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Who should have such insurances?
Principally every owner or co-owner should be mentioned in the policy as only these people are entitled to receive claims payments from the insurance company. After a relationship is broken up this may matter.
House insurances are normally contracted by the owners. In Spain often rental agreements stipulate that the insurance has to be arranged by the renting party. Should damages occur the owner can always demand restitution.
Household and content insurances are to be taken out by those who own them. This insurance is one of the more vital ones. We all tend to underestimate the true replacement costs which we would face after a devastating fire, for example. Of course many things we would not want to buy a second time, but if we were left without a proper insurance many of us would be unable to enjoy a similar standard of living for years.
What does the house insurance and household insurance in Spain include?
In Spain these insurances can be combined to cover:
House Insurance
Household Insurance
Third Party Liability (TPL) Insurance (Homeowners TPL, Civil TPL, Pet Keepers TPL)
Bicycle Theft Insurance
Baggage Insurance
Glass breakage is automatically included.
Spanish insurance companies often proclaim that their policies include legal defence insurance. This cover is much narrower than suggested. The cover is restricted to events covered by the insurance and will not allow the insured the free selection of lawyers. It certainly will not cover disputes between the insured and the insurance company.
Merits of combined insurance of policies
Combining related insurance cover makes sense to the customer and the insurance company. The insurance company can reduce their administration cost and hopefully will pass this benefit on to the insured.
The insured on the other hand has a single insurance policy and insurance company to relate to. In the event of a claim there will be no ambiguities as to whose insurance policy is responsible and the insured needs to keep track of fewer premium payments.
Contract periods of Spanish insurance policies
In Spain insurance policies will at most last for 12 months. Longer contract periods are illegal. Insurances can be cancelled with two months notice prior to the next renewal date. In practise however insurance companies pay little attention to formal cancellations. They cancel contracts once premiums are no longer paid. Therefore, it is much more important to give your bank written instructions to decline further attempts by the insurance company to debit premiums from your account.
Spanish premium rates in comparison
Premium rates of Spanish house insurances and household insurances are similar to those in other European countries – at least when comparing similarly comprehensive covers.
Holiday home insurance tends to cost a fraction more than the insurance for a permanent residence. Damages in holiday homes tend to go unnoticed for much longer periods and therefore grow worse.
The correct sums insured
The homeowners or building insurance is meant to provide the full reconstruction value of everything that has been constructed on your property or is firmly fitted to the constructions. This includes the house, terraces, pools, garages, fences, etc. It also includes closets, kitchen furniture, etc. It may be a good idea to ask an insurance expert for advise rather than risking under-insurance.
In Spain insurers generally adjust sums insured each year according to movements in the Consumer Price Index (CPI). The adjustments tend to ignore that in the regions us foreigner tend to purchase properties construction prices have by far outgrown the average price movements across Spain. You should therefore review your sums insured every year.
Householders insurances reimburse the replacement values. The insured often attaches a much lower value to his belongings because he tends to calculate that these would fetch much less due to wear and tear. In the event of a loss the insurer would have to allow you for buying new furniture, clothing, etc. and therefore the sum insured should reflect the higher replacement value. Again, competent assistance by an insurance expert will prevent mistakes that could have serious implications.
Valuables
Spanish insurers have yet to get accustomed to high valued interiors. To them and their employees it is still unfamiliar that people invest great sums into a cosy home – such as people from rain plagued countries tend to do. Spanish insurers often define any item worth a few hundred Euros as a valuable object. As valuables will be limited in coverage you may only learn in the event of a loss that your insurance will not serve you well. Therefore you should always choose an insurer that will insure your valuables according to your personal requirements. Otherwise there will always remain doubts as to the quality of your coverage.
Under insurance
No one expects you to be able to precisely define the reconstruction value of your property or the replacement value of your belongings. However, you may indeed be expected to call for the assistance of an insurance expert to get these values assessed as best as possible.
If you fail to declare and insure the correct values two things may happen. Firstly, in the event of a total loss the insurer will pay out only the sum insured irrespective of the actual loss you incurred. In the event of a partial loss the insurer is entitled to reduce loss settlements proportionately. For example: insured are EUR 100.000 whereas EUR 200.000 would be appropriate. Even though the damages amount to EUR 10.000 the insurer will pay out only EUR 5.000 arguing that you insured only 50% of the insured object.
Extend of coverage in Spanish house insurances and household insurances
What is insured?
Your insurance should reflect the correct sums insured in order to prevent disappointment in the event of losses.
The replacement value in your house insurance – Typically the house insurance includes everything you will not take with you when vacating the insured premises. This includes fittings, closets and firmly fitted kitchen furniture. Added should be everything else on the premises that forms part of the overall construction such as , terraces, pools, garages, fences, etc.
The replacement value in your household insurance – The contents insurance will include not only your furniture, valuables and other obvious things. It is to bear in mind the high cost of replacing clothing, electronic gadgets, things that are hidden in cupboards and drawers. Jewellery and cash are particularly desired by thieves and should be discussed very clearly with your insurance expert.
With less sophisticated Spanish insurers you may even have to declared chairs worth a few hundred Euros as valuables. Hands off - you will not enjoy loss settlements with insurers who have such attitudes! It is better to have an insurer who understands your needs.
What are you covered against?
The catalogue of insured perils tends to be identical for your house insurance and for your contents insurance. Buildings may be more exposed to storms and contents are more likely to be stolen – still, the insured perils should match.
Typically the insured perils should include:
Fire, smoke, lightning, electrical surges, explosion and implosion
Impact of objects and vehicles
Burglary and vandalism (in Spain most insurers cover vandalism only if a burglary took place)
Water pipe damages (Owner-Communities mostly have these covered only up to the doorsteps of the individual apartments – a system bound to produce disappointment)
Storm (in Spain only the Iberia-Policy will cover storm regardless of the velocity the wind may have had)
Elemental perils such as earthquake, flooding, tidal waves and
landslides
Cost – included should bet cost of debris removal, cleaning as well as alternative accommodation.
Only the Iberia-Policy also covers travel expenses resulting from a loss event.
How to prevent losses?
The best insurance policy is always the one you do not need to call upon. Insurance claims bear paper work and loss of time even if the insurance company replaces the loss 100%.
We can give you ample advice as to how you can minimize the risk of losses.
The Third Party Liability (TPL) Insurance
Spanish insurers often like to pretend that TPL is included free of charge. The covered amounts are therefore minimal and bear no relation to what compensation you may be required to provide to people that were damaged by you or your property.
It is therefore prudent to contract TPL insurance cover of at least EUR 1.000.000 per occurrence. The Iberia-Policy will even offer coverage according to the legal system of your EU-home country.
In Spain you may require TPL cover for:
Homeowner TPL
Civil TPL
Pet keepers TPL
Motor TPL
The settlement of losses
Language barriers
Contracting anything in a foreign language always leaves room for diverging interpretations. An insurance policy should therefore preferably be in your native language. Some insurance companies in Spain do offer such policies.
What to do in case when losses occur
Loss events are anything but fun even if the claims settlement is swift. If in addition you have to deal with ill-trained staff from an insurance company the nightmare is complete. In Spain it is worth selecting your insurers carefully. If they make you wait for the offer do not expect more commitment in case you need their help to get losses paid.
The insured should know how to make claims settlements easier. Most importantly the claim should be reported without delay. The sooner the insurance company knows about a claim the quicker he can instruct the loss inspectors to verify the extend of damages reported. This reduces the possibility of diverging estimates and resulting delays.
You are entitled and obliged to mitigate damages as best you can. Naturally you are not expected to endanger yourself in the process but whatever can be done immediately should be initiated. If minor repairs can be arranged it helps to document the process with photographs. Replaced parts should be kept and the damages should be kept visible for an inspection by the insurance company.
In the event of fires, burglaries and robberies the police has to be notified immediately. There is always a remote chance that this will help in finding culprits or retrieving stolen goods. The police will at least write a report and will ask you to list all damaged or stolen items. Here too the insurance company should be informed immediately. The insurance company will expect you to keep the premises as unchanged as possible so that they can assess the situation as best as possible. If you need to move or clean up some things photographs will help to document the previous situation.
Nobody expects you to keep each and every invoice. It is however normal to have those of invoices still at hand which relate to significant expenditures or things which still carry a guarantee. If you are unable to produce such evidence the insurance company may reduce payments.
Loss inspectors and repair services
It is prudent to ask in advance if an insurance company uses internal or independent loss inspectors. External inspectors tend to be more objective in assessing damages and costs. The insured may insist on a visit within 48 hours in particular if the damages impair his comfort.
It is also important to know if the insurance company will compel you to use their affiliated repair services or allows you to freely choose a repair service you trust. Affiliated services tend to work on the basis of contracts minimizing their reimbursements. The results are quick repair jobs lacking quality. The insured is victimized twice: first through the inconvenience of the loss event and secondly by the often appalling repairs. Select an insurer that will at least leave you an option.
The „Consorcio“- Pool
Spain has an institution called the „Consorcio“– Pool which assumes responsibility for losses if these are unusual (e.g. terrorism) or have the character of a national catastrophe (e.g. a devastating storm). The pool brings together all insurance and reinsurance companies registered in Spain. From each premium you pay, the pool receives a small portion.
In the event a national catastrophe the pool will analyse the damages and declare itself responsible for those regions which have been affected beyond a certain extend. If the pool assumes responsibility losses are no longer reported to the insurance companies but directly to the pool. You will need a very good intermediary to arrange that for you.
The existence of the pool guarantees that every insured receives the complete cover even if he happens to live in an area particularly exposed to storms, floods, etc. Otherwise no insurance company would dare to offer house insurances or content insurances in entire regions of the country.
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