“Obligation for conclusion of business insurance for partial coverage of material damages caused by fire, flood, or earthquake, classified as natural catastrophes, applicable to businesses and vehicles”
(Article drafted by Mara Vasileiou, Associate & Andreas Papastathis, Partner for Lexology on July 29, 2025)
Law 5116/2024 introduces a landmark shift in Greece’s approach to managing natural disaster risks, mandating compulsory insurance for businesses and vehicles against material damages from earthquakes, forest fires, and floods. Specifically, all businesses with annual gross revenues exceeding €500,000 must insure their physical assets—buildings, equipment, inventory, and vehicles—at a minimum of 70% of their value. Similarly, car owners whose vehicles are regularly parked in Greece must obtain insurance for damage caused by forest fires and floods, in addition to the already mandatory third-party liability coverage.
This new framework moves beyond traditional civil liability schemes, focusing instead on compensating the insured party directly for their losses. It reflects the growing urgency to address climate change-related risks and aims to reduce the financial burden on the state while enhancing private sector resilience and supporting long-term economic stability.
However, the law’s broad and ambiguous provisions—despite recent regulatory clarifications—leave key issues unresolved, such as how to value fluctuating assets, monitor continuous compliance, and handle coverage gaps. Penalties for non-compliance include fines starting at €10,000 and exclusion from state aid in the event of uninsured damages.
Ultimately, Law 5116/2024 marks a pivotal step toward a mixed public-private model of disaster risk financing—one that aims to promote a culture of prevention, strengthen the insurance market, and foster a more resilient business environment in the face of increasing natural catastrophes.
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