The amount written in the policy is not the ceiling of the payout. It is the ratio by which your payout will be calculated.
Oren called me in the evening, from his car, from the parking spot at his house. He didn't go inside.
“Ilan, look at something for me. I think they're playing me.”
Oren is fifty-one, the owner of a small logistics company in the Sharon. He bought two apartments in Athens, one in 2021 in Kypseli, a second in 2023 in Pangrati. He didn't get carried away there. He flew to Greece four times before the first signing, checked the registration, hired a Greek accountant, opened a local bank account, got a tax number, and has paid the Greek property tax on time ever since. When he talks about his deals, he speaks with the quiet of someone who did his homework.
In February there was a fire in the Kypseli apartment. An electrical fault in the kitchen, in the morning hours. The tenants got out safely. The fire destroyed the kitchen, the hallway and part of a bedroom, and left smoke and electrical damage throughout the apartment. The Greek contractor's quote for restoration: sixty-two thousand euros.
Oren's policy stated a sum insured of sixty thousand euros.
He knew that number very well, because he was the one who chose it. In 2021, when he bought, the Greek agent asked him how much he wanted to insure for. Oren thought about it for five minutes. He had paid a hundred and forty thousand euros for the apartment, but the land doesn't burn, after all. To rebuild an apartment like that? Sixty thousand. And the premium at sixty thousand was pleasantly low.
Since then he had renovated for thirty-five thousand euros. Since then construction prices in Athens had risen. On the morning of the fire the apartment was worth about a hundred and eighty-five thousand euros.
The letter from the insurance company arrived six weeks later. 19,400 euros.
Oren was sure it was a mistake. Then he was sure it was a trick. So he called me.
The next day the local partner referred me to the Greek Insurance Contract Law, Article 17. It says something very simple and no less brutal: if the value you declared when the policy was concluded is lower than the property's true value at the time of the loss, the insurer is liable only for the proportional part of the damage.
Oren insured a third of the apartment. So he received a third of the damage.
Not a third of sixty thousand. A third of sixty-two thousand.
This is the point almost every Israeli investor misses, and I see it again and again: we read the sum insured as a ceiling. How much, at most, you can receive. In Oren's case that was true in only one scenario; had the apartment been wiped out completely, he really would have received sixty thousand. But in any loss smaller than that, and most losses are smaller than that, the number wasn't a ceiling. It was a multiplier.
And then there was a second bite. Article 16 of the same law provides that, absent other agreement in writing, compensation is calculated by the current value of the items, that is, their value reduced by wear, not what it would cost to buy them new. The nine-year-old kitchen was compensated as a nine-year-old kitchen.
I think about this a lot. The question that was put to Oren in Greek, “how much would you like to insure for,” sounds like a question about budget. It isn't. It is a question about a declaration. You declare what the property is worth, and from that moment every future claim in the life of the policy is measured against that declaration. An agent sitting across from you in Israel might have stopped you. An agent who sells a policy for a hundred-and-something euros a year, by email, stops no one.
And that number stayed there for five years. Policies renew themselves. The renewal notice arrives by email, in Greek, and gets filed in a folder.
There wasn't much I could do. Article 17 is not a clause in the policy that can be attacked as an unfair term, it is the law itself. Oren took the nineteen thousand euros and financed the rest out of pocket. The apartment stood empty for seven months.
What we did do: a new policy, a sum insured set by the cost of rebuilding the built area and not by what he paid at the time, and explicit coverage for earthquake, fire and flood. Along the way he learned something else. Since 2024 the Greek tax authority has granted a discount on the annual property tax for insured apartments, twenty percent for an apartment whose value for tax purposes is up to half a million euros. But on one condition: the policy must cover the full cost of rebuilding, which the state set for 2026 at nine hundred euros per square meter. A policy that covers less earns nothing.
In other words, the Greek state is perfectly aware of the underinsurance problem. It just didn't bother to tell Oren.
He said to me at the end: “I paid premiums for five years on a feeling.”
That is more or less what happened.
The question I would ask in your place
- The amount written in my policy - who set it, when, and by what calculation?
- If the property is damaged tomorrow to half its value, how much do I expect to receive, and where exactly in the policy does it say that this is what I will receive?
- When did someone last check that number against the cost of rebuilding today, and not against what I paid back then?
Five minutes with the policy, once a year, is the difference between a third and the full amount.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית