Romanian Authorities May Fine Uninsured Homeowners Only After August 2012

The law says home insurance against natural disasters (earthquakes, landslides and floods) becomes mandatory 90 days after the adoption of the norms on the law’s application, allowing home owners one year to get such insurance policies.

According to the Interior Ministry’s interpretation, the grace period of one year is due to expire on July 15, 2011. After this date, local authorities may fine homeowners who are not insured against these three kinds of natural disaster.

However, the law’s applications norms were published in the Official Journal only on May 6, 2011, meaning insurance becomes mandatory on August 6, 2011. Since the law allows homeowners one year to get this insurance policy, no fines may be ordered before August 6, 2012.

Once this deadline passes, authorities may fine uninsured homeowners upwards of 500 lei (EUR116).

Insurer PAID will collaborate with local authorities to sell mandatory home insurance policies, its estimates showing that 60% of the houses in the country, around five million, are not insured.

PAID (the Pool of Insurance Against natural Disasters) is a joint stock insurance-reinsurance company that manages the risk fund meant for paying damages in case of natural disasters. Its 13 shareholders are: ABC Asigurari, Astra Asigurari, ARDAF, Carpatica Asig, Certasig, City Insurance, Credit Europe Asigurari, Euroins Romania, Generali, Grawe Romania, Groupama Romania, Platinum Asigurari and Uniqa Asigurari.

By July 4, PAID had issued more than 600,000 PAD policies. The yearly premium is EUR10-20, depending on the type of building, and covers damages between EUR10,000 and EUR20,000.

(EUR1=RON4.2738)