This is one of the most common questions – and one of the most misunderstood. The short answer: condominium insurance is not compulsory in the way that, say, motor third-party liability insurance is. The longer answer is more nuanced, because an expectation can still arrive from two directions: from the bank and from the building's own rules. Let's look at it honestly, without scare tactics.
- No law generally requires condominium insurance – it is not a compulsory class of insurance.
- When a loan is taken out, the bank typically expects the building to be insured, and the building's organisational and operational rules (SZMSZ) may prescribe it as well.
- Most buildings insure not out of obligation but out of sound risk management: the shared property is the largest single asset most families own.
What does the law say?
In Hungary the operation of condominiums is governed by Act CXXXIII of 2003 (the Hungarian Condominium Act), which deals with the building's organisation, with common property and with decision-making – but it does not impose a general insurance obligation on condominiums. In other words: the mere fact that a building is a condominium does not oblige it to take out insurance. That said, the general meeting is of course free to decide to do so – and most buildings do.
When it is expected anyway: the bank and the SZMSZ
There are two common situations in which “not compulsory” behaves very much like “required” in practice. The first is borrowing: if the condominium takes out a loan – for a refurbishment, say – the bank typically expects the building to be insured, since it is protecting its own security. The picture is similar with loans on individual flats: banks typically make insuring the flat a condition, and some also ask whether the building itself is insured. The second is the SZMSZ: the building's own house rules may require insurance to be maintained – in which case it is the community's own decision that turns it into an internal obligation. In both cases the specific document prevails: the loan agreement and the text of the SZMSZ respectively.
Why do most buildings insure anyway?
Because the arithmetic is compelling. A condominium's shared property – roof, structure, building systems – typically runs to hundreds of millions of forints in value, while the building's cash reserve is modest by comparison. Without cover, a larger fire or water loss would mean a special levy, a loan, or years of belt-tightening; and with liability losses the building would have to face a third party's claim. Insurance handles that mismatch: it exchanges an unpredictable heavy burden for a predictable annual premium. There is a separate article answering the “why should I pay for someone else's loss” question: the logic of community cover.
What is a good framework for the decision?
So the question is not “do we have to”, but whether the building has decided consciously. Good practice: let the general meeting see it all in one place – what the insurance would cover, what it would cost the building, and what going without cover would cost – and then decide. That is what I provide meeting-ready materials for: a comparison table, a draft resolution template, and a question-and-answer sheet for residents. That way the decision comes down to informed judgement rather than mood.
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