Buying home insurance in Spain can be confusing especially as there is a wide spectrum of English and Spanish based insurance companies operating in Spain.Each company will have slightly different levels of cover.There are also cultural differences – for instance the concept of ‘all risk’ is a British one and the thought that someone can have an all-risk cover is almost laughable to a Spanish insurer.
On the other hand, many Spanish insurers allow a higher limit per item before having to name an item on a policy and some Spanish insurance companies will even allow you to cover domestic staff or dangerous dogs.
It is therefore best to first ascertain what you require from an insurance and then search for the product. There is no point in just comparing quotes by their prices as the terms and conditions can vary drastically and mostly you will not be comparing like for like.
Home insurance can be divided into two sections; buildings cover and contents cover.It is important to understand what falls under each of these headings as it will aid the insured to make a better decision on what type of insurance they should take out.If you need insurance, you can ask for any of the three types: -Buildings Only -Contents Only -Buildings and Contents
What is buildings cover? Buildings insurance covers any damage to actual structure of the building and any fixtures in that building.Usually, anything considered to be part of the building are things that cannot be physically moved when moving house.Items such as windows, baths, fixed lighting, piping, flooring, built-in wardrobes, doors and solar panels are all covered under the buildings section of a policy.More obviously tennis courts, pools and gardens also fall into this category.
What is third party liability? When purchasing buildings cover, most policies will also have a sum insured for third party liability cover.This concept is often confused.Third party liability covers any damage that the insured inflicts on others be it bodily injury or material damage.Some policies will include possible damage inflicted by any member of the family living within the household or even a pet to a third party. Many policies will also include legal defence to protect against allegations made by others.Third party insurance never pays for your own damage – it pays for damages inflicted by the insured to a third party or defends you by seeking compensation when damages are inflicted on you.
If your house floods and the water seeps through to a neighbours house, you will be covered if you have buildings and third party liability cover.If a builder drills through a pipe, you will have to try and claim compensation from the builders company but your own insurance should cover the defence costs should you need to take the case to court. It is important to look at what the liability cover is in a policy and what exactly it covers you for.Companies differ largely on the sum assured for public liability cover.UK based companies tend to give a higher limit as liability suits are more likely to occur in the UK – Spain lags behind the UK and US on this concept.However many companies are flexible and will often agree to increase liability cover for a premium.
Why is buildings insurance necessary?
It is easy to avoid getting insurance.When paying hefty mortgages and when times are tough it is easy to be blasé about insurance.It is hard to imagine that anything will happen to your home.The probability may appear to be very low – yet a fire or flood can leave your home completely uninhabitable and the cost of repair may literally leave you without ‘a roof over your head’.Even if not as extreme as the latter – paying for damages can place a huge financial burden on homeowners.Therefore can we afford to take the risk of not being insured?
Here in Spain, banks and mortgage lenders will insist that you take out a buildings cover to cover the mortgage.This is their form of protecting their money that they have invested in your home.
How do I calculate the amount of buildings cover I need?
Market prices of properties can vary – so how much is the building actually worth.? Contrary to popular belief, the price a house may sell for is not an accurate amount to consider as cover.The amount that you need to consider is how much the rebuild cost would be.If your house was burnt down, how much would you need to pay to reconstruct it? It generally would be cheaper to re-build a house than to re-buy a new one.This is because the overall value of a property also depends on the land and surroundings – something that you will not need to rebuild.The re-build cost can be calculated using a simple rule of thumb:
Cost of construction per m2 x total number of m2 in your property
The cost of construction will vary according to where your property is located and the quality of the property.For instance in Manilva, on the Costa del Sol Spain, these rebuild costs can range from 700-2500 euros per square metre, with most properties falling within the 1000 euro mark, at time of writing. Therefore for a 100m2 property at 1000 euros per m2- the total buildings cover needed would be 100,000 euros.
What is contents cover?
A content is anything that you own and could take with you if you moved house. This includes furniture, electro-domestic appliances, electrical appliances such astelevisions, computers etc, clothes,food, ornaments and valuables.
Why is contents insurance necessary?
Many people will have a buildings cover as it is often a pre requisite for clients holding a mortgage.However whilst a bank may be concerned about the physical house, home owners also stand to lose a great deal in terms of contents – indeed sometimes loss or damage to contents can create financial burden.In case of theft valuable items may be taken.In case of flood, expensive carpets, antiques and even day to day necessities such as clothes and electro-domestic products may be destroyed.
How do you calculate it?
How do you price your contents?The best way to assess the value of your contents is to painstakingly go through all the rooms in your house and add up how much each item is worth.The following checklist can be used as a guidance:
General Furniture – tables, chairs, sofas, stools, beds, cabinets, shelving units, chest of drawers etc
Soft Furnishings – cushions, curtains and curtain fittings, blinds etc.
Generally speaking, an insurance company will pay out a maximum of 25% of the sum insured for valuables.
To name or not to name?
Apart from calculating the overall insurance requirement, it may be necessary to name specific items on a policy.
When contracting insurance it is best to ask the provider for details of the policy.For instance some Spanish insurers will define valuable as any individual item over a specific amount (eg 6000 euros).In the case of the latter, only items over the 6000 limit will need to be individually specified.Each company will have different limits so that what is considered valuable by one, may not be by another.
My Community has insurance, do I still need to insure the buildings and contents under my own policy?
In Spain, most properties are located in gated urbanisations known as ‘communities’.These communities generally have a president, someone voted in by the property owners.The president’s role is to act as a go-between between the administrators of the community who commission services such as gardening, pool cleaners, insurance and the residents of the community.
Communities usually have an insurance to cover that community of houses.The type of insurance for communities ranges from basic cover to quite a complete cover.Many owners assume that as they are contributing to a community insurance, that they no longer need to have a buildings cover.It is advisable to speak to your community president and see what the policy covers and if indeed the community does have any cover.
If your community has a basic cover and public liability cover, then damage to individual houses/apartments such as water damage would not be covered.It is then advisable to take out a buildings cover to ensure that damages are covered.If the community has public liability cover, basic cover and water damage, then the chances are that you will not need buildings cover. However many individuals do purchase buildings cover regardless of the latter as firstly banks usually require it if you have a loan on the house and secondly, if a community is not efficiently run, processing claims etc. may prove to take longer as it has to go via the community.
Contents are never covered by community insurance.
Prevention is better than cure
Once you have purchased your dream home in Spain, it is best to ensure that it is kept secure.The first thing to do is to change the locks as many people could have keys to your home; Real Estate Agents, Construction workers, developers etc.It is also advisable to either have an alarm that links up to a central station or put security bars on doors and windows.By ensuring your home is secure, you will not only give yourselves peace of mind but also reduce the cost of your insurance premium.