How To Calculate Home Insurance In Spain
If you’re reading this then you probably already realise that it makes sense to organise home insurance in Spain. Your property will probably be the biggest investment you’ll make, however it’s also the one where you stand to lose the most if something happens and you’re not insured. The majority of us wouldn’t be able to afford a rebuild, nor replace all our furnishings and fittings, and that’s why you need to think carefully about home insurance.
Whilst you can’t replace memories or photos, you can make sure that your property and contents are suitably protected. Home insurance in Spain is usually split into buildings insurance (seguro de continente) and contents insurance (seguro de contenido). It’s possible to take out cover for either, although homeowners normally take out a joint policy that covers both.
There are then several add-ons available, depending on the insurance company, such as a handy man to help with one-off jobs or a plumber to unblock the kitchen sink. However, let’s consider the basics: buildings and contents cover.
Calculating Buildings Cover
To calculate your buildings cover you need to calculate the rebuild cost and not the resale value.
The rebuild value is often less than the market value. This is because you don’t need to buy the land again if your property is destroyed as you already own it. The market value of the property is affected by a number of factors that don’t alter the rebuild cost: the area may be very desirable, perhaps it has good schools nearby, wonderful views or good connections to other towns and cities. These factors affect the market value, but they don’t change the rebuild costs.
The cover for rebuild costs should also include an amount for clearing away debris, planning permission, architect and surveyors fees and associated costs (including applicable taxes).
Insurance companies themselves will calculate an estimated cost per square metre based on the postcode, but this is very general. You need to bear in mind the quality of the build: higher quality materials for a rebuild would require more cover.
Don’t be tempted to undervalue your property when taking out insurance. If the insurance company has suggested a figure for rebuild, don’t go below that indication. There are two main reasons you shouldn’t do this:
- If you underinsure and you have to make a claim then the amount of the pay out will be insufficient to rebuild the house.
- You leave yourself open to a claim of underinsurance and the insurer would reduce the pay out. Not only would your pay out not be sufficient to rebuild your property it could be reduced further because you didn’t pay the correct premium for the risk.
You should always make a comparison between companies before choosing a policy. Remember that online comparison sites, although a good place to start, only provide basic info such as the price but you won’t have the small print to really understand what is covered and what’s excluded.
Calculating Contents Cover
The best way to calculate the amount you need for your contents cover in your Spanish home insurance policy will take some time as you’ll need to go from room to room adding up everything. For example, in a bedroom take into account: curtains, curtain rail, wardrobes, clothes, chests of drawers, beds, mattresses, shelving, etc. Add it up and write down the figure. Then move to the next room and do the same.
Note that your kitchen cabinets and fittings form part of the contents of your property and not part of the buildings insurance.
When it comes to collectable items, antiques and jewellery it might be necessary to have the items valued (this will depend on the individual insurance company). An insurance company may want an individual list of all items with an individual value of more than 3,000€ and they should be itemised in the policy. You may also be asked to provide a valuation if an individual item exceeds a certain amount.
If the thought of doing all this work makes you want to just pull a figure out of thin air, don’t! When you underinsure, if you lose everything you won’t receive enough to replace your losses.
Although home insurance is not mandatory by law in Spain, it’s highly recommended. For anyone with a mortgage your provider will require, as a minimum, a buildings policy that covers damage by fire. You don’t need to take out a policy with the provider your bank recommends, however they may offer a better interest rate if you do.
Insurance is not an emotional purchase. It doesn’t make us feel good to buy it but it does give peace of mind. However, it only does that if you take out the appropriate level of cover and pay the relevant premium.
If you’re renting then you’ll only need contents insurance, the owner is responsible for buildings cover.
One of the best ways to make sure you’re getting the best policy for your circumstances is to use an insurance broker. Money Saver Spain recommends BMI Brokers Correduría de Seguros, S.L. who specialise in general insurance products for expatriate clients throughout Spain (mainland and islands). With over 30 years of experience they understand that one-size doesn’t fit all and will tailor insurance cover to a client’s requirements. Purchasing insurance through a broker gives you the added support of them representing your claim in front of the insurance companies.
Contact Jeremy Ryan on 952 582 282 / 637 834 552 or visit directly BMI Brokers online.