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Not insuring your Bulgarian holiday property?

The real example: Bansko. Bansko is one of the most beautiful and well developed ski resorts on the Balkan Peninsula. With its nature, time honored trees, ski paths and great customer service Bansko attracts many tourists from different nationalities – Bulgarian, British, Russians, German, Chinese, Greeks, Romanians, Turkish and others.

The city is separated by the Glazne River. When walking along the streets, you can enjoy the view of Pirin Mountain – the National Park of Bulgaria with its perpetually snowy heights and age old forests. During the night you can see the twinkling lights of the city. By looking at all this in front of you, you can understand why the sight of Bansko is so picturesque.

Recently, the city met the disaster of a flood. Millions worth of investments drowned under the waters of the river. The hotel managers and investors had to pay substantial amounts for the repair of the buildings. Amongst the most damaged hotels were: “Royal Towers”, “Guiness”, “Stragite” and “Olimp”. The unexpected catastrophe brought many headaches, damages and the most important question: Were all those properties insured?

Buying a property has always been considered as a life-time investment. Something that many of us think will preserve the value of our savings. However, the investment needs care that is ensured from accompanying services such as management and maintenance (often undertaken by the investor), property insurance, cleaning, etc.

The last floods in Bansko proved that many people have not ensured a peaceful night's sleep - something which insurance could secure.

During the last several years the insurance companies in Bulgaria have been providing very acceptable insurance packages. The most appropriate and adequate insurance product for property is home insurance which provides cover against some 'Force Majeure' situations, such as natural perils, flood, earthquake and fire. Special cover for contents is also available. Preferred by many clients is the 'lessor’s liability 'cover that is important if you rent out your property.

From the point of view of foreign investors the focus is on the limits on some of the cover such as public liability, for instance, but the latter do not account for the size of the insurance market in Bulgaria where no company could offer 5mln euro limit on a cover. One of the most important things when buying insurance should be the rate of paid claims by the insurer.

In Bulgaria the statistic for property insurances for year 2008 shows the following:

Paid claims on property insurances amount to 6440181 euro (exchange rate 1EUR=1.95583 BGN) or 9.78% from the total paid claims (please, consider that 90% are formed from paid claims on car insurances). This is to prove that the insured party should not worry about his property in case of damages. See Graph One in the slideshow at the top right of this article and click to enlarge, demonstrating paid claims on fire and natural perils.

Source: NSI

According to the same source, the total damaged properties for year 2008 amount to 2336 units, out of which 273 have been damaged as a consequence from natural disaster. 11.7% is very high percentage considering that Bulgaria is situated in a very quite and friendly part of the world – there are hardly any earthquakes or floods during the year. Graph Two top right (click to enlarge) demonstrates the number of damaged properties from natural disasters.

Source: NSI

Nowadays there are still societies and people that think that they could do without insurance. That position is more for the risk takers, those who love living on the edge. However, things happen and we should be prepared for them. As Mihail Mateev reveals: “There are two ways of facing the future: The first one is to have fears for it and the second one to envisage it.”

Get prepared!!!

Written by Home Point BG Ltd.