Home insurance in Spain: How it works

When you own a home in Spain, you should take out buildings insurance to cover damage to the structure of the property. This is not a legal requirement, but if you have a mortgage, may be a condition of your loan. However, it is strongly recommended, since damage caused by fire, flood, bad weather, burst pipes and other contingencies can be very expensive.

Whether you own or rent your home, you should take out contents insurance. This covers your personal belongings, furniture and fittings. It may not cover items taken outside the home unless you specifically request it. This is called personal effects or personal possessions, and normally has a fairly low cover limit – perhaps only €100 or €200. Any cover offered for loss or theft of cash outside the home may also have a low limit, typically less than €200.

The purpose of insurance

Note that insurance only ever covers fortuitous (unexpected) loss or damage. You cannot claim for mechanical breakdown, wear and tear, damage caused by lack of maintenance, or due to the standard 'shelf life' of an item or fixture. Also, each incident that gives rise to loss or damage is treated as one claim. If you drop your computer on the floor and break it, and at the same time have a water leak that destroys your sofa, you will need to make two separate claims. But if a water leak destroys your sofa and also your computer, these two items are one claim, not two. If another water leak happens from a different source on the same day, the second water leak is a second claim.

How might Spanish home insurance differ from that of your country of origin?

Although personal insurance cover is broadly similar worldwide, certain elements may vary from country to country. You may find insurance policies on sale in Spain to be more limited, or use different definitions, so you should read the policy wording carefully before deciding which insurer and what type of cover you need.

Different definitions of 'home contents'

Whilst in many countries, the contents of your home are considered to be anything you could take with you if you moved house – including fitted carpets, if they are not stuck down – in Spain, certain indoor fixtures are deemed to be 'contents'.

For example, your kitchen units, including floor and wall cupboards, and bathroom fixtures such as toilet, sink, bath and shower cubicle, are all defined as 'contents' in Spanish home insurance. You must bear this in mind when considering how much to insure your contents for.

Although most insurance companies offer some flexibility about minor inaccuracies with the buildings sum insured, they may reduce the amount of a claim if your contents sum insured is insufficient. You should calculate the value of everything you own, including fixtures, and how much it would cost to replace it all as new. Remember to review it at least annually to ensure it remains enough, or a claim payment may be reduced on a pro-rata basis in line with the true value if you are underinsured.

Confusion over 'community insurance'

If you live in an apartment block or on an urbanisation (residential complex), you may be paying regular fees to your comunidad de propietarios, or 'community of owners'. This covers maintenance, cleaning, repairs and upgrades agreed upon by all owners, and will include your portion of the premium for property insurance.

Many new homeowners in Spain make the mistake of assuming their 'community insurance' policy is a replacement for buildings insurance, deciding not to take out the latter. But this is not the case: The buildings policy for the comunidad is only for communal areas, such as staircases, gardens, car parks, shared swimming pools, and corridors used as access by all residents to private properties. It also covers the outside part of an apartment block, such as damage to the rendering, but not the outside of individual villas. This means any part of your home which is private, rather than communal – including the inside – is not covered by 'community insurance', and you will need your own, separate policy.

Cover limits

Some insurance companies in Spain place monetary limits on certain types of claim, independently of your sum insured. One example could be a maximum payment on a claim for a burglary of €5,000 or €10,000.

Not all companies do this, but the practice is not unusual, so you should check the policy wording carefully before deciding upon a new quote for insurance.

In many countries, items of value – such as jewellery or artwork – or anything worth over a certain sum of money has to be mentioned separately on your policy schedule (the document you are given showing your individual cover and amount of the agreed premium). This is known as a specified item, and may attract a small extra premium. Otherwise, it may be subject to a single article limit (maximum sum payable per item when a claim is made)that might be considerably lower than the item is worth. In Spain, single article limits are less common, but where they do exist, may not have an option to specify an item to ensure you are paid its full value in the event of loss, theft or damage. If you own any single item worth more than approximately €1,000, you should check with the insurance company whether it will be covered in full.

Lack of 'accidental damage' cover

For your buildings, 'accidental damage' could mean, for example, unintentionally drilling through a water pipe or electricity wire, but the definition these days is often stretched considerably: Repairs to walls and ceilings following ingress of rainwater might be covered if you have opted for 'accidental damage', where there is no external damage to the property caused by the same weather event. By contrast, 'accidental damage' cover is most useful for contents insurance, rather than buildings. If you knock something over and break it, or spill paint on a sofa or expensive rug, for example, you may have a valid claim.

In Spain, it is rare for 'accidental damage' cover to be offered, although more and more companies are gradually including it. Where they do, it is normally a standard feature of the policy – unlike in many other countries where you need to request it as an optional extra and pay an additional premium. Spanish insurance companies which provide accidental damage cover are likely to do so as part of a package, perhaps as a 'fully comprehensive' (todo incluido) option versus a more basic package. You should check whether this is the case, or whether it is available as an additional cover line, before agreeing to take out the policy.

Absence of a policy excess

Whilst not always the case, it is common in Spain for insurance companies to pay claims in full, without including a policy excess. An excess is the amount of any claim you agree to cover the cost of yourself; opting for a higher excess, if permitted, usually means a lower premium. A typical policy excess might be €50 or €150, meaning any loss or damage below this amount would not be possible to claim for, and this sum would be deducted from the final claim payment.

Policy excesses on buildings cover are rare in Spain, but many companies do not even apply this to contents insurance. In theory, it means you can make a claim for very small items.

No return premium for early cancellation

In many countries, if you cancel your policy before its annual renewal date – either because you have sold the property, or have found a better-value quote elsewhere – you will receive a refund for the months of cover not yet enjoyed. In Spain, however, you should make sure any decision to change insurance company coincides with your annual renewal, as you will not get the unused premium back.

The crucial aspect of having insurance is, of course, to be able to make a claim when you need to. You may find the process is different in Spain to that in your home country – this is explained in our article Home insurance claims process in Spain.