How to calculate home insurance in Spain

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Our property is often the biggest investment we make in our lives and not only could we lose it, for example, in the event of a fire, but we could also lose everything in it, such as our memories, photos or important legal documents.

It is important to have insurance, depending on your needs and your personal situation it may vary in price. If you are wondering how home insurance is calculated, this post is for you.

If you are reading this then you probably already realize that it makes sense to organize home insurance in Spain.

While we cannot replace souvenirs or photos, we can help ensure that you are adequately protected so that your property is rebuilt and the costs of reproducing your important legal documents are covered.  For the calculation of costs, we will tell you how home insurance is calculated.

The main protections of home insurance in Spain are usually split into building insurance and content insurance, you can contract them independently but it is more usual and recommended to contract both in the same policy.

How is home insurance calculated? Buildings cover:

If you want to know how home insurance is calculated in this case, you should know that to calculate the coverage of your buildings you need to calculate the cost of construction and not the resale value.

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The rebuild value may be less than the market value. This is because you do not need to buy the land again, if your property is destroyed you already own it. The market value of the property is affected by many factors that do not alter the rebuilding cost, for example, the area may be very desirable.

Perhaps you have good schools nearby, some wonderful views or good connections to other towns and cities, these variables do not change the costs of rebuilding but they do affect the market value and therefore the insurance, so it is important to realize all these factors to know how home insurance is calculated.


The costs of the reconstruction should also ensure that the house insurance includes an amount for cleaning up the debris, planning permission, architect’s fees, surveyors and VAT (VAT plus other related costs).

Insurance companies will usually calculate the estimated cost per square meter based on the code. This should take into account the quality of the construction, if the materials used are of higher quality than normal, then this should be taken into account. It is important to take this into account when considering how home insurance is calculated.

Do not be tempted to undervalue your property when taking out the insurance. If, for example, the insurance company has suggested a figure for rebuilding, do not go below that indication. There are two reasons you should not do this:

  • If you under insure and you have to make a claim, then the amount of the payout will be insufficient to rebuild the house.
  • When you take out a policy, the insurer expects the premium paid to reflect the risk you are assuming. If the property is valued at 300,000, but you are paying a premium for a policy of 150,000, then you are under-insured.
  • In that case you will have paid the insurance company a lower premium than the actual risk is worth. This would allow the insurance company to reduce the payment they should give you, so not only would your payment not be enough to rebuild your property, it could be reduced even further because you have not paid the correct premium for the risk.
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In the rare case that you feel that the insurance company’s construction value is too high, we do not recommend that you reduce it, but choose another company instead.

For this reason, it is important to know how the home insurance is calculated, to avoid unnecessary payments and expenses.

how is home insurance calculated in Spain? Content insurance

To calculate the amount of coverage of the contents policy you must go from room to room adding up the value of your belongings, this is how home insurance is calculated.

Go into a room and take a look at what’s there: curtains, curtain rods, closets, clothes, dressers, beds, mattresses, shelves, etc. Add up and write down the figure. Then go to the next room and do the same.

It is particularly important to remember that your kitchen is part of the contents of your property and not part of the building’s 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 of jewellery, watches or collectables with an individual value of more than 3,000 euros.

To know how the home insurance is calculated, the objects mentioned above must be detailed by the insurance company’s policy. You may also be asked to provide an estimated value in the case of jewellery, this means that it must be appraised by a reputable local jeweller.


Again, do not under-insure as in the event of everything being destroyed then you will not receive sufficient to replace your losses.

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How is home insurance calculated: In summary

Insurance is not an emotional purchase. When you take it out, it gives you peace of mind and makes you feel more secure. This feeling increases when you remove the right level of coverage and pay the corresponding premium.

Please think about the coverage you need to avoid disappointment at what is likely to be a complicated time.

Now that you know how home insurance is calculated you should know that in Spain there is a wide variety of insurance companies to suit your needs.

At BMI Spain we can help you find the most appropriate insurance company for you and your family.

Do not hesitate in contact with us if you have any doubts about healthcare in Spain for expats, our BMI Spain team will be pleasant to help you.