By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of November 2013
One cannot stress enough the importance of hiring home insurance in Spain regardless of whether you live in the country full-time or else live abroad. I have written this article to give a sweeping overview of what home insurance entails and what you reasonably may expect it to cover.
As a starting point on the subject it is important we first distinguish and define what is understood by the above two legal concepts.
a) Continente: refers to the physical property itself, the building and its fixtures
b) Contenido: makes reference to your personal belongings within the property, the contents
Typically, on choosing home insurance, you will be asked by your insurance broker on whether you are interested in a policy that covers one or the other or is comprehensive and includes both.
Naturally the more your cover insures, the more expensive the premium. As it stands to logic, there is a direct correlation. When it comes to insuring property and its contents I would always rather err on the safe side than trying to save a few dozen pounds. On the long run you are saver paying a more expensive premium. The silver lining, talking out of experience, is that home insurance in Spain is cheaper than its UK counterpart.
This includes both the building and its fixtures. It covers any and all of the following:
1. Fire, explosion, implosion
3. Lightning strike or lighting-induced power surges
4. Adverse weather (i.e. strong winds, heavy rain, hailstorm, snow)
5. Open faucets, water leaks
6. Vehicle collision
7. Vandalic acts
8. Broken windows, glass
This basically refers to all your personal belongings. Anything that is not nailed down or bolted to the floor. The more ‘secure’ your property is deemed by an insurance company (location, shutters, bars, alarms, communal private security services etc.) the less you stand to pay.
It would cover any and all of the following in case of theft, for example:
2. Art, antiques
5. Electrical appliances
Is it mandatory?
No, unless you have taken on a mortgage loan. In which case a lender may reasonably impose you have adequate home insurance and may even tag it on to the mortgage as an ancillary service.
Do I need to hire my own home insurance if my Community of Owners already has a cover in place?
Yes, they are completely unrelated. The former covers your home (building and or contents) and the latter covers (mainly) the community.
I would strongly recommend that you hire your own insurance to cover your home. The communal policy is geared normally to cover almost exclusively communal areas and facilities. Its purpose is not to cover the contents of your private home within a Community of Owners. On very few occasions will the communal policy actually cover an accident in your own home and it will only be indirectly at best i.e. water-related damages originating in communal areas, such as a badly sealed gutter in the rooftop, that results in water seeping through into your master bedroom.
By the same token you can also be held liable if your own home causes a flood that extends to adjacent neighbouring properties i.e. split internal pipes. This is not covered by communal insurance and you will have to pay for all related damages and repairs.
Far-fetched claims such as “there is no need to hire a home insurance for contents if your community already has an insurance policy in place” are grossly misleading and unfounded. They should be disregarded as ill-advice. If you want to be appropriately covered and insured hire and pay your own private home insurance policy. There is a wide array available to suit all pockets. Be advised that normally on taking on a mortgage to buy property in Spain lenders will throw in the deal some form of home insurance. This is a linked product to your mortgage and you normally have little choice over it. Please read section six in my article on Spanish Mortgage Loans: Beware of Abusive Clauses (January 2009).
What if I rent out my property?
There are special covers available specifically for this contingency. These for example go into fine details such as a tenant trashing your property or including legal representation in the event of tenant eviction. I advise you hire one if you plan to let your property.
Third-party liability insurance (‘seguro de responsabilidad civil a terceros’)
Not all home insurances include it. Please read the small print. Examples of this would be:
a) Underage children throwing an object over the balcony and landing on someone’s head in the street below.
b) A leak originating in one of your split internal pipes that spreads to an adjacent neighbouring property.
Arranging home insurance
This can be done in either of three ways, from cheaper to more expensive:
i) Through your lender (mandatory on taking on a mortgage loan). The cheapest option albeit not necessarily the most suitable.
ii) Through a local insurance broker. Many have foreigners working for them or may even be foreign-owned; so language shouldn’t be a problem.
iii) Arranging it in your home country. This has the advantage that you will always be dealing with professionals in your own language; but you will pay a higher premium for it. Many UK companies now offer comprehensive insurance covers for overseas properties. Make sure they are duly registered and supervised by the Financial Services Authority (FSA).
I close my article once again reiterating the importance of hiring an adequate insurance cover for your Spanish real estate.
I strongly recommend before signing anything that you first seek qualified advice from an expert, such as a lawyer or an experienced insurance broker, to assist you choosing the right cover for you. And the reason is because most people I know have the bad habit of never reading the small print – more so if it’s in a foreign language such as Spanish.
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