Who pays for a destroyed house?

Imagine: your home is gone from one day to the next. Apart from illness or the loss of a loved one, this is probably one of the worst things that can happen to you. Suddenly, the place that represents stability, security and well-being is gone. Photos, mementos and personal items – lost forever.

It happens again and again that houses are completely or partially destroyed, even in Switzerland. Last week a mudslide buried several houses in the Misox. In Schwanden in Glarus, it was less than a year ago that several residents lost their homes. In Gondo, a third of the village was buried by a landslide in the autumn of 2000.

What does such a stroke of fate mean financially? A large part of one’s savings is often invested in one’s own home. However, financial ruin is not a threat – at least not in Switzerland. In almost all cantons, you have to insure your house against fire and natural hazards. The insurance covers all damage caused by natural forces, except earthquakes. This includes storms, hail, floods, avalanches and landslides.

Uninhabitable house

The Hefti family knows what it means to have to worry about restoring your own home. The Heftis live in Schwanden (GL). Their house became uninhabitable on December 22, 2023 due to an avalanche of mud and debris. “Our basement was filled with dirt up to the ceiling, and mud and debris were knee-deep on the ground floor too,” says Jürg Hefti. The masses of earth had crushed the rear patio door and penetrated the house. The garden was also buried under meters of rubble.

The dirt from the house has now gone, sucked up with a huge suction excavator. Civil defense and specialist companies took care of it on behalf of the building insurance company. However, a return is not yet an option because there is a risk of further landslides. Since the first mudslide at the end of August 2023, the area has been more or less a restricted zone. Since then, the Heftis have also only been able to return to their house during certain time windows.

While the dryers in the house are running at full speed, Hefti is waiting for the architect’s cost estimate. There is no rush, however, because repairs cannot begin until protective structures have been built. That should be the case by the end of the year: “Then hopefully we will be back in our home by Christmas 2025.”

Insurance is mandatory in almost all cantons

“Anyone who has taken out building insurance can assume that their house or the damage to their house will be replaced,” says Alain Marti, Vice Director of the Association of Cantonal Building Insurers (VKG). If a house is washed away, the insurance covers the costs of rebuilding it in the same place. If it is partially destroyed, it covers the repair costs. “Anyone who does not want to build a new house will be paid out the value of the building at the time of the damage.”

Facilities that are permanently attached to the building, such as the kitchen, heating or solar system, are also insured. Movable items such as furniture or the car in the garage are not included. For this, you need household contents or comprehensive insurance. The garden and the destroyed outdoor pizza oven are also not insured.

Exceptions to forced relocation

It doesn’t always take as long to repair the damage as it did in the Heftis’ case. This was also the case in Schwanden. After the accident, it became clear relatively quickly that part of the perimeter was no longer inhabitable. Anyone living in this red danger zone had to find a new home.

“We have already been able to solve many of these cases,” says Hansueli Leisinger, head of Glarner Sach. Affected homeowners received the replacement value of their property from the insurance company so that they could build a new house elsewhere in the canton or buy an existing one.

Typically, building insurance does not pay for the purchase of existing properties. In the canton of Glarus, however, there is very little building land in the price range of the disaster region. On the other hand, a number of properties are for sale. Therefore, according to Leisinger, it was decided that the purchase of an existing building would also count as restoration.

However, the money from the building insurance is not enough to buy a house or build in a new location, because the insurance only covers the value of the building. In the event of forced relocation, the canton or municipality will step in to cover the value of the land, because this is tantamount to expropriation. The federal government can also provide money.

Hope for donations fund

The Heftis have not yet received any insurance money. But Jürg Hefti also expects that the material damage will be largely covered and that the building insurance will pay in full for the restoration of the ground floor, basement and garage. According to Glarner Sach, the buildings in the affected area are generally insured at replacement value. Exceptions only apply to very old or poorly maintained buildings.

“We will also be reimbursed for the destroyed furniture and other movable items in the house thanks to our home contents insurance,” says Hefti. It is not a lot, because the family was able to save most of the furniture and move it to the temporary apartment, as the house was only affected by the second wave. The insurance also covers certain additional living expenses.

Hefti is satisfied with the work of the insurance companies so far. It is helpful that some financial institutions in the region have waived mortgage interest for affected homeowners for two quarters. It is still unclear who will pay for the destroyed surroundings. The father of the family is also hoping for money from the community’s donation fund, which he and others have worked hard to build up.

Hefti is worried about the loss in value of the properties in the affected region. He fears that the banks could make additional demands. “Apart from that, we will hopefully get off lightly financially.” The majority of the damage is psychological and temporal anyway, and no one can compensate for that.