Is home insurance compulsory in Montenegro? The laws we reviewed contain no general legal duty. An obligation can arise from a mortgage agreement, and the assembly of unit owners decides on insuring the building.
Local searches show what people want to know about home insurance: "osiguranje stana" (flat insurance) is followed by "crna gora" (Montenegro), "iskustva" (experiences), "cena" (price) and "od poplave i požara" (against flood and fire), "osiguranje stana cijena" (flat insurance price) by "forum" and "od potresa" (against earthquake), and people also search "osiguranje kuće crna gora" (house insurance Montenegro). Policy prices depend on the insurer and the risks agreed, so we do not quote them here. What applies to every policy is set by the Law on Obligations.
This article explains whether insurance is compulsory, how the sum insured affects the payout, which losses are not covered, what happens if the premium is unpaid, what to do when a loss occurs and what happens to the policy when a flat is sold or is mortgaged.
Is home insurance compulsory
None of the laws we reviewed imposes a general duty on an owner to insure a flat. An obligation can arise in two ways:
- Mortgage agreement. The Law on Property Relations allows a mortgage agreement to oblige the mortgage debtor to insure the property. What banks require with a mortgage is explained in our article on mortgages.
- The building. The assembly of unit owners decides on insuring the residential building. How the assembly works is explained in our article on the building manager.
The list of companies licensed to operate is published by the Insurance Supervision Agency.
What property insurance covers
Anyone with an interest in the insured event not happening, because they would otherwise suffer a material loss, can take out property insurance. The payout serves to cover the loss and cannot exceed the loss the insured suffered.
| Rule | What it means for a flat owner |
| Payout up to the loss | Insurance is not a way to make money |
| Agreed lower limit | It is valid to agree a payout below the loss, for example an excess |
| Lost profit | Taken into account only if agreed, for example lost rent |
| Several losses in the same period | Each is paid in full up to the whole sum insured, without deducting earlier payouts |
| Agreed value of the property | The payout follows it, unless it is significantly higher than the real value without good reason |
Sum insured: underinsurance and overinsurance
- Underinsurance. If at the start of the insurance period the flat was worth more than the sum insured, the payout is reduced proportionally, unless agreed otherwise. Our example: the flat is worth €100,000, it is insured for €50,000 and the loss is €10,000; the payout is €5,000. If it is agreed that the ratio between value and sum insured does not matter, the insurer pays the full loss up to the sum insured.
- Overinsurance. If the sum insured is higher than the flat's value and nobody acted in bad faith, the sum is reduced to the real value and premiums are reduced proportionally. If the higher sum was agreed by fraud, the other party can ask for the contract to be annulled.
- Fall in value. If the value of the insured property falls during the insurance, either party can ask for the sum insured and premium to be reduced.
Losses that are not covered
| Loss | Rule |
| Caused by accident or by the insured's negligence | Covered, unless expressly excluded in the contract |
| Caused intentionally or by fraud | Not covered; a contrary clause has no effect |
| Arising from defects of the property itself | Not covered, unless agreed otherwise |
| War operations and riots | Not covered, unless agreed otherwise |
Which risks are covered, for example fire, flood or earthquake, is set by the policy. So ask for the insurance conditions together with the offer.
Premium
If the premium is to be paid when the contract is concluded, the insurer's obligation starts the day after payment. If a premium falling due later is not paid, the contract ends by operation of law 30 days after a registered letter about the due premium is delivered to the policyholder, but not before 30 days from the due date. The contract also ends by operation of law if the premium is not paid within one year of falling due.
When something changes
With property insurance, the policyholder must inform the insurer of any change in circumstances that may matter for assessing the risk. If the risk increased through their own action, they report without delay; if it increased without their involvement, within 14 days of learning of it. If a loss occurs before the insurer is informed, or before a higher premium is agreed, the payout is reduced in proportion to the premium paid and the premium due. Anyone who starts letting the flat should check the policy conditions.
When a loss occurs
| Step | What the law says |
| Prevent and limit the loss | The insured must take all possible measures; the insurer covers reasonable rescue costs, even above the sum insured |
| Report to the insurer | Within three days of learning of it at the latest; whoever is late compensates the insurer for the damage the delay caused |
| Loss of rights | Policy clauses under which the insured loses the right to a payout for failing an obligation after the loss are void |
| Payment | Within the agreed period, no longer than 14 days from notification; if the amount is not established, the undisputed part is paid as an advance; late payment carries default interest |
The insured is not entitled to hand the damaged property over to the insurer and claim the full sum insured, unless agreed otherwise.
Selling the flat and mortgages
- The policy passes to the buyer. When insured property is sold, the policyholder's rights and obligations pass to the buyer by operation of law, unless agreed otherwise. A seller who does not tell the insurer about the sale remains liable for premiums falling due after the sale. The insurer and the buyer can withdraw from the insurance with 15 days' notice, at the latest within 30 days of learning of the sale. What else to do when selling is explained in our guide to selling a flat.
- Mortgaged flat. After an insured event, pledge rights that existed on the flat attach to the insurance payout, and the insurer cannot pay the owner without the mortgagee's consent, unless it neither knew nor could have known of that right. How a mortgaged flat is sold is explained in our article on selling mortgaged property.
- Liable third party. On paying out, the insured's rights against the person liable for the loss, for example a neighbour whose plumbing leaked, pass to the insurer.
Short checklist
| Question | Why |
| Does the sum insured match the flat's value | Because of underinsurance |
| Which risks are in the policy | Fire, flood, earthquake or water leaks are not automatically covered |
| Is lost profit agreed | Without it, lost rent is not compensated |
| When is the premium paid | Cover starts depending on it |
| Is the flat mortgaged | The bank must consent to the payout |
| Are you selling the flat | Inform the insurer |
You can post or find flats in our real estate category.
Frequently asked questions
What is underinsurance? When the flat is worth more than the sum insured, the payout is reduced proportionally, unless agreed otherwise.
How soon must a loss be reported? Within three days at the latest from when the insured learned of it. Being late does not forfeit the right, but the insured compensates the insurer for damage caused by the delay.
Within how many days must the insurer pay? Within the agreed period, which cannot exceed 14 days from notification, and if time is needed to establish the amount, from when it is established.
What happens to the policy when I sell my flat? The rights and obligations under the policy pass to the buyer by law, unless agreed otherwise. The insurer and the buyer can cancel with 15 days' notice.
Does insurance cover earthquakes? The policy decides. The law sets general rules, and the insurance conditions list the risks covered.
Sources
The property insurance contract is governed by the Law on Obligations (Official Gazette of Montenegro 47/2008, 4/2011 and 22/2017, articles 1009 to 1036; later amendments do not concern these articles). The duty to insure under a mortgage agreement and the assembly's decision on insuring the building are governed by the Law on Property Relations (Official Gazette of Montenegro 19/2009 and 29/2025, articles 183 and 328). Fijaka is a listings platform and gives neither legal nor insurance advice; for a specific policy, ask the insurer for the insurance conditions.