Regulatory Alerts2024-12-05
Order on Minimum Conditions for Insurance Companies Writing Building Fire Insurance
The Danish Financial Supervisory Authority issued this order to establish minimum coverage requirements for building fire insurance policies covering structures located in Denmark. The regulation mandates that policies must cover specific perils such as fire, explosion, and aircraft impact, while explicitly excluding war-related damages, and prohibits contractual waivers that harm registered property rights. Violations of these coverage standards are subject to fines, and the order replaces previous regulations effective January 1, 2025.
Order on Minimum Conditions for Insurance Companies Writing Building Fire Insurance
Pursuant to Section 74, Paragraph 4, and Section 316, Paragraph 1, of Act No. 718 of 13 June 2023 on Insurance Business, the following is enacted:
Chapter 1
Preliminary Provisions
Section 1. This Order applies to the writing of building fire insurance by insurance companies concerning buildings located in this country.
Section 2. The provisions of this Order may not be derogated from by prior agreement to the detriment of holders of registered rights over the property.
Chapter 2
Scope of Coverage
Section 3. The building fire insurance must at least cover damages caused by:
- Fire, including lightning strikes causing fire (fire damage),
- Explosion,
- Bursting of steam boilers and autoclaves,
- Collapse of aircraft or the insured being hit by such or by falling objects therefrom, provided that damage caused by carried explosives is not covered, and
- Sudden soot ingress from a properly installed fireplace used for room heating.
Paragraph 2. The building fire insurance does not cover damage as a direct or indirect consequence of war, war-like actions, violation of neutrality, civil war, insurrection, or civil unrest.
Section 4. The building fire insurance must include the buildings mentioned in the policy at the insured location, as well as pipes, heating systems, household machines, and similar items as mentioned in Section 38 of the Land Registration Act, cf. Act Consolidation No. 622 of 15 September 1986.
Paragraph 2. For agricultural breeding buildings, the building fire insurance must, in addition to what is mentioned in Paragraph 1, cover fixed machines and installations used for agricultural operations.
Chapter 3
Penal Provisions
Section 5. Intentional or grossly negligent violation of Section 3, Paragraph 1, or Section 4 is punishable by a fine.
Paragraph 2. If the violation is committed by a limited company, partnership limited by shares, cooperative, or similar entity, the company may be imposed with corporate liability for a fine pursuant to Section 319, Paragraph 1, of the Act on Insurance Business.
Chapter 4
Entry into Force
Section 6. This Order enters into force on 1 January 2025.
Paragraph 2. Order No. 856 of 21 October 2002 on minimum conditions for insurance companies writing building fire insurance is repealed.
Danish Financial Supervisory Authority, 5 December 2024
Louise Mogensen / Line Bergmann
Official Gazette A 2024 Published on 18 December 2024 5 December 2024. No. 1580. Ministry of Industry, Business and Financial Affairs, Danish Financial Supervisory Authority, file no. 24-019426 CQ003086