Natural catastrophe insurance of Iceland
Settlement of damages on destroyed houses
22nd January 2024
The natural catastrophe insurance of Iceland (NTÍ) has worked to settle damages to houses that have suffered total damage in the natural disaster in Grindavík. According to the laws that govern NTÍ, it is stipulated that damages payed by NTÍ must be used to repair or rebuild houses that have been damaged due to natural disasters, on the same lot. NTÍ will grant an exemption from this provision in light of the circumstances.
• Owners will be free to use compensation to buy or build real estate where they choose
• Postponement of payment of damages due to disposal and demolition
Iceland's Natural Disaster Insurance (NTÍ) has worked to settle damages to the houses that have suffered total damage in the natural disaster in Grindavík.
According to the NTÍ governing laws, it is stipulated that they must be used to repair or rebuild houses that have been damaged due to natural disasters, on the same lot.
NTÍ will grant an exemption from this provision in light of the circumstances:
In other words, owners of damaged houses will be allowed to use the compensation to buy or build new real estate where they choose.
Postponement due to disposal and demolition costs
Damage compensation for altjon houses is based on the fire damage assessment of the property in question, and the compensation must cover the replacement value of the property in question, the estimated cost of rebuilding a new property and the demolition and disposal of an older property.
Since there is still uncertainty about how the demolition and disposal of the abandoned properties in Grindavík will be carried out, NTÍ will immediately pay all damages but withhold the estimated cost of disposal and demolition.
That cost is calculated by Húsnæðis- og manvirkjastofnun (HMS) and normally amounts to 8-10% of the property's total fire damage assessment. If the cost of demolition and disposal turns out to be lower than the estimated cost of HMS, the injured party will benefit.
In the ever-changing and uncertain situation that currently exists in Grindavík, the conditions for assessing damage to partially damaged houses are extremely difficult. It is therefore not possible to assume that the extent of damage that has been examined is final. For those reasons, NTÍ will only present the results of the damage assessment on the properties that are total damage properties in Grindavík.
NTÍ is working with the government to find solutions for the difficult situation that has arisen because of this.