Recently, the Brussels-Capital Region was the last region in Belgium to introduce mandatory fire insurance for tenants. In doing so, the Region follows the example of Flanders, where this obligation has already been in place since January 1st 2019, and Wallonia, where it has already been applied since September 1st 2018.
In principle, the tenant of a given property is liable for fire and water damage unless one can prove that the fire occurred through no fault of his or her own. The costs that can potentially result from such damage are therefore not minus and prompted the legislator to provide for mandatory fire insurance. This way, the tenant is prevented from being left with a mountain of debt following such damages and risks.
A good regulation, at least at first glance. However, when such duty is compared with principles relating to insurance, some difficulties arise.
What is covered by fire insurance?
Fire insurance, also called home insurance, must include some standard coverages. These cover the following risks:
- Fire damage: consider all possible damages in the context of a fire, such as smoke damage, damage made to extinguish the fire, etc. With fire insurance, the insurer will intervene to cover these costs.
- Water damage: the most common cause for water damage is a leak. This can cause damage to the floor and walls on the one hand, but also increase your water bill significantly. In most cases, the insurer will not intervene to repair the leak itself, but will, for example, repair the floor or pay for the cost of detecting the leak.
- Tenant liability: this ensures that you are insured if third parties should suffer damage due to a fire in your home.
Apart from fire and water damage, fire insurance will also cover other risks such as storm or consequential damage, natural disasters, etc.
Fire insurance is mandatory for every person renting a property. If the property is your own, you are not obliged to take out fire insurance... but it is still recommended.
Risk assessment
A fire insurer is obliged to cover the damages incurred in case the covered risk occurs. The clearest and best-known example of this is the burning down of the house. In this respect, it is very important for the insurance company to get a good idea of the potential probability of the risk occurring. For example, a straw roof will be more susceptible to fire than roofs composed of the classic tile material. Based on that risk assessment, the insurance company will start estimating the risk profile of the candidate - policyholder and categorise it into a ‘bad risk’ or a ‘good risk’.
For example, if one is in the ‘bad risk’ category, the insurance company may well refuse to enter into a contract, or provide coverage. This aspect is not legally problematic since, based on freedom of contract, as a fundamental principle, one cannot be forced to enter into a contract.
This freedom of contract in principle raises potentially significant problems in the context of compulsory fire insurance for tenants. If a person wishes to rent a particular property, they may encounter obstacles if they do not comply with the requirement to present fire insurance. Strictly speaking, this legal requirement has the effect of potentially excluding families from the rental market simply because they do not meet this requirement. The problem becomes all the more worrying when one considers that some families simply have no other option but to rent. For them, therefore, a form of homelessness threatens to hang over their heads, denying them access to a basic right namely having suitable housing.
Compulsory insurance
That compulsory insurance has already led to difficulties in the past is a fact. Not least for compulsory motor vehicle insurance where one had to contend with owners of vehicles being systematically refused. In this context, compulsory insurance resulted in certain persons being unable to drive a vehicle. Given the many difficulties that arose, the legislator intervened with the so-called motor vehicle pricing bureau. The problem of repeated refusal is taken care of by this bureau, they designate an insurance company that will have to provide coverage.
While a pricing bureau already exists for debt balance and natural disasters as part of the guarantee in fire insurance, a general pricing bureau specifically for fire insurance is lacking. Nevertheless, this is an issue that the legislature can address.
Indeed, in the past, the legislator has already shown a broad interpretation of certain terms such as the concept of ‘natural disaster’ to accommodate, for instance, the issue of slump within existing charging bureaus.
Following the compulsory fire insurance for tenants that has been in force for the whole of Belgium since 1 November 2024, the question arises whether a general pricing bureau for fire insurance would not offer a better solution, especially given the potential problems created by compulsory fire insurance for tenants.
CLUE current system: not being able to present fire insurance contract as a tenant = potential homelessness.
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