How to Avoid Underinsurance or Overinsurance

November 3, 2022
  1. Underinsurance: definition and consequences
  2. Overinsurance: definition and consequences
  3. You need to take out this insurance
  4. You can take out these insurances
  5. Possible double coverage or gaps
  6. Properly insured with the insurance check
  7. Talk to our insurance experts

Insurance premiums are the second largest expense item after housing costs in almost all budgets. Therefore, homeowners should regularly review their insurance policies and adjust their insurance coverage if necessary. Underinsurance or overinsurance can be expensive. If you're overinsured, you're paying premiums for services you don't need - and if you're underinsured, you'll bear part of the loss yourself in the event of a claim. So, how does one recognize costly overlaps or dangerous gaps?

Underinsurance: definition and consequences

Underinsurance mostly occurs within the household insurance. If your household contents are worth 100,000 francs but you only insure CHF 80,000 francs of it, you are underinsured. In the event of a claim, the insurance company would reduce its benefits proportionally and, in this example, would only cover 80 percent of the cost of the new purchase. For example, 3,200 instead of 4,000 francs for the television. Underinsurance can occur over time if you buy new furniture and your household goods are worth more than they were when you signed the contract. That's why you should review your coverage regularly.

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Underinsurance can be expensive in the event of a claim. You may save a few francs in premium, but only receive part of the cost of the new purchase from the insurance company.

Overinsurance: definition and consequences

For example, if you insure your household goods for 120,000 francs that are only worth 100,000 francs, you will pay the premium for 120,000 francs but receive a maximum of 100,000 francs in the event of a claim. Underinsurance, like overinsurance, can also occur over the years if you sell valuable jewelry, for example. But you can also be overinsured because you have taken out superfluous insurance policies or multiple coverages and are therefore paying too much in insurance premiums.


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You need to take out this insurance

In Switzerland (with the exception of the cantons of Geneva, Ticino and Valais), only buildings insurance is mandatory. In Obwalden, Schwyz and Uri, as well as in the Principality of Liechtenstein, buildings insurance can be taken out with any private insurance company; in all other cantons, it can only be taken out with the cantonal buildings insurance company. It covers fire, fire or smoke damage and natural hazards such as landslides, rockfalls, hail, floods, avalanches, rain, snow and melt water, snow pressure, snow slides, falling rocks or gale-force winds and covers damage caused by burst water pipes or water backups from the sewage system.

Houzy Hint


In our article «Gebäudeversicherung: Was ist gedeckt?» you will learn which types of damage are covered and how you can enhance the building insurance with additional insurances if you want to.

You can take out these insurances

How many and which additional insurances you take out depends on your need for security. These five voluntary insurances are worth considering, depending on your situation:

  • Earthquake insurance makes sense if you live in a region at risk and coverage is excluded in your buildings insurance. It covers damage after earthquakes such as cracks in the masonry, damage to the statics or burst water pipes.
  • Building service insurance covers damage to heating, kitchen appliances, air conditioning, photovoltaic system, pool, sauna, tumble dryer or washing machine.
  • Home contents insurance covers theft, natural hazards, fire, glass breakage and water damage. Household contents include everything you would take with you if you moved. That means all furniture and clothes, but also the bike in the garage or the skis in the attic.
  • Term life insurance steps in if the insured person can no longer work (disability) or dies (death). It ensures that the surviving dependents can bear the mortgage after the stroke of fate and remain living in your home.
  • Water insurance covers water damage caused by backed-up sewage, groundwater, broken pipes or rainwater that is not covered by buildings insurance. According to Baloise, these were the most frequent claims in the last ten years.

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Good to know

Condominium owners are liable for personal injury and property damage and should therefore take out building liability insurance. In «Insurances For Condominium: What You Should Know» read more about the special features for condominium owners.

Houzy Hint


In «Hauskauf: Welche Versicherungen brauche ich?» learn everything future homeowners should know about insurance before buying or building a home.

Possible double coverage or gaps

The greatest risk of overlap or double coverage is with buildings and contents insurance. As a rule, building insurance covers damage to the building and household insurance covers damage to household contents. However, certain risks may be covered under both policies. Three examples:

  • Theft: In the event of a burglary, the building and household insurance cover damage to the building. If the sum insured of the household insurance is low, you should report damages to the building insurance, otherwise you might be underinsured and have to pay a part yourself.
  • Building liability: With most insurance companies, building liability for houses with up to three apartments is automatically insured in your personal liability if you occupy one apartment yourself. You would therefore not have to take out and pay for building liability insurance.
  • Glass breakage: You can insure building glazing such as bathtubs, glass ceramic hobs or lavabos in the household insurance or in the building insurance as "building glass". Make sure that you do not insure the risk in both insurances and pay premium twice.

Properly insured with the insurance check

Sometimes the benefits overlap, sometimes there are gaps between individual insurances. With our insurance check, you can find out in two minutes which insurances are mandatory, recommendable, worth checking or not necessary for your house or apartment. All you have to do is briefly describe your property and living situation and you will immediately receive the result. Thanks to our insurance check, you optimize your insurance coverage, are properly insured and save premiums for insurances that you may not even need.

Talk to our insurance experts

The young family with three children has different needs than the 40-year-old single or the married couple whose children have already left home. Some need more security, others can afford more risk. That is why there is no one-size-fits-all solution for all homeowners. Our insurance experts will advise you competently and personally on all insurance issues, from construction insurance or building insurance to household insurance or liability insurance. They will clarify whether your insurance cover is suitable for you and recommend sensible solutions. So that a claim does not upset your financial situation.

Want to know if you have properly insured your home or apartment? Nothing could be simpler: with Houzy's insurance check, you can find dangerous undercoverage or costly overcoverage. If you discover double coverage or a gap, you can request a no-obligation quote from our insurance partner Baloise with just a few details.

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