Property Insurance in Poland – A Practical Guide for Homebuyers

However, property insurance can provide much broader protection than the minimum coverage required by the bank. Depending on the policy you choose, it may also cover household contents, burglary and theft, or personal liability.

In this article, we explain what property insurance covers, what banks require, and what to look out for when choosing an insurance policy.

What is property insurance?

Property insurance provides financial protection against damage that may occur to an apartment or house. Depending on the policy, it can cover the building structure itself, its fixtures and fittings, as well as additional items.

The main purpose of property insurance is to protect the owner against the costs of repairing or rebuilding the property in the event of unexpected incidents, such as fire, flooding or other unforeseen events.

It is important to remember that the scope of coverage depends on the terms and conditions of the individual policy. Not every insurance policy covers all types of damage.

Is property insurance mandatory when taking out a mortgage?

Property insurance is not mandatory for every property owner. However, the situation is different when purchasing a property with a mortgage.

Banks generally require the property used as collateral for the mortgage to be insured. The purpose is to protect the property's value in the event of damage or destruction and, consequently, to safeguard the bank's interests.

The bank specifies the required scope of coverage and insurance conditions. In most cases, the basic policy must cover the building structure and permanent fixtures against fire and other specified natural or accidental events.

It is worth knowing that, under Polish regulations, a bank may require property insurance, but the borrower has the right to choose any insurance provider, provided that the policy meets the bank's minimum requirements.

What does basic property insurance cover?

Basic property insurance generally covers two main elements:

Building structure (walls and structural elements) – including the main components of the property, such as walls, foundations, ceilings, the roof and other structural elements.

Permanent fixtures and fittings – elements permanently installed in the property that cannot be easily removed without dismantling. These may include: Doors and windows, Flooring and tiles, Electrical and plumbing installations, Bathroom fittings, Built-in kitchen units and fitted wardrobes, Radiators and other permanently installed fixtures.

Basic coverage usually protects against damage caused by specified unforeseen events, such as: Fire, Lightning strikes, Explosion, Water damage, Strong winds or hail, Flooding – if included in the policy.

The exact list of covered events depends on the insurance provider's offer. It is particularly important to check whether flooding is covered, as it is not always automatically included in a basic policy.

Additional coverage – what else can you insure?

A basic policy primarily protects the property itself. However, you can extend your coverage to include additional elements, providing broader protection for you and your family.

The most commonly selected additional options include:

Household contents – covers movable items inside the property, such as furniture, household appliances, computers, televisions and other everyday belongings.

Personal liability insurance – protects you against the financial consequences of accidentally causing damage to third parties. For example, if a plumbing failure in your apartment causes water damage to your neighbour's property, your insurance may cover the resulting costs, subject to the policy terms and conditions.

Burglary and theft – provides protection if insured belongings or other covered items are stolen following a break-in.

Home assistance – may cover the organisation and costs of professional assistance, such as a plumber, electrician or locksmith in the event of an emergency.

Glass breakage – may cover items such as windows, mirrors, glass doors and induction cooktops.

The choice of additional coverage depends on the individual needs of the property owner. It is worth considering which situations may pose the greatest risk and selecting coverage accordingly.

Insurance offered by the bank or an external insurance provider?

When taking out a mortgage, the bank may offer its own property insurance. However, this does not mean that you are required to use that particular offer.

You can choose an insurance provider yourself and arrange a policy independently, provided that it meets the requirements set by your lender.

Insurance offered by the bank can be a convenient option, as the formalities can often be completed directly during the mortgage application process. The bank usually provides a ready-made insurance package that meets its requirements.

Insurance from an external provider allows you to compare different offers independently and choose coverage that best suits your needs.

Before making a decision, it is worth paying attention to: The scope of insurance and the events covered, The sum insured, Exclusions from the insurer's liability, The conditions for receiving compensation, The possibility of assigning the insurance rights to the bank.

The most important thing is to ensure that the selected policy meets the bank's requirements while providing adequate protection for your property.

Assignment of insurance rights to the bank – what does it mean?

An assignment of insurance rights is the transfer of certain rights to receive insurance compensation to the bank that granted the mortgage.

In practice, this means that if the property is damaged or destroyed as a result of an insured event, the bank, as the beneficiary of the assignment, has additional security in the form of rights arising from the insurance policy.

However, this does not mean that the bank automatically keeps every compensation payment. How the funds are used depends on the type of damage, the assignment terms and the bank's procedures. In the case of minor damage, the funds may be used to repair the property, while more serious damage may require additional formalities imposed by the bank.

The assignment of insurance rights is a standard part of mortgage security and usually needs to be established before the mortgage loan is disbursed.

What should you check before signing an insurance agreement?

Before choosing a policy, it is worth carefully reviewing its terms and conditions. Simply having insurance does not mean that every type of damage will automatically be covered.

Pay particular attention to:

Sum insured – the maximum amount the insurer will pay for specific types of damage. It should reflect the value of the insured property or belongings.

Scope of coverage – check which events are covered and whether the policy includes the risks that are particularly important to you.

Exclusions from coverage – situations in which the insurer may refuse to pay compensation.

Deductibles and liability limits – some policies limit the amount of compensation or require you to cover part of the damage yourself.

Before signing the agreement, it is also worth reviewing the General Terms and Conditions of Insurance (OWU – Ogólne Warunki Ubezpieczenia), which set out the detailed rules of coverage.

Does property insurance need to be renewed every year?

Yes. Most property insurance policies are issued for a period of 12 months. Once this period expires, you need to arrange a new policy to ensure continuous coverage.

This is particularly important when you have a mortgage, as the obligation to maintain property insurance is generally included in the mortgage agreement and may apply throughout the entire repayment period.

If you use a policy from an external insurance provider, remember to submit the renewed policy, proof of payment and confirmation of the assignment of insurance rights to the bank, if required.

Having no valid insurance policy may mean that you are no longer complying with the terms of your mortgage agreement. It is therefore important to keep track of your policy's expiry date.

Planning to buy property in Poland? I can help you with the mortgage process!

Buying an apartment or house is an important decision, so it is worth taking care not only of the right financing but also of appropriate property protection.

If you are planning to purchase property in Poland and need a mortgage, I can guide you through the entire process – from assessing your financial situation and choosing the right bank offer to securing mortgage financing.

If you are a foreign national, I can also help you understand the banks' requirements regarding income and residence documentation.

Get in touch to discuss your situation and explore the available financing options for purchasing property in Poland.