Landlords and insurances in Spain: why it is necessary to arrange it
There are commonly four types of insurance to arrange as a landlord:
1. Public liability insurance
Public liability insurance is one of those insurances that landlords just don’t think about. You will understand the necessity to insure your car or property in Spain but Spanish liability insurance is probably not on top of you list of priorities.
Perhaps it is best to give you some examples so that you can understand the risks involved in not protecting yourself against third-party liability (public liability).
Anybody visiting your home in Spain could potentially make a claim against you for damages or injury if, for example, they slip and fall. This is especially likely in Spain as many people have a swimming pool. Or, for example, if an electrical fault causes damage to the property or a tenant. Even though these accidents might be completely their own fault you could be held liable.
Or suppose you are letting your property. Some renovations should be done. You are likely to have a steady stream of repairmen visiting your property such as electricians, builders and maintenance people, to carry out these renovations. However, it could also be something simple as to service your boiler, clean your pool or maintain your garden.
Literally, anybody who comes onto your property has the potential to sue you and take you to court.
As a landlord you can protect yourself against these third-party claims for negligence and medical claims by taking out a specific policy for public liability insurance in Spain.
It might also well be that some of your other insurances include this already. It is certainly best to check that you are covered rather than take the risk.
Spanish public liability insurance also works the opposite way around so that if you are at someone else’s property and you cause damage or injury, you yourself will be covered should they make a claim against you.
So make sure you have cover and find out how much it covers you for – it might not be as much as you think and could leave you vulnerable to a large claim which could financially ruin you in an extreme case.
What does Spanish public liability insurance include?
For example, if a tenant will be injured while living at the property, and the injury is caused by the property, the landlord may be liable for costs associated with the tenant's absence from work, medical costs and, for a serious injury, future loss to the tenant where they are unable to work in the same capacity as they did before.
Not only might you be liable for all their expenses and costs, you may end up also paying some expensive legal bills from them and also for yourself in having to take out legal representation.
This is why we strongly recommend to insure you against public liability. Where can you find this insurance? You can go directly to some of the largest Spanish insurance companies. Here are a few that provide third-party liability or public liability insurance in Spain:
2. Household insurance (seguro de hogar)
Household insurance generally covers items of furnishings at the property. However, if the landlord holds the policy, it most commonly does not cover claims for the tenant's possessions. A landlord should consider household insurance to cover loss and damage to carpets, curtains, blinds, walls, etc.
Where a burst pipe floods a carpeted living room, the household insurance may cover the costs of a contractor to extract the water, and dry carpets and underlay in the room. This can be costly to you and cause disruption to the tenant over a number of days. Sufficient reason to consider household insurance.
3. Building insurance
Building insurance covers loss and dames to the external and interior structure of the property. On occasions, it may also cover fittings in the property (e.g. kitchen cupboards and bathroom vanities), where the damage is caused by a burst water pipe, or other such event. If the property is in a building of multiple apartments, the building insurance will probably be held with the building management company and paid by you as a landlord as part of the levies.
4. Non-payment insurance
There are insurance policies available to landlords who want additional security for when a tenant default on the terms of the rental contract. The most commonly used insurance in this respect is the seguro de impago de alquiler.
Basically there are two forms of non-payment insurance:
1. A clause of non-payment of the rent within the household insurance (seguro de hogar). So verify if your household insurance (if you have any) will include an element that covers you non-payment of the rent.
2. A non-payment insurance. Basically this is an insurance for the landlord, where the payment of the rent will be guaranteed by the insurance company, while taking care of vacating the tenant and claiming the payment of the rent. It may also include the reclamation of repairs and maintenance of the installations of the property. In specific cases, the insurance may also include legal assistance for breach of specific legal regulations like persistent noise and other harmful or dangerous activities, conflicts with neighbors about boundaries, walls and distances as well as disputes with the community of landlords.
If we talk about the seguro de impago de alquiler, there are basically two (German) companies who offer this service in Spain:
There is one thing to clarify: the seguro de impago of Arag is not for viviendas secundarias. This means that it is not for holiday homes, homes occasionally used during weekends or holiday.
We can send you an overview of the conditions of the seguro de impago of DAS and Arag (in Spanish).
Premium for a seguro de impago at DAS costs about 22,50 € per month. At ARAG it depends on the rent. With a rent of 1000 € you have to think about a premium of 540 € per year.
Please note that it can be the tenant as well who will pay the insurance completely or partially, although the beneficiary will obviously always be the landlord.
Are you interested in support in arranging the insurances?
© 2016 Lilian Hermans - Quilantro