Insuring a let flat in the Czech Republic: what the building covers, what you cover, what the tenant covers, and what to do when damage happens

• For a flat in a building with an owners’ association, insurance comes in three layers. The building as a whole is usually insured by the association. The inside of the flat and your furnishings are insured by you. The tenant insures their own belongings and their liability.
• Tell your insurer that the flat is let. You must answer the insurer’s written questions truthfully, and you must notify it of a material change in circumstances. If you do not, it may terminate the policy or reduce the payout.
• Watch the sum insured. If it is lower than the value of the flat, the insurer reduces the payout proportionally. This is called underinsurance.
• Require the tenant to have contents and liability insurance. Check that it also covers damage to the let flat, and ask to see the policy when the lease is signed.
• After damage, act quickly but do not repair too early. Report the event to the insurer without undue delay and wait for its consent before repairing, unless safety or another serious reason requires otherwise.

Insuring a flat you let is not one policy. It is several contracts held by different people that should complement each other. The gaps between them are where you end up paying for damage yourself.

The exact boundary between the flat and the common parts differs from building to building. It is set by the declaration of ownership and the association’s articles. If you do not know it, ask the committee or the building manager. It is the first thing you will need when water starts leaking somewhere. Also find out where the main water shut-off for your flat and for the riser are, and tell the tenant at handover.

The owners’ association manages the building and land, and each unit owner contributes in proportion to their share of the common parts (sections 1180 and 1194 of the Czech Civil Code). In practice, building insurance is one of the items the association pays from these contributions. In cooperative buildings, the cooperative insures the building.

For a landlord this means three practical tasks:

1. Find out what the building policy covers. Ask the committee for the scope, sum insured, excess and the insurer’s or broker’s contact. Some associations also insure parts of the flats; others insure only the common parts.
2. Check how claims are reported. If water escapes from a riser, the association reports the damage to the building. Damage inside your flat may be reported by you under your own policy. It helps to know in advance who does what.
3. Do not rely on the building policy instead of your own. Building insurance typically does not cover your furnishings or the tenant’s belongings.

Building insurance is not among the services listed in the Czech Services Act (section 3(1) of Act No. 67/2013 Coll.), such as heating, water, lift, lighting and cleaning of common areas. The tenant therefore does not normally see it in the service charge statement, and the landlord covers it from the rent. Rent and services are also the only payments you may require from the tenant (section 2251(2) of the Civil Code).

The policy you take out as the owner should cover the fixed parts of the flat and your furnishings. Insurers use different names and product structures, so look at the content, not the name.

Tell the insurer that the flat is let

This is the most common mistake. A landlord insured the flat while living in it and later started letting it. Czech law provides for this situation:

• You must answer truthfully and completely the questions the insurer asked in writing when the contract was concluded (section 2788). If you did not, and the insurer would not have concluded the contract with truthful answers, it may withdraw from the contract (section 2808(1)) or, under the conditions of section 2809, refuse to pay.
• If circumstances stated in the contract or asked about by the insurer change so materially that they increase the probability of an insured event, the insured risk increases. You must notify the insurer of such a change (section 2790).
• If you fail to notify an increase in risk, the insurer may terminate the policy without notice and, if an insured event occurs, reduce the payout in the ratio of the premium received to the premium it would otherwise have charged (section 2793).

Whether letting is an increase in risk under a specific policy depends on what the policy states and what the insurer asked. The simplest approach is to write to the insurer that the flat is let and keep its reply in writing. Some products insure let flats on the same terms; others have special variants or exclusions.

Sum insured and underinsurance

The sum insured should match the value of the insured property. If it is lower at the time of the loss, the insurer reduces the payout proportionally unless the contract says otherwise (section 2854). An illustrative calculation: the flat’s insured value is CZK 2,000,000, it is insured for CZK 1,000,000 and the loss is CZK 200,000. The insurer then pays CZK 100,000, because the sum insured covers only half of the value.

Underinsurance creeps in unnoticed. You insured the flat years ago, then renovated it, replaced the kitchen, and building costs rose. Review the sum insured after every larger investment and at each policy anniversary. Also ask whether the product offers automatic indexation or a clause waiving the underinsurance reduction.

Excess and limits

• The excess is the part of the loss you bear yourself. The insurer does not pay it if it is expressly agreed in the contract (section 2815). A higher excess means a lower premium, but you then pay small losses yourself.
• The limit is the ceiling up to which the insurer pays. Unless the contract says otherwise, it is presumed to apply per loss event (section 2813). For some risks, such as theft or vandalism, limits are often lower than the sum insured. Check them.

Furnishings that belong to you

If you let the flat furnished, you have your own movable items in it: furniture, appliances, lamps, curtains. Check that your policy covers them in a let flat where you do not live. A list of furnishings with photos and approximate purchase prices helps twice: as an annex to the handover report and as evidence after a loss.

An empty flat between tenancies

Some policy terms limit cover or impose special duties if a flat is unoccupied for a longer period. Find out what period and duties your terms set. Between tenancies, check the flat regularly, close the main water supply if possible, and ask the insurer whether a longer renovation needs to be reported.

Liability insurance works differently from property insurance. It does not cover your own loss but the loss you must compensate someone else for. The insurer compensates the injured party on behalf of the insured to the extent set by law or the contract (section 2861(1)). The injured party has a direct claim against the insurer only if this is agreed or another act provides for it (section 2861(2)). A neighbour flooded from your flat therefore usually claims compensation from whoever caused the damage, who then passes it to their insurer.

With a let flat, the key question is who caused the damage:

• Damage from a defect of the flat or its equipment. The landlord keeps the flat fit for use (section 2257(1)). If a corroded pipe inside the flat bursts or your water heater fails, it is typically your liability as the owner.
• Damage caused by the tenant’s conduct. A party that breaches a contractual duty compensates the resulting loss (section 2913(1)). If the tenant leaves the bath running or the hose of their own washing machine bursts, it is typically their liability.
• Damage from the building’s common parts. A burst riser or a leaking roof is a matter for the owners’ association and its insurance.

In practice it is not always clear-cut. Liability is assessed by the insurers after investigation and, in a dispute, by a court. That is why it pays for both you and the tenant to be insured. The insurers then settle between themselves and you do not have to argue about who pays what out of pocket.

The tenant’s duties when the flat is damaged

If the tenant discovers damage or a defect that must be fixed without delay, they must report it immediately, and other defects that prevent normal living without undue delay (section 2264(1)). They must also do what can be expected to prevent further damage (section 2264(2)). If they do not report a defect in time, they lose the right to reimbursement of costs (section 2265(3)). Damage the tenant is responsible for and does not repair, you repair at their cost (section 2267). Remind the tenant of these duties at handover together with an emergency contact.

The tenant insures two things: their belongings (contents insurance) and their liability for damage. Liability matters more to you. It is the source that pays for damage the tenant causes to your flat or the neighbours, including amounts beyond the deposit.

Does the policy cover damage to the let flat?

Look at this most carefully. Ordinary personal liability insurance may not automatically cover damage to property the insured uses under a lease. With some products it is a separate add-on. Ask the tenant to show you the policy or a confirmation from the insurer that states cover for damage to rented property.

What to put in the lease

• a duty for the tenant to hold contents and liability insurance for the whole tenancy, including cover for damage to the let flat,
• a minimum limit you agree on,
• a duty to show the policy at signing and on request later, for example at its anniversary,
• a duty to tell you if the insurance ends,
• an emergency contact and a duty to report damage immediately.

The tenant takes out and pays for the policy with an insurer of their choice, so it is not an additional payment to you. The lease should not impose manifestly unreasonable duties on the tenant; such terms are disregarded (section 2239).

Deposit and insurance complement each other

The deposit may not exceed three months’ rent (section 2254) and can also be used to cover damage to the flat. For larger damage it is not enough, and it covers only your flat, not the neighbour’s. The tenant’s liability insurance and the deposit therefore do not exclude each other. The deposit is fast and in your hands; insurance covers larger losses.

1. Prevent further damage. Stop the water, secure the flat after a burglary, call the fire brigade in a fire. The tenant must do what can be expected to stop the damage growing (section 2264(2)).
2. Document the condition. Photos and video of the whole damage, the cause, the damaged items and their rating plates. For theft and vandalism, report it to the police.
3. Report the event to the insurer without undue delay. Whoever claims payment must give a truthful account of how the loss arose and its extent, of third-party rights and of any other insurance of the same property, and provide documents (section 2796(1)). For damage to someone else’s property, also tell your liability insurer that the injured party has claimed compensation (section 2862(1)).
4. Wait for the insurer’s consent before repairing. Do not repair damaged property or remove debris until the insurer agrees. This does not apply where work must start earlier for safety, health, environmental or other serious reasons. The duty also ends if the insurer does not respond within the agreed or a reasonable time (section 2851).
5. Follow the investigation. The insurer must start investigating without undue delay and justify the result in text form (section 2797(1)). Unless agreed otherwise, payment is due within fifteen days of the end of the investigation. If the investigation cannot be completed within three months, the insurer must explain why in writing and, on request, may pay a reasonable advance (section 2798).

If the tenant caused the damage, tell them in time to report it to their liability insurer. Without their report, payment from their policy will be delayed.

The following examples show how damage is usually split. The actual outcome always depends on the policy terms and on what the investigation finds.

1. The hose of the tenant’s washing machine bursts and floods the neighbour

The neighbour’s loss typically falls on the tenant and their liability insurance. Damage to your flat, such as the floor and ceiling, can be claimed from the tenant’s liability cover or from your own flat insurance, whose insurer may then recover the amount from the tenant. If the tenant has no insurance, only the deposit and their own assets remain.

2. A riser bursts inside the wall

A riser is usually a common part of the building. The association handles damage to the building under its policy. Damage inside the flat, such as floors and furnishings, is reported under the building policy or your own, depending on the terms. The tenant’s belongings are covered by their contents insurance.

3. A burglary

The tenant’s stolen laptop is covered by their contents insurance. Your television and the damaged front door are covered by your policy, if you have theft and vandalism cover. Insurers usually examine how the flat was secured in a theft. Check what security your terms require and make sure the flat meets it.

4. A fire caused by your appliance

If a fire starts in a faulty dishwasher you supplied, your property insurance typically applies, and possibly your liability cover towards the tenant and neighbours. Regular servicing and replacing old appliances is therefore a question of liability, not just comfort.

5. A damaged floor and kitchen when the tenant moves out

The tenant returns the flat in the condition in which they took it over, allowing for normal wear (sections 2225(1) and 2293). Damage beyond normal wear is first set against the deposit. If that is not enough, the tenant’s liability insurance may apply if it covers damage to the let flat. Without a good handover report with photos, however, it is hard to prove what was normal wear and what was damage.

Policy anniversary and termination

Fixed-term policies are often renewed automatically unless one party states at least six weeks before the end of the policy period that it does not want to continue (section 2803(2)). A policy with regular premiums can be terminated at the end of the premium period, but notice must be delivered at least six weeks in advance, otherwise the policy ends only at the end of the following period (section 2807). Termination is also possible within two months of concluding the contract with eight days’ notice, and within three months of reporting an insured event with one month’s notice (section 2805). The insurer can also terminate within three months after a claim.

The anniversary is a good time to review the sum insured and compare terms. Arrange any new policy so that cover continues without a gap.

Sale, gift and inheritance

Unless expressly agreed otherwise, the insurance ends on the day the change of ownership or co-ownership of the insured property is notified to the insurer (section 2812). A buyer, recipient of a gift or heir must therefore take out their own insurance. The lease, however, does not end with a change of owner, and its rights and duties pass to the new owner (section 2221(1)). A flat can thus be let and uninsured at the same time.

Besides property and liability insurance, there is also rent insurance, which pays according to the product terms when a tenant stops paying. It is a different type of protection: it covers lost income, not damage to the flat. Before taking it out, read for how many months and up to what amount it pays, what the waiting period is, what conditions the tenant must meet and whether it applies to an empty flat.

A comparison of rent insurance with guaranteed rent and other ways of transferring the risk of lost income is in our guide How to let a flat in the Czech Republic without risk.

1. “The building is insured, so my flat is too.” Building insurance usually covers the common parts, not your furnishings and often not the inside of the flat. Ask the committee about the scope.
2. “I have a policy, so it does not matter that I let the flat.” If the insurer asked about the use of the flat or the contract states it, you must report the change. Otherwise you risk termination and a reduced payout.
3. “The tenant paid a deposit, so they do not need insurance.” The deposit is at most three months’ rent and does not help the neighbour the tenant floods.
4. “The sum insured adjusts itself.” Only if the contract provides for it. Otherwise underinsurance and a proportional reduction loom.
5. “After damage I will call a tradesperson right away and report it later.” Urgent steps to limit the damage, yes; repairs only after the insurer agrees, unless safety or another serious reason requires otherwise.

• Letting without an agent. Other landlord duties, from the energy rating to the service charge statement, are in Letting a flat in Czechia without an agent.
• Noisy neighbours. How to handle complaints about your tenant and your tenant’s complaints about neighbours is explained in Noisy neighbours and quiet hours in Czech rentals.
• Letting without risk. Tenant selection, the deposit, the handover report and protection against non-payment are in How to let a flat in the Czech Republic without risk.

This article reflects the legislation in force on the date of publication. The actual scope of cover is always set by the policy and its terms. Before an important decision, check for later amendments. The Czech statutes are available in Czech.

• Civil Code (Act No. 89/2012 Coll.), insurance: sections 2788 to 2798, 2803 to 2815, 2851, 2854, 2861 and 2862; residential leases: sections 2221, 2225, 2239, 2251, 2254, 2257, 2264 to 2267 and 2293; owners’ associations: sections 1180 and 1194; compensation: section 2913.
• Act on Services Connected with the Use of Flats (Act No. 67/2013 Coll.), section 3: definition of services.

This is a general guide, not legal or insurance advice for a specific case.