Buildings insurance - First loss cover
So you’ve bought your new 2 bed 2 bath apartment in Spain and are now looking to insure it.
Obviously, you will want to insure the contents of the apartment but when it comes to buildings cover……Do you need it? You live in a block of apartments and you don’t “own” the whole building – surely the community insurance will cover it?
The answer is yes and no!!
Yes, the community insurance will cover the actual “building”
No, it will not cover any “permanent fixtures” within your apartment
Allow me to explain:-
“Contents” are defined as items you would take with you if you where to move house. Generally, one would not take the fitted kitchen and bathroom fittings with you. These are generally covered under “buildings insurance”.
Say, for example, you forgot the chip pan and set fire to the kitchen!! You could claim for your pots and pans under a contents policy but normally the “fixed” kitchen cabinets etc are covered under a “buildings” policy.
You would be hard pushed to convince your community to let you claim on their insurance at the expense of other owners for your kitchen.!!
Don’t Panic!! There is a solution in the form of “first loss” insurance. This is an insurance especially designed for apartment owners who do not need to insure the building as a whole. It is non proportional, i.e. if you only have €10,000 first loss cover and a new kitchen costs €10,000, the company will pay the full amount and not proportion the cover across the property
Depending on the quality of the apartment, we would recommend between €10,000 and €25,000 fist loss cover in addition to your contents cover.
So for peace of mind, next time your insurance is due, remember to ask about first loss cover.
Please bear in mind, however, that if you have a mortgage on the property, the lending bank will insist that you take full buildings cover as they need to protect their investment.