AZE.US
As apartment and house prices in Baku continue to climb, the maximum payout under mandatory property insurance remains stuck at levels that increasingly look detached from market reality.
In the capital, the coverage limit is still 25,000 manats. That might have looked meaningful years ago. Today, when even ordinary apartments can start at 100,000 manats and many homes sell for 200,000 to 300,000 manats or more, the mismatch is hard to ignore.
The issue has drawn more attention after recent heavy rains, flooding and other incidents that exposed how little protection many homeowners actually have. When a high-value property suffers serious damage, the mandatory insurance payout often covers only a small portion of the loss.
The current framework dates back to legislative changes adopted in 2011. Since then, around 15 years have passed, but neither insurance premiums nor coverage limits have been meaningfully revised. In that period, inflation has risen, housing prices have moved sharply higher, and the market has changed far faster than the insurance model behind it.
Under the current rules, mandatory property insurance in Baku costs 50 manats a year and provides coverage of up to 25,000 manats. In Ganja, Sumgayit and Nakhchivan, the limit is 20,000 manats, while in other cities and districts it is set at 15,000 manats.
Experts say this weakens both public interest in insurance and confidence in the system itself. Homeowners are required to buy coverage, but in the event of major damage they often cannot expect compensation anywhere near the real value of what they have lost.
Specialists also note that in many neighboring countries, property insurance limits and premiums are reviewed periodically to reflect inflation and rising real estate values. In other words, the system is adjusted to changing market conditions instead of being left frozen for years.
Insurance expert Vusal Badalov says homeowners who want protection closer to the real value of their property should consider voluntary insurance. According to his estimate, a property worth around 200,000 manats could be voluntarily insured for roughly 200 to 300 manats.
That is where the logic breaks down for many property owners in Azerbaijan. Housing prices have moved into a completely different bracket, but mandatory insurance still operates as if the market has barely changed. Until that gap is addressed, many homeowners will continue to see compulsory coverage less as real protection and more as a legal formality.