LIABILITY – BELONGINGS – VALUABLE ITEMS – BUILDINGS – LEGAL – CAR – ASSISTANCE – RENTAL GUARANTEE – LIFE INSURANCE
Depending on one’s situation there are 5 or 6 obligatory personal or family insurances in Switzerland.
These include liability, belongings, building, car, health and accident insurance. To avoid a bad experience valuable items and legal insurance are also highly recommended. Life insurance is an extremely interesting tax and savings tool, so it should also be seriously considered. Speaking to Charles will help you to avoid missing out on any of the above and understanding what is important, when and why.
Personal liability insurance covers injury and material damages caused to a third party. It is known as « responsabilité civile » in French and is obligatory to rent a property in Switzerland. By Swiss law, as soon as any damage (physical or material) to a third party causes financial loss, the person responsible is bound to compensate that loss.
Personal belongings insurance covers damage to or the disappearance of the holder’s personal affairs. The standard risks covered include fire and water damage, natural events, burglary and fragile surfaces (which include windows, bathroom and kitchen surfaces). It is known as « assurance ménage » in French and is obligatory to rent a property in Switzerland. Extended coverage should be requested to cover accidental damage to one’s own property, theft outside the home, cyber damage and valuable items.
A valuable piece of jewellery or a watch is worn all over the world and can be lost, stolen or broken anywhere. The personal belongings insurance will not protect it. Paintings, sculptures, musical instruments, cameras, art and leather goods can also be protected. Valuable items insurance can either be subscribed to as an itemized insurance policy (piece by piece) or as a module on your belongings policy for an insured sum (insure a value rather than specific items).
Buildings are complex and must be covered for different risks throughout their lifecycle. Owners’ must insure construction and renovation projects, the finished building, liability, loss prevention, location, disposal costs and outdoor facilities.
IMPORTANT: When you buy a building, you have 30 days to contact your insurer to transfer the existing building insurance into your current insurance plan. If you do not do this the building insurance of the previous older will automatically be transferred to you. This is inconvenient in the event of a claim, as you will need to deal with two insurance companies.
Legal insurance covers the legal costs related to contractual conflicts (work, lease, insurance contracts…) or non-contractual conflicts (criminal law, neighbours, traffic related issues…). It is known as « protection juridique » in French. Attorney fees in Switzerland are anywhere between CHF 350.- to 800.- per hour and a retainer or an advance of ten hours is common practice. A retainer on court costs is also required to receive a case in court.
To avoid being confronted with such high legal costs two thirds of the Swiss population have this insurance; because any legal issue, whether it be for advice, as a defendant or a claimant will require at least 4 hours of an attorney’s time. The yearly cost represents roughly 30 minutes of an attorney’s time for CHF 500k of coverage.
Swiss car insurance is divided into three modules, one of which is mandatory and two of which are optional if the car has not been financed through a leasing plan.
Liability insurance is obligatory for all motor vehicles. License plates cannot be issued without motor vehicle liability protection. This covers the holder for any damage done to a third party, their motor vehicle or belongings.
Partial casco insures the car for everything except collision and parking damage. Protection includes: fire, lightening, explosions, short-circuits, cables eaten by rodents, natural events (winds more than 75kmh, hail, snow damage, land and rock slides), theft, broken glass, collisions with animals and vandalism.
Only the full casco module covers collision and damage caused by the policy holder to his or her own car. This is the Swiss all-risk motor vehicle coverage. IMPORTANT: The car must always be insured for the catalogue value, plus options, even if it is purchased second hand or used. Underinsurance applies to car insurance, so the amount covered must be as precise as possible to avoid being penalized when compensated for a claim.
If you travel for leisure more than three times a year by plane and or at least once every two months by car travel insurance in Switzerland and roadside assistance should be part of your protection plan.
Many people take out basic travel insurance at the same time as they reserve their trip; this means that if they do three trips in a year they pay for three different insurance policies with limited scopes of protection. A yearly combined travel and roadside assistance insurance package done with a specialist company is highly recommended as protection is generally much better and costs less than multiple individual insurance contracts.
8. Rental guarantee
Rental guarantee or security deposit insurance in Switzerland is not a classic insurance contract, it simply provides an institutional guarantee (or surety) to the landlord that he will be paid in the event of a claim when his tenant leaves his property or if the tenant does not pay his rent. The rental guarantee policy will not pay the claim for the policyholder, this will be covered by the personal liability insurance contract if the claim is a result of accidental damage. The insurance rental guarantee is an alternative to a blocked security deposit account with a bank.
In Switzerland everyone who rents a property is obliged to deposit three months of rent on a blocked security deposit account with their banking institution. Unfortunately, this obligation can tie up a lot of cash, the only alternative is the rental guarantee insurance contract.
9. Life insurance
Life insurance is a powerful tax optimization tool in Switzerland because it plays a central role in the Swiss 3 pillar pension system. Term life insurance, savings plans, and the financial risks related to the passing away of a parent or loved one, are all inextricably linked in the three-pillar system in Switzerland. The government grants considerable tax benefits to residents who link a savings plan to their term life insurance policy and to those that protect themselves and their family from the passing away of a loved one.
Swiss life insurance contracts are divided into three types, they can each be subscribed to as pillar 3A or pillar 3B, offering tax benefits and a waiver of premiums clause to guarantee the contractual benefits at the end of the contract. The types are:
– the term life insurance contract which offers a fixed benefit in the event of death; it can be contracted on one or two heads (the life of one person or two different people).
– the savings plan life insurance contract which emphasizes saving, rather than a fixed benefit in the event of death. Only the amounts invested in the savings plan at the time of death will be paid out.
– the mixed life insurance contract which offers a fixed benefit in the event of death and a savings plan.