Who pays building insurance under a usufruct (Nießbrauch) in Germany?
In short
Under a usufruct (Nießbrauch) in Germany, the usufructuary, the person with the right to use the property, pays the building insurance for as long as the usufruct lasts. Section 1045 BGB requires them to insure against fire and other accidents, but the payout belongs to the owner. If a policy already exists, they pay its premiums. For a typical house that is about EUR 400 to 500 a year.
What German building insurance taken over by the usufructuary costs.
Example
Typical range
Family house 100 square metres, basic cover
about EUR 90 to 150 a year
Typical family house with good cover
about EUR 400 to 500 a year
Older house or exposed location
about EUR 800 to 1,000 a year or more
Guide values as of October 2026 from published price overviews.
Premiums depend on location, year of construction, living area and natural hazards cover.
Worked example
Parents transfer the house to their daughter and keep the usufruct
The parents still live there. The contract says nothing about insurance.
Premium of the existing policy
about EUR 450 a year
Who pays under section 1045(2) BGB
the parents as usufructuaries
Payout after a fire
to the daughter as owner
Tax deductible
no, the parents live there
The parents keep paying, and the daughter must be registered with the insurer as owner.
What German law says about usufruct and insurance
Section 1045(1) of the German Civil Code (BGB) says the usufructuary must insure the property for the duration of the usufruct against fire and other accidents at their own cost, if that is in line with proper management. For a residential house, building insurance is standard, so the duty practically always applies.
If the house is already insured, for example because parents keep the policy when they transfer the house to their children, section 1045(2) BGB makes the usufructuary bear the premiums, to the extent they would have to insure anyway. No second policy is needed.
Who gets the money after a loss
The insurance must be set up so that the claim against the insurer belongs to the owner. If the house burns down, the owner receives the payout even though the usufructuary paid the premiums. That is intended, because the building belongs to the owner.
In practice the usufructuary can be the policyholder, but the owner must be named as the person entitled. If you continue an old policy, tell the insurer about the roles so there is no doubt after a loss.
Question
Statutory rule under usufruct
Who takes out the building insurance?
the usufructuary, at own cost
Who receives the payout?
the owner
Who pays an existing policy?
the usufructuary while the usufruct lasts
Who pays routine repairs?
the usufructuary, as ordinary upkeep
Who pays major renewals?
not the usufructuary unless agreed
Agreeing something different in the usufruct contract
The BGB rules apply unless something else is agreed. In family transfers it is common to state that the usufructuary bears all costs and charges, including extraordinary ones. Equally, the owner may take over the insurance, for example when the usufructuary has a small pension.
Write down explicitly who pays the building insurance, who is the policyholder and who must agree to premium increases. That avoids disputes when premiums rise sharply after claims or indexation.
Tax for usufructuary and owner
If the usufructuary lives in the house, the premium is a private cost and not deductible, as with any owner occupied home. If the usufructuary lets the house, they receive the rent, and the premiums they bear are generally their deductible expenses.
If the owner pays the insurance voluntarily while the usufructuary keeps the income, the owner usually cannot deduct it because there is no income to set it against. Clarify the split with a tax adviser before signing.
Typical gaps after a transfer with usufruct
After the change of ownership the old policy often stays untouched. Check the sum insured, natural hazards cover (Elementarschutz) and gross negligence, because the usufructuary is liable to the owner if they fail their insurance duty and the house turns out underinsured.
Building owner's liability belongs here too if the house is let or not lived in by the usufructuary. For an owner occupied family home, personal liability insurance usually covers it.
Step by step
Read the usufruct agreement for rules on costs and insurance.
Find the existing policy and report the change of owner.
Decide who is policyholder and who pays.
Check sum insured, natural hazards and gross negligence.
If the house is let, clarify the tax treatment.
Checklist
Owner named as entitled person in the policy
Clear insurance clause in the usufruct agreement
Sum insured matches current rebuilding value
Natural hazards cover checked
Liability cover for the house clarified
Common mistakes
Not informing the insurer after the transfer
Assuming the new owner automatically pays
Cancelling the policy because the house now belongs to the children
Questions and answers
Frequently asked
Does the owner have to pay building insurance during a usufruct?
By law no, the usufructuary does.
The usufruct agreement can say otherwise.
Who receives the money after a fire?
The owner.
Section 1045 BGB requires the policy to be set up so the claim belongs to them.
Does this also apply to a right of residence (Wohnrecht)?
No, section 1045 BGB concerns usufruct.
With a right of residence the owner usually pays unless agreed otherwise.
Must the usufructuary pay major repairs?
Under section 1041 BGB only ordinary upkeep.
Major renewals only if the contract says so.
Can the usufructuary deduct the premium?
If they let the house, generally yes as an expense.
