A first home, a mortgage or renting: what should I insure, and what did the 2025 wildfire teach us?
What the bank asks for and what is your choice, why you can bring cover from another insurer, and why a home insured for half its value is paid at about half. With the lessons of the Limassol wildfire of July 2025.
In short
The bank may require insurance for the loan, but it must also accept another insurer’s policy with equivalent cover. And a home is insured for the cost of rebuilding, not the purchase price: the 2025 fire showed what happens when it is insured for only part of its value.
- Look at the home’s sum insured and roughly compare it with the cost of rebuilding.
- Photograph or film every room and save the files in the cloud.
- Read the policy’s “conditions” (for example a cleared plot) and note the yearly jobs.
- Ask the bank in writing for the level of cover it requires for the loan.
From the series “The questions you are afraid to ask”: questions real people ask, with honest answers.
At a glance
- If the bank requires insurance for the loan, Law 41(I)/2017 obliges it to accept another insurer’s policy when the cover matches the level it proposed.
- Insure the home for the cost of rebuilding, not the purchase price. After the 2025 fire, a home with €290,000 of damage received €190,000, because it was insured for only part of its value.
- Contents that were not declared are not paid, and a condition that was not kept (for example a cleared plot) can lead to a refusal.
- Home insurance is general insurance: here we give information only.
A home is the biggest step
Your first home, or the house you are building on family land, means years of saving and a loan for decades. At the bank you are handed many papers at once, and the insurance feels like one more signature. The fear we hear most is “what happens if something goes wrong and the money is not enough?”. The fire of summer 2025 showed that this fear has a basis, but also that it can be prevented.
What the bank asks for, and what you choose
Law 41(I)/2017 on mortgage loans allows the bank to offer insurance together with the loan, but not to make a product a condition of the loan, unless it proves to the Central Bank that this clearly benefits you. And when the bank requires insurance, it accepts a policy from another insurer if the level of cover matches the one it proposed (Article 12(4)). Ask in writing which level of cover it wants, so you can compare fairly.
The loan’s life cover is life business, and we explain it in the article “The insurance the bank asks for”. Note that for a life policy taken out to secure a loan, the law’s 30-day right of withdrawal may not apply, unless you knew in advance that the loan would not be granted. Read the terms before you sign.
The lesson of the Limassol fire
The wildfire that started on 23 July 2025 burned 124 square kilometres across 17 communities. 706 buildings were damaged: 335 destroyed and 371 partly damaged. Two people lost their lives. The Insurance Association explained what happened to many homes: a home worth €200,000 insured for €100,000 is compensated at 50%. In one example, €290,000 of damage was paid at €190,000. Many policies had not been updated in 20 years.
The state support scheme did not close the gap for everyone: by September 2026, 863 applications had been made, 536 approved and 327 rejected. In a separate “underinsured” category, 78 cases: 29 approved, 33 rejected, 16 pending. Home insurance is not compulsory in Cyprus, but your policy is the part you control. From 2026, premiums of up to €500 for insuring a home against natural disasters are deductible from income.
What went wrong for others — and how to avoid it
- The home was insured for half its value, and half was paid. After the July 2025 fire, many sums insured were years out of date (Cyprus). How to avoid it: insure the cost of rebuilding, not the purchase price or market value; check the figure at every renewal and after any extension or renovation, and ask to see it in writing every year.
- The contents were never declared, so they were not paid. The Insurance Association said so plainly (Cyprus). How to avoid it: a simple list with photos or video of each room and receipts for valuable items, stored in the cloud; declare jewellery, art and electronics separately if the policy asks.
- A policy condition was broken, for example the plot was not cleared. Where the policy requires it, the insurer may refuse (Cyprus). How to avoid it: read the “conditions” and “warranties”, not only what is covered; diarise the yearly jobs (clearing, alarm, locks) and keep dated photos.
- “The state will pay.” In the support scheme after the fire, 327 of 863 applications were rejected (Cyprus). How to avoid it: treat state aid as uncertain and slow; your own policy is what you control.
Your questions, one by one
I’m buying my first flat with a mortgage. What insurance will the bank ask for, and what is optional?
Ask the bank in writing which covers it requires and at what level, because this varies. The law lets the bank offer its own products alongside, not make a product a condition, unless the Central Bank approves. For the insurance it requires, you can bring equivalent cover from another insurer.
Can I use the housing scheme for young people and still choose my own insurance?
We could not confirm the rules of each scheme, so ask the managing authority and the bank in writing. For a mortgage loan, the law says the bank accepts equivalent cover from another insurer. Ask for the required level of cover in writing.
I rent a flat. Do I need insurance for my belongings, or is the landlord’s enough?
The landlord’s insurance usually covers the building and the landlord’s own items, not your belongings. Ask the landlord what it covers and whether the lease asks anything of you. Contents insurance for tenants is general insurance; ask a general-business intermediary or an insurer.
Is earthquake cover included in home insurance, or extra?
This varies from policy to policy. Look explicitly for the word “earthquake” in the covers and the exclusions, and for any separate amount you pay first. If you cannot find it, ask in writing.
We have a 30-year mortgage and two kids. If my husband dies, can I keep the house on my salary?
That depends on whether there is life cover that repays the loan, and on what is left for the family’s living costs. Ask the bank and the insurer in writing: who is insured, for how much, and what happens to the balance. The loan’s life cover is explained in the article “The insurance the bank asks for”.
The bank’s insurance covers only the loan balance. Do I need extra for living costs?
Loan insurance pays off the loan; it does not pay bills, education or daily costs. If someone depends on your income, that is a separate gap. The “Mortgage protection check” tool helps you see it.
I’m building a house on family land. What should be insured during construction?
During construction, what usually matters is site risk, liability to third parties and liability for the people working there. Ask the contractor in writing what insurance they hold, and ask for copies. For any gaps, speak to a general-business intermediary.
My parents are guarantors on our mortgage. Should they be insured too?
A guarantor promises to pay if you do not. That is why the most useful protection for your parents is usually your own cover, so they never have to pay. For what the guarantee means for them, ask a lawyer.
Does home insurance cover damage from a burst pipe or a storm?
There are often covers for water leaks and weather events, but with conditions: for example not for damage that happened gradually, or with an amount you pay first. Read the definitions in your own policy. The guide “What to do if your home is damaged” shows the first steps.
I’m buying a home alone at 38. How much loan cover do I need if nobody depends on me?
As much as the bank requires, and perhaps not much more for life cover. If nobody depends on you, the biggest risk is often falling ill and being unable to pay. That is why income protection is worth a look too.
Our home is in my husband’s name only. What happens if he dies?
Succession law and any will decide that; it is a question for a lawyer. Cyprus has had no estate duty since 2000, but the estate’s administrator files a statement of assets with the tax authorities within six months. Check too who the beneficiary of the loan’s life cover is.
Can I switch my mortgage life cover to a cheaper one after the loan starts?
The law says the bank accepts another insurer’s policy if the cover matches what it asked for. Ask the bank in writing what level it requires, compare, and do not cancel the old one before the bank accepts the new one in writing. A new application also means a new health declaration.
I’m a landlord. If a tenant is injured in my flat, who pays?
That depends on who is liable, and it is a matter of liability insurance, which is general insurance. Check whether your property policy includes owner’s liability and to what limit. Ask your insurer or a general-business intermediary.
Are wildfires covered by home insurance? Last summer the fire came close to our village.
Fire is usually one of the basic covers, but check three things: whether the sum is today’s rebuilding cost, whether you declared the contents, and whether there are conditions such as a cleared plot. Those are exactly what made the difference after the 2025 Limassol fire.
Our loan was sold to a credit-acquiring company. Is my insurance still valid?
The policy is a contract with the insurer, so it usually continues as long as it is paid. Ask both the insurer and the new company in writing who now benefits from the assignment, and keep paying. If a dispute arises, complaint deadlines start from when you became aware of it.
We bought an old stone village house. Will insurers cover it?
Often yes, but they may ask about the condition, the roof, the electrics, or for an inspection. The rebuilding cost of a traditional building can be higher than a new one; work it out properly. Nobody can promise acceptance before assessment.
Do I need the life cover before the bank releases the loan money?
If the bank requires it, it usually wants it in force before release. Start early, as health underwriting can take time. Ask the bank in writing what level it requires, so you can bring equivalent cover from another insurer.
My title deeds haven’t been issued yet. Can I still insure the property?
The risk to the home already exists, with or without a title deed. Ask the insurer which documents it accepts (for example a sale contract deposited at the Land Registry). State the situation honestly on the application.
Questions worth asking
- Which insurance does the bank require, at what level of cover? (in writing)
- What is the home’s sum insured, and how was it worked out?
- Are earthquake, fire and water leaks covered, and with what amount I pay first?
- Which conditions must I keep (plot, alarm, locks)?
What you can do from today
- Ask for your home policy’s current schedule and look at the sum insured.
- Estimate the rebuilding cost roughly with the underinsurance tool.
- Photograph or film every room and store it in the cloud.
- Read the “conditions” and diarise the yearly jobs.
- Ask the bank in writing for the required level of cover for the loan.
General information, not advice. AVRASTRO is not an insurer and does not sell general insurance. For home, travel, boat or liability cover, speak to an intermediary registered for general business or to your insurer; for your own case, the terms of your own policy apply.
Sources
- CyLaw — Law 41(I)/2017 (credit agreements for residential property), Article 12
- CyLaw — Law 38(I)/2016, Article 228 (right of withdrawal from a life policy)
- Cyprus Mail, 3 October 2025 — Property owners objecting to meagre wildfire compensation
- Politis, 1 August 2025 — Insurance Association on underinsured homes after the fire (in Greek)
- Cyprus Mail, 14 September 2026 — Nearly 40% of applications for Limassol fire compensation rejected
- Grant Thornton Cyprus — Cyprus Tax Reform 2026 (January 2026)
- PwC Cyprus — Tax Facts & Figures 2024 (estate duty abolished since 2000)
Read also: What to do if your home is damaged · General insurance: the basics · The insurance the bank asks for · Loan insurance: what to know · Marrying or living together: what changes?
