Home Insurance 2026: Why It Really Is Worth It
Home insurance protects your property and your family against fire, theft, damage to third parties, natural disasters and civil liability. It is not compulsory by law (unlike motor insurance) but it does become compulsory with a secured mortgage, at least for explosion and fire cover. Knowing how the premium is calculated helps you choose without being overcharged.
If you are buying a home with a loan, work out the instalment first with the mortgage payment calculator and count the policy among the compulsory ancillary costs.
What a Home Insurance Policy Covers
Modern home policies are multi-risk, meaning that they combine several covers. The main ones are:
Fire and Explosion (Compulsory With a Mortgage)
Covers physical damage to the building and its contents caused by:
- Fire, lightning, explosion, blast
- Falling aircraft and vehicles
- Smoke and shock waves
- Weather events (with an optional extension)
Theft and Robbery
Compensates for goods taken from the home and for any damage caused during the break-in (doors, windows, locks). It often also covers valuables and jewellery, with specific limits.
Civil Liability
Covers damage that you or your family members might unintentionally cause to third parties (for example flooding the neighbour, falling masonry, a courier injured on the stairs).
Water Damage
Includes burst plumbing, leaks from the roof, frost damage and flooding caused by exceptional rainfall.
Natural Disasters
Earthquake, flood, landslide and extreme weather events. In recent years some insurers have included them as standard; others offer them only as an optional extension.
How the Home Insurance Premium Is Calculated
The annual premium depends on a number of factors. The commercial formula is:
Premium = base rate × insured value × risk coefficients
The Main Variables
- Habitable square metres: the larger the home, the higher the premium
- Rebuild value of the building: €/m² between 1,000 and 2,500 depending on the area
- Value of the contents: furniture, appliances, valuables
- Location (postcode): areas at high seismic or hydrogeological risk carry higher premiums
- Type of property: a flat in a block < a detached house
- Security systems: alarms and reinforced doors cut the premium by 10-25%
- Covers chosen: more risks covered = a higher premium
- Limits and excess: high limits and low excesses push the premium up
Premium Calculation Examples
Example 1: 60 m² Flat in a Block (Outer Milan)
- Building value: 60 × 1,500 = €90,000
- Contents value: €25,000
- Covers: fire + theft + liability + water damage
- Annual premium: ~€250-€380
Example 2: 150 m² Detached House (Provincial Town)
- Building value: 150 × 1,800 = €270,000
- Contents value: €60,000
- Covers: all of them + natural disasters
- Annual premium: ~€600-€900
Example 3: Fire Cover Only for a Mortgage (60 m², Rome)
- Building value: €90,000
- Explosion + fire cover only (the minimum required by banks)
- Annual premium: ~€80-€150
Mortgage Policy vs Standalone Policy
The Policy Bundled With the Mortgage
Banks offer bundled policies that are often priced well above the market (by 50-100%). They are convenient but not compulsory: by law the customer is free to choose the insurer, provided the policy meets the minimum requirements.
The Standalone Policy
Bought separately from a broker, an agency or directly online. It allows you to:
- Save 30-60% on the premium
- Choose covers tailored to your needs
- Change company every year to take advantage of better offers
Limits and Excesses: Getting Them Right
The Limit
The maximum amount the insurer pays out per event. If you have a limit of €100,000 and you suffer €150,000 of damage, you receive €100,000.
The Excess
The amount you bear yourself before the insurance steps in. A €500 excess on €2,000 of damage means a net payout of €1,500.
The Percentage Deductible
A percentage borne by you (for example 10%). On €10,000 of damage with a 10% deductible: payout €9,000.
Rule of thumb: for your main home (high emotional and financial value) go for high limits and low excesses. For perishable items or items of limited value, accept higher excesses in order to bring the premium down.
Home Insurance for Tenants
People who rent can also protect themselves with policies designed for tenants, focused on:
- Liability towards the landlord for damage to the property
- Theft of the contents
- Liability towards third parties
- Legal protection in disputes with the landlord
Typical premium: €80-€180 a year for an average flat.
Tax Deductions on Home Insurance
Home policies attract only limited tax relief:
- Mortgage life cover (CPI): deductible at 19% up to €530 a year (maximum premium)
- Natural disaster cover attached to a property: deductible at 19% with no premium cap
- Standalone fire cover: NOT deductible
Ways to Save
1. Compare at Least 5 Quotes
Use online comparison sites and contact independent brokers directly. The differences can reach 50-70%.
2. Improve Your Security Measures
A certified alarm, a class 4 reinforced door and approved safes can cut the premium by 15-30%.
3. Family Packages
Some companies offer discounts when the home policy, family liability cover, life and motor insurance are all with the same insurer.
4. Pay Annually
Paying the premium annually rather than in instalments (half-yearly, quarterly) saves 5-10%.
5. Review Your Covers Every Year
Insurers put premiums up automatically. At every renewal, check whether there are better offers around.
FAQ
Is home insurance compulsory?
No, it is not compulsory by law. Explosion + fire cover is compulsory, however, if you have a secured mortgage. For blocks of flats, a catastrophe policy for the common parts is compulsory from 2026.
Can I cancel the policy imposed by the bank?
Yes. You can replace it with an equivalent policy from another company at any time, with no penalty, by giving the bank 60 days notice.
What happens if I underestimate the value of the property?
The “proportional rule” applies: the payout is reduced in proportion to the gap between the real value and the insured value. If the property is worth €200,000 but is insured for €100,000, you receive only 50% of the loss.
Does the policy cover working from home?
Traditional policies cover personal equipment only. Company equipment used for remote working needs a specific extension (€40-€80 a year).
Conclusion
A properly sized home insurance policy costs €250-€700 a year for a standard flat and protects you against costs that can exceed €100,000 in the event of a serious claim. Compared with policies imposed by banks, or with insurers you have not shopped around for, the saving can reach 60%.
To place the cost within the overall budget for buying a home, start from the mortgage simulation with the mortgage payment calculator and add the cost of the policy you choose.