Natural Hazards Extension Clause
The natural hazards extension clause broadens fire and buildings insurance to cover natural perils such as flood, windstorm, hail, avalanche, snow pressure and landslip, and is compulsorily bundled with private fire insurance in Switzerland.
- Clause type
- Extension
- Origin/Market
- Swiss market
- Favours
- Insured
- Negotiability
- Market standard
Purpose
Fire policies by their nature only respond to fire, lightning and explosion; damage caused by natural events such as flood, windstorm, hail, avalanche, snow pressure, rockfall or landslip falls outside cover unless specifically agreed. The natural hazards extension clause closes this gap by bringing the listed natural perils within the scope of the fire or buildings policy.
Effect and limits
In Switzerland, natural hazards cover has been compulsorily bundled with every private fire policy for buildings and contents since the 1950s; more than 95% of all buildings are covered on this basis. In the so-called GUSTAVO cantons and in Liechtenstein, private insurers carry the buildings cover, while in the remaining cantons buildings cover is provided as a monopoly by the cantonal buildings insurers. The natural hazards pool ensures that all policyholders pay a uniform, affordable premium regardless of their individual exposure; earthquake is the one significant natural peril that is regularly excluded. In Germany and Austria, by contrast, natural hazards cover is voluntary and is arranged through separate clauses or add-on modules to the buildings or property policy.
Negotiation and practice
Outside Switzerland, it is essential to check precisely which individual perils are actually included and whether earthquake needs to be covered separately. For properties in high-risk flood or landslip areas, sub-limits, deductibles and any waiting periods in the relevant clause wording deserve close attention.
Jurisdictional comparison
While Switzerland’s compulsory natural hazards model with pool-based equalisation is regarded worldwide as a role model, Germany has no insurance obligation for natural perils; the relevant cover must be actively taken up, which regularly leaves gaps in cover for flood and heavy-rainfall events.