After a burnt-out attic or a burst pipe that floods several rooms, the owner first works out the cost of restoring the building. Then come the other bills: the skip and the landfill fee, the separate removal of asbestos-containing slate, the structural engineer and the designer, the rerouting of utility lines required by the authorities, the rented flat for the months of drying out. As a broker, I see that these items cause a surprise twice: once when it turns out what the loss really costs, and a second time when they are missing from the settlement offer – not because the conditions exclude them, but because nobody asked for them. This article presents the additional-cost cover in home insurance: what belongs here, how it is limited, and what you need to do for it to become part of the payment.
- In a major loss, a significant part of the bill is not for restoring the building but for demolition, removing debris, alterations required by the authorities, design work and temporary housing – policy conditions pay for these separately, under headings such as “cost reimbursements” or “additional costs”, with their own limits, differing from insurer to insurer.
- The limit is typically a set proportion of the building's sum insured or a fixed amount, and whether it is paid within the sum insured or on top of it differs from one set of conditions to another; under the Hungarian Civil Code (Ptk.), the insurer bears the necessary costs of mitigating the loss within the limits of the sum insured even if the mitigation was unsuccessful.
- The insurer does not assess the additional costs on your behalf: only costs that are causally linked to the insured event, claimed item by item by the client and supported by invoices or official documents are reimbursed – the loss inspection is about the building; raising the costs is up to you.
What counts as an additional cost? A map of the items
Alongside building and contents damage, Hungarian home insurance conditions typically list in a separate chapter – headed “cost reimbursements”, “additional costs” or “incidental costs” – the expenses they reimburse in connection with the insured event. The list varies from insurer to insurer, but the typical items are similar: the cost of firefighting and salvage, including part of the damage caused by the extinguishing agent and during salvage; demolition and debris clearance; removal and disposal of rubble, under some conditions with separate provision for handling hazardous waste (asbestos slate); temporary covering, propping and closing off; removal and storage of the remaining contents; the cost of temporary accommodation rented in place of a home that has become uninhabitable, which the article on an uninhabitable home covers in detail; designers', structural engineers' and experts' fees and the fees for official permits; and extra costs arising from official requirements. What is not on the list is typically not reimbursed either: so it is worth going through the items one by one in your own conditions rather than assuming that they are “part of the loss”. Damage caused by firefighting water is usually part of fire cover – the article on fire and natural perils discusses this – whereas the cost of firefighting and salvage is a cost item.
Within the limit or on top? The logic of the conditions
The payment of additional costs has three parameters, and all three depend on the conditions. The first is the limit: conditions typically cap cost reimbursement at a set percentage of the sum insured for the building (or for the property group concerned) or at a fixed amount, per item or in total; the exact figure is given in your own conditions or the policy, and when comparing offers this is also a line to compare. The second is whether the costs are paid within the sum insured or on top of it: if within, then in a total loss the costs use up part of the amount intended for the building; if on top, the limit can be paid out in addition to the payment for the building damage – in a major loss this can mean a difference of hundreds of thousands or even millions of forints. The third is underinsurance: if the building's sum insured does not reach the rebuilding value, under the conditions proportionate payment may also extend to the cost items, as the article on underinsurance describes. There is one item whose legal basis is the insurance chapter of the Hungarian Civil Code (Ptk., Section 6:463): the insurer bears the necessary costs of mitigating the loss within the limits of the sum insured even if the mitigation was unsuccessful – so the cost of temporary plastic sheeting or of the plumber called to turn off the water does not depend on the insurer's goodwill. For Certified Consumer-Friendly Home Insurance products, according to the consumer information published by the MNB (Hungary's central bank and financial supervisor), in the case of damage that threatens everyday habitability the insurer pays an advance on the claim within five working days, which may be used exclusively for loss-mitigation work that prevents further damage – for example, covering the roof with sheeting.
Extra costs due to official requirements: where most people slip up
Extra costs due to official requirements cause the most disputes, because the line runs between a consequence of the event and an upgrade. A typical case: after a burst pipe, the utility company or the building authority does not allow the pipe to be rebuilt along its original route, and relocating it costs more than repairing it would; the burnt-down roof structure of an old house has to be rebuilt to today's fire safety, thermal insulation or structural standards, which costs more than restoring the original condition. Conditions typically pay for this extra only if the costs chapter names it, and even then only up to a limit; whatever is not a requirement but your own decision – a larger window, better tiling, a new layout – remains your own cost. This is why the insurer asks for the written official requirement or the utility company's statement: without it, the insurer typically treats the extra as an upgrade, that is, as your own cost. Designers' and experts' fees work on similar logic: the conditions either name them or they do not, and if they do, they are paid to the extent needed for the restoration – for a rebuilding that requires a permit, the fees for the design documentation and for the responsible site manager may also come under this heading.
It pays only if you claim it and prove it
At the inspection, the loss adjuster assesses the damage to the building and the contents; most of the additional costs do not yet exist at that point, because demolition, transport and design take place later. So claiming the costs is your task: they must be reported item by item, in the claim notification or later quoting the claim number, and each item must be supported by documents – skip and transport invoices, the landfill weighbridge ticket, the designer's and the expert's invoices, the official requirement, the tenancy agreement and proof of the rent transfers. It is worth submitting quotes in advance, because conditions typically make larger-scale demolition subject to the insurer's prior consent, and until the inspection, changes may be made on site only to the extent necessary to mitigate the loss. Items without an invoice are typically paid by the insurer at net value or not at all, and there is no invoice for work you do yourself, so conditions typically pay labour costs for it only to a limited extent or not at all – as the article on loss assessment and settlement explains, before signing a settlement offer it is worth checking whether the cost items are included, because it is hard to get anything added to a settlement once it has been closed. The primary route for reporting is the insurer's claims line; if you get stuck when a cost item is rejected, I help where I can.
What should you do now?
Find the cost reimbursement chapter in your policy conditions and ask three questions: which items does it include, how high is the limit, and is it paid within the sum insured or on top of it? If the building's sum insured is tight, so is the additional-cost cover: here, too, a realistic rebuilding value is the first step. And in a major loss, keep a separate list of the invoices from day one – from the fire brigade's call-out to the last skip – because reimbursement of the costs depends on this list, not on the insurer's memory.
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Sources
- MNB (Hungary's central bank and financial supervisor): Certified Consumer-Friendly Home Insurance – consumer information (text finalised: February 2025): advance payment within five working days for loss-mitigation work, a building that has become uninhabitable as a priority loss
- Hungarian Civil Code (Ptk., Act V of 2013) Section 6:463 – duty to prevent and mitigate loss, bearing the necessary costs of mitigation within the limits of the sum insured; Section 6:460 – underinsurance and proportionate payment
- MABISZ (Hungarian insurers' association) Home Insurance Guide (20 February 2025) – the sum insured and property groups, the claims settlement process
- Allianz Otthonom home insurance – Customer information and general policy conditions (in force from 20 March 2025) – cost reimbursements: loss-mitigation costs within the sum insured without a separate limit, other costs (demolition, removal of ruins and debris, temporary roof construction) up to 5% of the building's sum insured, extra costs due to official requirements up to 10% of the property group's sum insured (example; varies by insurer)
