Change-of-ownership insurance: what does it cover?

It does not automatically cover everything discovered after the purchase. Cover depends on the damage, the age of the home, the reports, the policy's exclusions and the level of cover chosen.

That is why you need to compare more than the price. Also look at exclusions, excess, depreciation, the cover period and the difference between standard and extended cover.

In brief

• Change-of-ownership insurance is part of the Danish home inspection scheme (huseftersynsordningen).
• A valid condition report and electrical installation report must be available if the insurance is taken out under the scheme.^[1]
• Standard cover has a statutory minimum. Extended cover varies between insurers.^[2]
• As a general rule, the insurance is aimed at damage that was present at the takeover but was not mentioned, or was clearly described incorrectly, in the reports.
• Matters that are clearly described, ordinary wear and tear, and conditions to be expected given the age of the home are not automatically covered.
• The insurer can make specific exclusions for certain parts of the building or installations based on the reports.^[3]
• The seller must offer to pay an amount equal to at least half the premium on the quote the seller has presented.
• If you choose a more expensive or extended policy, the seller's contribution does not automatically increase.
• The insurance must be taken out before you take over the risk for the home.

What is change-of-ownership insurance?

Change-of-ownership insurance is tied to the physical home you take over.

Under its terms, it can cover hidden physical conditions that:

1. Were present at the takeover
2. Were not described, or were clearly described incorrectly, in the condition report or the electrical installation report
3. Amount to damage, an imminent risk of damage or an installation issue that qualifies for cover
4. Are significantly worse than what you could expect from a comparable intact building of the same age
5. Are not excluded by the policy's general terms or specific exclusions

It is not enough that a condition comes as a surprise to you personally. The assessment also takes account of the home's age, construction method, state of maintenance and the information provided in the sale.

The home inspection scheme in brief

The home inspection scheme is voluntary for the seller.

If the seller wants to use the scheme to limit their ordinary liability for hidden defects and deficiencies, the buyer must, among other things, receive the following before making a binding offer:

• A valid condition report
• A valid electrical installation report
• A quote for change-of-ownership insurance
• A written offer from the seller to pay at least half the premium in the quote presented

The buyer decides whether to take out the insurance.

If you opt out, that does not mean the seller's ordinary liability automatically continues unchanged. If the seller has met the conditions of the home inspection scheme, the seller may still be released from a large part of their ordinary liability.^[1]

What can standard cover include?

Standard cover follows a statutory minimum. The specific claim is still assessed against the policy and the facts of the case.^[3]

Physical damage to the building

This can be breakage, leaks, deformation, weakening, cracks, destruction or other physical conditions that noticeably reduce the building's value or usability compared with a comparable intact building.

Imminent risk of damage

A complete failure does not always have to have happened yet. A physical condition can be relevant if there is an imminent risk of damage that qualifies for cover.

Plumbing installations

Under the minimum terms, standard cover can include missing or significantly reduced function and the legalisation of illegal plumbing installations in and under the insured building up to the outside of the foundations, if the issue was not disclosed as required.^[2]

Electrical installations

Missing or reduced function and illegal electrical installations can be covered under the terms when the issue is not correctly described in the electrical installation report.

Certain consequential costs

The minimum cover can also include certain additional costs, for example necessary consequential costs of repairs, technical assistance and temporary rehousing within the limits of the terms.

This does not mean that every issue within these categories gives full compensation. The minimum claim threshold, excess, depreciation, exclusions and documentation can affect the outcome.

What is typically not covered?

Change-of-ownership insurance is not a maintenance agreement or a guarantee for the whole house.

The following is typically not automatically covered:

• Matters clearly described in the condition report or the electrical installation report
• Matters you knew about in some other way before the purchase
• Ordinary wear and tear
• Conditions to be expected in a building of the same type and age
• Cosmetic issues without relevant physical damage
• Lack of maintenance after the takeover
• New damage that occurs after the takeover
• Movable property and ordinary contents
• Matters that fall below the minimum claim threshold
• Matters covered by a specific policy exclusion
• Changes and work you have carried out yourself after the purchase
• Wishes for modernisation, even if an older solution still works

Some matters can be covered by extended cover but not by standard cover. It depends on the specific product.

Known damage and incorrectly described damage

There is a difference between a matter being described correctly and it only being mentioned superficially.

Cover is not decided solely by whether a particular word appears in the report. The insurer looks at the whole description, the location, the extent and the other information in the sale.

Standard versus extended cover

Standard cover has a statutory minimum. Extended cover is an additional product, and its content varies between insurers.^[2]

The words standard and extended are not enough to compare two quotes. Read what is actually included and what the insurer has excluded.

5 or 10 years of cover

Change-of-ownership insurance is typically offered with a cover period of 5 or 10 years.

A longer period can make it possible to report matters that qualify for cover and only become apparent later. It does not change the requirement that the damage or its cause must have been present at the takeover.

Also compare:

• Whether all parts of the cover apply for the whole period
• Whether the excess is calculated per claim
• Whether there is an overall excess
• Whether the compensation cap applies in total for the period
• Whether depreciation changes the compensation over time
• Which notification deadlines apply

Excess, minimum claim threshold and depreciation

Three different mechanisms can reduce the compensation.

Minimum claim threshold

As a starting point, a matter must exceed the applicable minimum threshold to trigger compensation. The amount is adjusted, so you should read the current quote rather than rely on an older amount found online.

Excess

The excess is the part of a covered claim you pay yourself. The quote must show the excess per claim and any overall limits.

Depreciation

The compensation can be reduced according to depreciation tables for certain parts of the building. Age and expected lifespan can therefore mean that you do not get the full cost of a brand new building component reimbursed.

Example

An older floor is damaged as a result of hidden damage that qualifies for cover.

The insurer may first assess:

1. Whether the cause and the damage are covered
2. What a relevant repair costs
3. Whether age-related depreciation should be applied
4. Which excess should be deducted

The compensation is therefore not necessarily equal to the tradesperson's total price.

Exclusions can matter more than the price

Based on the reports, the insurer can make exclusions for certain parts of the building or installations.^[3]

Examples could be:

• The basement floors and walls
• A particular bathroom
• The roof structure
• An extension without sufficient access
• A question mark in the condition report
• Installations that could not be inspected

A cheap quote with a broad exclusion can give less real protection than a more expensive quote with fewer exclusions.

Read the exact wording. An exclusion for a whole part of the building can reach further than the individual problem that triggered it.

What does the seller have to pay?

The seller obtains a quote for change-of-ownership insurance and, if the home inspection scheme is used, must offer in writing to pay at least half the premium in the quote presented.^[1]

Simplified example

The seller's quote costs 24.000 kr.

In this example, the seller's contribution is 12.000 kr.

The example is simplified. The purchase agreement, the insurance quote and the actual settlement must be checked.

The seller does not automatically have to pay half of a more expensive policy you choose yourself.

Can you choose a different insurer?

Yes.

You are not tied to the insurer in the seller's quote. You can obtain and choose a different quote, provided it can be taken out on the basis of the reports and before the deadline.

When you compare, check:

• Whether the other insurer accepts the reports
• Whether the quote has different exclusions
• Whether the cover period is the same
• Whether you are comparing standard or extended cover
• Whether the excess and compensation cap differ
• Whether the seller's contribution can be used as expected

When must the insurance be taken out?

The insurance must be taken out and in force before you take over the risk for the property.

That is not always the same as the formal handover day (overtagelsesdag).

If you get the right of disposal (dispositionsret) and access before the handover, the risk may pass to you earlier under the purchase agreement (købsaftale). The insurance start date must therefore match the agreement.

Read the purchase agreement's provisions on:

• Handover day
• Date of right of disposal
• Transfer of risk
• Insurance
• Handover of keys

Get the start date confirmed in writing in the policy.

How to compare quotes

Use the same checklist for every quote.

Compare the quotes alongside the condition report. That is often where you can see why the insurers make different exclusions.

Four practical examples

1. Hidden pipe damage

After the takeover, a leak is discovered from a hidden pipe under the floor. There were signs of the damage before the takeover, but the issue was not described in the reports.

This may be relevant for the insurance if the installation issue and the consequential damage meet the policy's conditions.

2. Red-rated damage in the condition report

The report describes a critical leak in the roof. After the purchase, water gets in at the same spot.

The issue was known before the purchase and will normally not be treated as unknown hidden damage.

3. Question mark on a basement wall

The report shows a question mark for discolouration and possible damp. The buyer completes the purchase without further investigation.

The unresolved issue can cause problems for cover, because the risk was made visible before the purchase.

4. Illegal electrical installation

After the takeover, an authorised electrician finds an illegal installation that is not mentioned in the electrical installation report.

The issue may be covered under the minimum terms if the other conditions are met.

The examples show how it works, not a promise of cover. The insurer assesses the specific documentation and policy.

Does it cover mould?

It can, but not always.

Among other things, the insurer will look at:

• Whether there is physical damage or a risk that qualifies for cover
• What caused the mould
• Whether the cause was present at the takeover
• Whether signs or risk were described in the reports
• Whether the issue is to be expected given the building's age and construction
• Whether the policy has an exclusion
• Whether the mould concerns the building or the contents

Mould is a symptom. Cover often depends on the underlying cause and the wording of the policy.

Does it cover oil tanks and soil contamination?

Standard cover is not a general environmental insurance for the whole plot.

Some extended products can include certain contamination issues, often requiring an order from the authorities and with special amount limits. The terms vary considerably.

So also read the guide on oil tanks and soil contamination when buying a home.

If you discover possible damage

Documentation and timing matter.

1. Take photos and video
2. Note the date, location and how it develops
3. Find the condition report, electrical installation report, purchase agreement and policy
4. Take reasonable steps to limit acute damage
5. Report the issue following the insurer's procedure
6. Hold off on major repairs or demolition until the insurer has had the chance to inspect the issue
7. Keep damaged parts, invoices and correspondence if it is practically possible

You have a duty to limit damage. That does not mean you must carry out a permanent repair before the insurer has made its decision.

Read the practical checklist in the guide on the first 14 days after the handover.

If you disagree with the insurer

Start by asking for a written decision with reference to:

• The relevant policy provision
• The information in the reports
• The technical assessment
• Any depreciation
• The excess and the calculation

If the disagreement continues, the insurer's complaints officer and then the Danish Insurance Complaints Board (Ankenævnet for Forsikring) may be relevant options, if the case meets the board's conditions.

A dispute can be about more than cover. It may also be necessary to clarify whether a possible claim should be directed at the seller, the building expert who prepared the report (bygningssagkyndig), a tradesperson or another party.

How it works with the condition report

The condition report and the insurance must be read together.

• The report shows what was known or visible before the purchase
• Question marks show issues that should be clarified
• The insurance exclusions can be based directly on the report
• A clearly incorrect description can have a different significance from correctly described damage
• Areas that were not inspected can lead to exclusions

Read the guide Condition report: how to read it as a buyer.

If the reports contain unresolved issues, you can also have them reviewed by a professional. See the guide on using a building surveyor when buying a home.

Checklist before you choose

The documents

• Is the condition report valid?
• Is the electrical installation report valid?
• Have you read the seller's disclosure statement?
• Have question marks and uninspected areas been clarified?

The quote

• Is the cover standard or extended?
• Does it apply for 5 or 10 years?
• Which buildings are included?
• Which specific exclusions have been written in?
• What is the excess per claim and in total?
• How are the depreciation tables used?
• What is the total compensation cap?

The comparison

• Have you compared more than the premium?
• Do the quotes cover the same matters?
• Has the seller's contribution been calculated correctly?
• Does the start date match the transfer of risk?

The purchase agreement

• Are the quote and the seller's payment stated correctly?
• Is there time to obtain other quotes?
• Are the relevant conditions and deadlines in place?

Read more about deadlines and conditions in the guide on lawyer and bank conditions.

Common misunderstandings

The insurance covers everything not in the report

No. The issue must meet the policy's conditions for cover and must not be excluded.

The seller always pays half of the insurance I choose

No. The seller's contribution is based on half the premium in the seller's quote.

Extended cover is the same at every insurer

No. The extensions vary. Compare the terms point by point.

10 years of cover means new damage is covered for 10 years

No. As a starting point, the damage or its cause must have been present at the takeover.

No comment in the report means automatic cover

No. Age, what can be expected, the minimum claim threshold, exclusions and other terms also matter.

A question mark is unknown damage

Not in the ordinary sense. The report has specifically drawn your attention to possible damage that should be investigated.

The insurance always pays for a brand new building component

No. Depreciation and excess can reduce the compensation.

Change-of-ownership insurance and home insurance are the same

No. Change-of-ownership insurance concerns certain matters that were present at the takeover. Home insurance (husforsikring) covers events and damage during your ownership according to its terms.

In short

Change-of-ownership insurance should be assessed as an overall package of cover, reports, exclusions, excess, depreciation and cover period.

The cheapest policy is not necessarily the one that best fits the home's specific risks. Read the exclusions in particular, and clarify question marks or inaccessible parts of the building before the purchase becomes final.

The premium and any possible work belong in your overall finances. You can bring together the purchase price, your own money, transaction costs and a buffer in the Purchase Budget calculator.

Also read the guide on what it costs to buy a house.

BoligKlar gives you a second pair of eyes and an overview. The insurer assesses the specific cover, and legal claims depend on the documents and the individual sale.

Frequently asked questions