total ruin cover protects against direct material damage resulting from construction or renovation works carried out by third parties on the ground or subsoil, provided that those works were not carried out in the homeowners’ association or in the insured building. For the cover to apply, the damage must affect structural elements of the building and compromise its mechanical resistance and stability.
It is important to stress that, for this cover to come into effect, it is an essential requirement that the competent authority officially declares the building to be in total ruin and orders the evacuation of the property.
What It Does Not Cover
Total ruin cover does not usually include the following situations:
- Damage caused by settlement or earth movements, such as subsidence, landslides or detachments, unless covered by a specific guarantee for these cases.
- Material damage that does not affect the structural safety of the building or require an official declaration of total ruin and evacuation of the property.
- Damage occurring during the construction or assembly phase of the insured property.
- Damage caused to insured property by works carried out by third parties before the policy came into effect, even if detected during the policy period.
Not all companies have the same exclusions; we have listed the most common ones.
How Does “Total Ruin” Cover Work?
This guarantee is activated when the building has suffered such serious damage that the only solution is demolition and reconstruction. In practice, for damage to be considered total ruin, it must be significant enough to affect the stability and safety of the building as a whole. It is not enough for only part of the building to be affected; the damage must be so extensive that partial repair is not viable.
This guarantee applies in excess of, or in the absence of, decennial construction damage insurance or another similar insurance policy that may be in force.
In some cases, the insurer may require a technical report to determine whether the conditions for total ruin are met. If confirmed, the insurance company will cover the costs required for the demolition of the damaged building and its subsequent reconstruction, according to the terms and limits established in the policy, unless an exclusion applies.
Is This Guarantee Compulsory?
No. It is not compulsory and, although many companies have recently started offering it, it remains an optional guarantee with many insurers, while others still do not market it.
Limits and Sublimits of the Guarantee
As with all covers in community insurance, attention must be paid to the insured sum. In some cases the policy covers both the building and the contents, while in others only the building is covered.
Some companies specify specific sublimits for professional fees of the technical management team involved in the reconstruction works.
Why Is This Cover Essential in Community Insurance?
In a homeowners’ association, shared risk means that any serious problem affecting the building structure has a direct impact on all residents. Total ruin cover provides important financial protection, ensuring that, in one of the situations described above, owners are not forced to pay out of pocket the astronomical costs of demolition and reconstruction. It also provides peace of mind, knowing that in the worst case the insurance will support the safety and habitability of the residential building.
If you need to compare different community insurance quotes, get in touch with us. At Vida SR we are a Madrid insurance brokerage specialising in community insurance.