Insurance aimed for private households provides protection for both family members and property. With the exception of statutory motor liability insurance, personal insurances are voluntary. However, they may sometimes be required – for example, many landlords require tenants to have home insurance.
Voluntary insurance products differ by product and company, both in price and coverage. It is always worth comparing insurances to find the most suitable one.
Property valuation
Depending on the policy, the insured value of a property can be based on the customer’s own valuation or calculated from a specific factor (for example, the maximum compensation of home insurance is usually based on the home’s floor area). Buildings are usually insured for their full value, while movable property is insured at the maximum amount of compensation. The value of property depreciates with time: in the event of loss or damage, the insurer deducts age reduction from the insured item’s replacement value and pays out compensation based on the remaining value of the item.
Insurances for households
Private households’ and individuals’ insurances encompass property insurance and personal insurance policies. These include accident and health insurance, life insurance and disability insurance, home insurance, motor vehicle insurance, boat insurance, travel insurance, animal insurance and forest insurance.
Home insurance
Home insurance covers the home and movable property of private households. Movable property refers to ordinary items intended for private household use, such as furniture, appliances, clothing, and sports and hobby equipment. Home insurance can be taken out at different levels of coverage: the insurance can be limited, covering only the damage caused by certain events specified in the policy (e.g. fire and natural phenomena), or extensive, in which case it also covers sudden and unexpected losses and breakages. It is advisable to include liability and legal expenses insurance in the home insurance policy.
Home insurance includes a maximum compensation for certain item groups, such as collectibles and valuables, work tools, and fixtures and fittings in rental or shared housing. There may also be an upper limit for the total compensation amount.
Boat insurance
Boat insurance provides cover for privately used boats. “Boat” refers to the whole vessel, including the hull, main engine, rigging and sails in a sailboat, as well as equipment and fixed devices belonging to the boat. Boat insurance covers damage to the boat and its equipment to the extent of the chosen coverage.
Including boat-specific liability and legal expenses insurance in the boat insurance contract is recommended. Boat liability insurance covers personal or property damage caused to others by the insured’s negligence or carelessness, for which the insured is liable as a private individual. Boat legal expenses insurance allows the boat-owner to seek legal assistance if necessary. Boat legal expenses insurance covers matters related to the operation and ownership of a privately used boat. The insurance can be used in disputes, petitions and criminal matters, for example, in a prosecution concerning carelessness in water traffic. The insurance does not cover prosecution for offences related to steering a vessel while intoxicated or aggravated endangering of water traffic.
Animal insurance
Animal insurance is intended as financial protection for the owner (private individual or company) in case the animal falls ill, is injured, or is lost. Animal insurance often includes liability insurance, which covers personal and property damage caused by the animal to third parties.
Animal life insurance. When losing an animal, the owner loses not only a friend but also suffers a financial loss. The purpose of life insurance is to enable the acquisition of a new, similar animal. The amount of animal life insurance should correspond to the animal’s current market value (fair value).
Animal veterinary expense insurance. Getting the correct diagnosis for a sick animal may require several veterinary visits, and the combined cost of various examinations and treatments can be quite high. With the right veterinary expense insurance, the animal can quickly access sufficient examinations.
Veterinary expense insurance typically covers the costs of examinations and treatments for various fractures and wounds performed by a veterinarian, as well as medicines prescribed for their follow-up treatment. Veterinary expense insurance always includes a deductible, which is specified in the insurance policy.
Forest insurance
Forest is valuable property worth taking good care of. Good forest management helps keep the forest in good condition, but sometimes the forest suffers various damages. The most typical causes of damage are storms, snow, rodents, and forest fires.
The object of forest insurance is the stand, timber, seedlings, logging residues intended for bioenergy, and forest tree seedlings according to the chosen level of coverage. The insurance premium is based on the area of productive forest land on the insured property and the location of the forest.
Forest insurance can also include liability and legal expenses insurance. Liability insurance covers personal and property damage caused to third parties during forest management or timber harvesting work in one’s own forest. Legal expenses insurance covers costs incurred from using legal assistance in disputes, criminal matters or petitions related to the forest.
Private individual’s liability and legal expenses insurance
Usually, home insurance also includes private individual’s liability and legal expenses insurance.
Liability insurance covers bodily injury and material damage that the insured has caused to a third party. The damage must be compensable under tort law. The most typical damages are those caused by children and damages caused in parking lots by means other than a car.
Legal expenses insurance covers the insured’s legal and court costs incurred from using legal counsel in disputes, criminal cases and petitions (non-contentious civil cases). Legal expenses insurance can be included, for example, in home insurance, trade union insurance, or some other insurance.
Compensation for legal costs under legal expenses insurance must be applied for in advance, before the costs are incurred. Legal expenses insurance is primary over public legal aid, but under certain conditions, public legal aid can be granted to cover the deductible of legal expenses insurance.
Private insurances of the person
Personal risks can be covered in various ways. The most common personal insurances taken out by private individuals are individual pension insurance, life insurance, disability insurance, health insurance and travel insurance.
Life and disability insurance
Life and disability insurance can secure the family’s financial situation in the event of death or work disability of the insured. It’s wise to take out such insurances especially if the family’s livelihood depends on the income of both spouses, or if the household has a mortgage or other ongoing financial obligations requiring stable income.
Life insurance can be taken out either with fixed or decreasing cover. In fixed cover, the premium increases annually but the benefit payable upon death stays unchanged. In decreasing cover, the premium remains the same but the amount of death benefit decreases annually.
Disability insurance can ensure livelihood if one becomes incapable to work due to illness or accident. Disability coverage can be taken for short-term disability, in which case compensation is paid as a daily allowance, or for permanent disability, in which case compensation is paid according to the degree of disability.
Both life and disability insurance require a health declaration from the insured.
Accident and medical expenses insurance
Accident and medical expenses insurance can supplement the protection provided by statutory social security in various situations. These insurances cover costs arising from accidents or illnesses up to an agreed amount. Accident insurance may also include lump-sum compensation for permanent disability or death resulting from an accident. Accident and medical expenses insurances are sometimes offered as optional covers under a comprehensive health insurance policy. The coverage and naming of products vary between insurers, and ‘medical expenses insurance’ and ‘health insurance’ are frequently used to refer to similar products.
Accident insurance is a voluntary personal insurance that compensates for financial losses. The insurance can include compensation for medical expenses incurred from an accident, disability compensation, temporary or permanent impairment compensation, and death benefit. An accident is defined as a sudden event caused by an external factor, occurring against the insured’s will, resulting in bodily injury.
Medical expenses insurance covers the costs of diagnosing and treating illnesses. The voluntary insurance can be taken out for an adult or a child, including an unborn child. Companies can also choose to insure their employees with medical expenses insurance. Granting personal medical expenses insurance requires a health declaration. As with most other insurances, the policyholder can choose between different levels of cover when taking out the insurance. There are various of medical expenses insurance policies and products, and the illnesses they cover may vary.
Travel and luggage insurance
Travel insurance provides cover for the traveller and their luggage. A policy can include both or just one of these covers. Travel insurance covers, for example, the treatment costs of an illness or accident that occurred during travel, medically necessary repatriation approved in advance by the insurance company, repatriation or funeral costs incurred abroad in the event of death, trip cancellation and interruption in situations defined in the insurance terms, and in some cases, missed departure.
Luggage insurance covers the loss, theft or breakage of luggage and the purchase of essential items if luggage is delayed. Luggage insurance is household-specific. Luggage insurance can also be added to home insurance.
Travel insurance can be continuous or trip-specific. Continuous insurance is usually valid for 3 months or 45 days for a single trip. Travel insurance policies usually specify a minimum distance from home that must be travelled before the cover becomes valid.
Motor vehicle insurance
Motor liability insurance is a statutory insurance that must be valid for nearly all motorised vehicles, trailers registered for road use, and some mobility devices and motorised bicycles. Motor liability insurance is a prerequisite for registration. When a vehicle is acquired, it must be insured without delay.
If the vehicle has valid insurance when its ownership or right of possession changes, a new insurance must be taken out within 7 days. If the vehicle is uninsured when it changes owner, the insurance must be taken out on the day of purchase.
The insurance obligation is extensive to ensure that no one is left without compensation in the event of an accident. Motor liability insurance compensates for the personal injuries and material damages of the guiltless party of the road accident. It also compensates for the injuries of the driver and other passengers of the vehicle that caused the accident. The motor liability insurance does not compensate for the damage to the vehicle of the party who was guilty of the accident. Compensation is determined according to the Motor Liability Insurance Act.
Voluntary motor vehicle insurance – also known as comprehensive insurance or kasko – supplements statutory motor insurance by providing additional cover for the insured vehicle. For example, it can compensate for damage suffered in a parking area or as a result of vandalism, covering property damage to the vehicle and its standard equipment to the extent specified in the policy terms. It can also cover other costs specified in the terms. Depending on the scope of coverage, comprehensive insurance can cover material damage that the policyholder’s own vehicle suffered in an accident caused by the policyholder, which statutory motor liability insurance does not cover.
The Finnish Motor Insurers’ Centre (LVK) is a cooperative body of motor insurance companies operating in Finland. It carries out diverse road safety development work and maintains the activities of road accident investigation boards.
Summary and key terms
Common insurances for private households and individuals encompass property insurance and personal insurance policies. These include accident and health insurance, life insurance and disability insurance, home insurance, vehicle insurance, boat insurance, travel insurance, animal insurance and forest insurance. These can supplement statutory social security. Property insurance for private individuals is usually handled with home insurance, the scope and coverage of which can vary. Home insurance may also include liability and legal expenses insurance. Statutory motor liability insurance can be supplemented with voluntary motor vehicle insurance (comprehensive insurance) for additional coverage.
Replacement value (replacement cost): The amount of money needed to replace the damaged property with a corresponding new item.
Current value (market value, actual cash value): The value of the damaged property immediately before damage. The compensation is determined taking into account wear and tear, use, age and similar factors that depreciate the property.
Depreciation: Percentages defined in the insurance terms that are deducted from the compensation based on the age of the damaged property. Depreciation is subtracted from the replacement value of the property.
Deductible: The amount that is covered by the policyholder. Damages smaller than this are not compensated from the insurance. Choosing a higher deductible lowers the insurance premium.