Builder's Legal Protection Insurance: big, small or not at all?

Hello everyone, we are building with Fertighaus Weiss and want to take out a construction legal protection insurance. Do you think this makes sense?

Actually, we only came across two providers that are completely different:

1. a) ARAG construction legal protection insurance

Advantage: price only €158/year, cancellable annually

Disadvantages: only €10,000 lawyer and court costs insured, 6 months waiting period would still have to be acceptable

b) ARAG combo package with private and traffic legal protection for €293 per year

2. a) ÖRAG construction legal protection with €850 (when choosing an ÖRAG lawyer)/€1,000 deductible.

b) ÖRAG construction legal protection insurance with €250/€400 deductible.

Advantages: €100,000 lawyer and court costs insured, no waiting period

Disadvantages: high annual price with a) €1,012 and b) €742, minimum 3 years term; it must run for 5 years so that you can claim damages that appear later for another 3 years.

What do you think?

At ARAG, I consider the 10k to be set too low. In case of emergency, that would be a drop in the bucket. With the 100k from ÖRAG, you can potentially do something. But you have to conclude it with the construction company before signing, if I’m reading that correctly? Isn’t that already too late for you? Over the 3 years, you end up putting around 3000€ into it, which is not a small amount of money. I see only a few practical examples where such insurance really benefits. Maybe in cases where something really comes up within the scope of the warranty, you are truly in the right, but the construction company doesn’t acknowledge it. If problems occur during the construction progress, it is usually a moderate catastrophe, insured or not, as your construction comes to a halt. And once you are in a legal dispute with the construction company, your chances of a friendly settlement are slim. Your financial resources are limited, and it’s difficult to find an alternative company to finish the job. And when it comes to construction companies, there are primarily the good ones, who take care of defects anyway, without a lawyer. And the really black sheep, who fool the clients, rip them off, then let the company go into insolvency with an overflowing mailbox and register a new one under the name of the brother of the brother-in-law. You can win in court there, but all you can do is frame the judgment on the wall. Apart from that: I have been privately insured with ÖRAG legal protection for many years. We rarely had any issues, but when we did, we were advised and represented without any problems. In that regard, I can say nothing bad about them.

We took out the ÖRAG insurance before construction began. The contract runs for 5 years and thus also covers the longest warranty period. The one-time premium is based on the amount of the construction sum. We paid a little more than €2,000. We had already taken advantage of a consultation with a specialist lawyer, and the fee for this was covered by ÖRAG without any deductible. It is basically a risk insurance. In the best case, you don’t need it; in the worst case, you’re glad to have it. We thought that, considering the amounts involved in construction, the €2,000 is actually not that much in relation to what it covers. You just have to be extremely careful and not hide behind this insurance when it’s just about the usual “communication problems” on site. Throwing lawyers around because it won’t cost you anything anymore will certainly not help the project succeed. However, I would claim that since our general contractor knows we have such insurance, he has been somewhat “more customer-friendly” with us. I placed the insurance confirmation as the cover page in my construction folder, and at every site meeting it doesn’t go unnoticed but remains unspoken ;-) I obviously hope not to have to use it actively, especially during the construction phase and also afterwards. I’m happy to write off the €2,000 then.

I had the same consideration about ARAG or ÖRAG. ARAG doesn't really help, because you take the 10k into your own hands when it comes down to it. ÖRAG helps you with the high amounts, where you might no longer dare to proceed legally on your own because the risk of your own costs would be too high. For us, it became ÖRAG – paid 5 years in advance then there's a discount. I also excluded the costs for the land with the note that the land purchase was already 1 year ago and wouldn't be insured anyway. Conclusion is possible after signing but BEFORE construction begins. GD