Some of the major banks in Russia have begun to require that mortgage insurance policies for homes also cover the risk of falling aircraft, including unmanned aerial vehicles and their parts. The All-Russian Union of Insurers (VSU) announced the change.
The new requirement concerns property insurance for the mortgaged apartment or house. In addition to traditional risks such as fire and flood, some credit institutions are now adding falling aircraft. The VSU specifies that the insurance amount for the property usually remains common for all risks included in the contract.
The change is related to the growing risk of damage to residential buildings as a result of drone attacks. According to information from “Kommersant“, confirmed by insurance market participants, the practice is currently most typical for large banks and for collateral in border and other vulnerable Russian regions. Following them, regional credit institutions are also beginning to introduce similar conditions.
Drones are not always recorded as a separate risk
However, there is an important peculiarity. Insurers do not always explicitly use the wording “UAV attack“. The coverage can be recorded as a risk of “falling aircraft and their parts“, and in other cases, damage related to drones falls into categories such as terrorism and sabotage.
The industry standard of the Supreme Court already provides for insurance of mortgaged property against falling aircraft and their parts, without distinguishing whether the machine is manned or unmanned. However, a terrorist act is only covered when this is explicitly provided for in the specific insurance contract.
This means that in the event of damage to a home from a fallen drone or its debris, the specific terms of the policy will be of decisive importance.
For example, “Rosgosstrakh“ indicates that in their mortgage insurance, the fall of aircraft and their parts is already included in the basic coverage and is taken into account in the tariff. In the case of damage from a fallen drone, the company considers the case precisely within the framework of this risk.
Banks determine what the policy should cover
Insuring the pledged real estate is mandatory for mortgage lending in Russia, but the specific set of risks covered is determined by the requirements of the respective bank. Therefore, if the lender stipulates coverage against aircraft crashes, the borrower must have an appropriate policy.
The market is already reacting to the new situation. Some insurers include such coverage in their standard products, while others treat it separately or tie it to the risks of terrorism and sabotage.
The trend shows how the ongoing war in Ukraine and the increasing use of drones are starting to change not only the assessment of risk in Russia, but also the terms of common financial products such as mortgage loans and property insurance.
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