# Planned Natural Hazard Cover for Residential Buildings > BMJV and BMF plan broader natural hazard cover for homes, automatic policy extensions and possible relief for tenants. Source: https://www.mtrlegal.com/en/planned-natural-hazard-cover-for-residential-buildings/ · Language: en · Updated: 2026-10-26 --- ## Federal and state governments discuss broader protection against natural hazard damage Flooding, heavy rainfall and other extreme natural events regularly cause substantial damage to residential buildings in Germany. Nevertheless, a large proportion of buildings have no insurance cover against what is known as natural hazard damage. On 21 October 2026, the [Federal Ministry of Justice and Consumer Protection](https://www.bmjv.de/SharedDocs/Pressemitteilungen/DE/2026/1021_Elementarschadenversicherung.html) (BMJV) and the Federal Ministry of Finance (BMF) therefore published a joint key issues paper on expanding insurance cover. The paper, officially entitled “Discussion Paper by the BMJV and BMF on Implementing the Coalition Agreement in the Area of Natural Hazard Insurance”, pursues two objectives: in future, the vast majority of residential buildings should be insured against natural hazards, while the financial burden on property owners and tenants should remain limited. The key issues are initially to be discussed with the federal states and the relevant associations. A draft bill is then to be prepared. ## Natural events cause billions in damage According to figures from the German Insurance Association, insured losses caused by flooding, heavy rainfall and comparable natural events in Germany average around two billion euros per year. According to the BMJV, only 59 percent of residential buildings are currently insured against such risks. By contrast, around 98 percent of property owners have residential building insurance. However, numerous policies do not include cover for natural hazard damage. The planned rules therefore directly address both new and existing residential building insurance policies. At the time of publication, Federal Minister of Justice Dr. Stefanie Hubig pointed out that flooding and heavy rainfall could, within a short period, destroy assets accumulated over many years. In view of climate change, substantial damage to buildings could be expected to occur more frequently in future. Without insurance cover, those affected by floods would be left to cope on their own unless government assistance funded by tax revenue were made available. Federal Minister of Finance Lars Klingbeil likewise emphasised the growing consequences of extreme natural events. Natural hazard insurance could form an important component of financial protection. However, it was essential that the cover remain affordable for policyholders. ## Natural hazard cover as part of new policies ### Broader scope of residential building insurance According to the key issues paper, when entering into a new residential building insurance policy, insurers will in future be required to offer a policy that includes natural hazard damage. The planned requirement is to be implemented by an [amendment to the Versicherungsvertragsgesetz (VVG, German Insurance Contract Act)](https://www.gesetze-im-internet.de/vvg_2008/). In particular, the insurance cover is to include the following risks: - Flooding caused by heavy rainfall is to be insured. - The cover is to include damage caused by sewer backflow. - Earthquakes, subsidence and landslides are also to be covered. - Snow pressure and avalanches are likewise to be included within the proposed scope of cover. - Storm surges and damage caused by rising groundwater, however, are not to be included. ### Cap on the deductible For the proposed standard cover, the contractual deductible is to amount to no more than ten percent of the agreed insurance benefit. An absolute cap of EUR 20,000 is also envisaged. In the event of an insured loss, property owners would therefore have to bear no more than this amount of the damage themselves. ## Automatic extension of existing insurance policies Existing residential building insurance policies without natural hazard cover are also to be included in the proposed system. Insurers are to offer the respective property owners an extension of their policies. If policyholders do not respond to this offer within one year, the existing policy is to be automatically extended to include cover against natural hazards once the new rules become applicable. This would broaden the scope of cover even without an express declaration by the insured person. ## Lower-cost minimum insurance remains under consideration ### Reduced cover with a higher policyholder contribution During the further legislative process, consideration will be given to whether property owners should be able to choose lower-cost minimum insurance instead of standard cover. This option would provide only reduced insurance cover against natural hazard damage. Under such minimum insurance, policyholders would have to bear up to 50 percent of the agreed sum insured themselves. However, their contribution would be capped at EUR 100,000. It has not yet been determined whether this option will actually form part of the subsequent draft bill. ## Protecting tenants against additional operating costs The discussion paper also addresses the impact of the proposed insurance cover on tenancies. Further consideration is being given to a statutory prohibition on passing the cost of natural hazard cover on to tenants as operating costs. Such a prohibition on passing on costs is intended to prevent the expansion of insurance cover from leading to higher service charges for tenants. In this respect too, the paper does not yet contain any final provisions. ## Comments invited until December 2026 The BMJV and BMF sent the discussion points to the federal states and associations on 21 October 2026. The parties involved may submit comments until 2 December 2026. The BMJV intends to publish the comments received on its website. A draft bill is to be prepared only after this consultation has been completed. The published key issues therefore do not yet constitute legislation in force. No decision has yet been made on the specific structure and final scope of natural hazard cover. ## Legal assessment for companies and shareholders The planned new rules primarily concern insurance contract law and their potential impact on tenancies. Legal issues arising in a corporate context may also affect other areas. MTR Legal assists companies, investors and high-net-worth individuals with related matters of corporate and capital markets law and provides [legal advice on contract law](https://www.mtrlegal.com/rechtsberatung/handelsrecht/vertragsrecht/).