Compulsory PAD costs 130 lei a year for a concrete, brick, metal or stone home, with cover up to 100,000 lei.
Earthquake, flood and landslide only. Not fire, water damage, theft, contents or liability.
Not holding PAD can bring a fine of 100 to 500 lei, applied by the local authority.
Compulsory PAD, optional home insurance, and the bank's requirements if you have a mortgage.
With a mortgage, the bank usually requires property insurance assigned to it, and often life insurance.
Home insurance in Romania: the short answer
Every home in Romania must carry PAD, the compulsory disaster insurance under Law 260/2008. It covers only earthquake, flood and landslide: for a home built of concrete, brick, metal or stone (type A) the premium is 130 lei a year and the maximum cover is 100,000 lei; for type B homes the premium is 50 lei. Because PAD covers a fraction of a villa's value and nothing beyond those three risks, most owners add optional insurance, and a mortgage lender will require a policy assigned to the bank.
It is one of the first questions after the keys: "What insurance do I need?" In Israel, buyers usually think of building insurance tied to the mortgage and contents insurance. In Romania there is one more layer, compulsory by law, that many foreign buyers have never heard of. Here are all three layers, in order.
Layer 1: PAD, the compulsory policy
| Details | |
|---|---|
| Law | Law 260/2008, as amended by Law 115/2023 |
| Who must hold it | Every owner of a home in Romania, individual or company |
| Risks covered | Earthquake, flood (natural), landslide |
| Type A home (concrete, brick, metal, stone) | Premium 130 lei a year; maximum cover 100,000 lei |
| Type B home (wood, adobe and other light materials) | Premium 50 lei a year |
| Term | One year, renewed annually |
| Where to buy | Online through PAID, or through insurers and banks that distribute it |
| Fine for not holding it | From 100 to 500 lei, applied by the local authority |
PAD is a floor, not a solution. For a villa, 100,000 lei is a small share of the cost of rebuilding.
What PAD does not cover
- Fire and explosion.
- Water damage from pipes, a burst boiler or a neighbour.
- Storm, hail and snow load.
- Burglary and vandalism.
- Contents: furniture, appliances, belongings.
- Liability towards third parties.
Layer 2: optional home insurance
Optional insurance (asigurare facultativă) is offered by Romanian insurers, on top of PAD. A typical policy includes:
- The building, for its rebuilding value, against fire, water damage, storm and more.
- Contents, with limits for valuables.
- Liability towards neighbours and third parties.
- Earthquake cover above PAD, as an option in many policies.
- Assistance services: emergency plumber, electrician, locksmith.
As a rule, an optional policy covering earthquake, flood and landslide is issued on top of a valid PAD policy, which must be in place first. Under the 2023 amendments there are exceptions, for example for homes in buildings classed in seismic risk class I, where an insurer may agree to issue optional cover; acceptance is the insurer's decision.
Layer 3: what the bank requires with a mortgage
When you take a mortgage, the bank usually requires:
- Property insurance for at least the loan amount or the rebuilding value, with the policy assigned to the bank (cesionată) as beneficiary for the duration of the loan.
- PAD, as the legal base.
- In many cases, life insurance for the borrower.
The bank sets the exact requirements. Ask for them in writing before signing, so they go into your monthly budget. Financing from a Romanian bank for an Israeli resident is possible; the loan and its terms are subject to the client's review and approval by the lending bank only. See our step-by-step mortgage guide.
PAD is a floor, not a solution.
Comparing the three layers
| PAD | Optional home insurance | Bank requirement | |
|---|---|---|---|
| Compulsory? | Yes, by law | No | Yes, as a loan condition |
| Risks | Earthquake, flood, landslide | Broad, by policy | At least the building |
| Cover | Up to 100,000 lei (type A) | By the sum insured | At least the loan or rebuilding value |
| Beneficiary | Owner | Owner | The bank, while the loan runs |
Checklist for a new villa owner
- Buy PAD from the day the home is in your name, and set a yearly renewal.
- Insure the rebuilding value, not the market price: the land does not burn.
- Add contents and liability if you furnish or let the villa.
- Ask about earthquake cover above PAD, especially in the Bucharest region; see our article on earthquake risk.
- If you live abroad, choose a policy with local assistance and someone on the ground with keys.
- Keep the policies with your documents, together with the handover documents.
On all annual costs of a villa, see our guide to villa upkeep costs.
Frequently asked questions
Is home insurance compulsory in Romania?
Yes. PAD, the disaster insurance under Law 260/2008, is compulsory for every home. It covers earthquake, flood and landslide.
How much does PAD cost in 2026?
130 lei a year for a type A home (concrete, brick, metal or stone), with cover up to 100,000 lei, and 50 lei a year for a type B home.
What is the fine for not having PAD?
From 100 to 500 lei, applied by the local authority.
Does PAD cover fire or water damage?
No. PAD covers only earthquake, flood and landslide. Fire, water damage, theft, contents and liability require optional insurance.
Does the bank require insurance with a mortgage in Romania?
Yes. The bank usually requires property insurance assigned to it as beneficiary for the duration of the loan, and often life insurance for the borrower.
The bottom line
In Romania, home insurance is built in layers: compulsory PAD, optional insurance for everything else, and the bank's requirements if you have a mortgage. PAD alone is not enough for a villa.
If you want to know what your insurance budget will look like for a specific home, book a 30-minute call with me. We will put insurance into the full picture of annual costs.
Moti Azulay, Compass Group Romania
Sources and data: PAID, compulsory home insurance pool · Romanian legislation portal (Law 260/2008; Law 115/2023) · Financial Supervisory Authority (ASF).
This article is for general information only and is not insurance or financial advice. Premiums and terms are set by the insurers and by law; check the current conditions before you buy a policy.
Now you know more.
This article is general information, not legal, tax or financial advice. Consult local professionals before any transaction.
