Our Property is usually the biggest investment we make in our lives and not only could we lose it, for example, in the event of a fire we could also lose everything in it. Our memories, photos, important legal documents.
If you are reading this then you probably already realise that it makes sense to organise home insurance in Spain.
Whilst we cannot replace the memories or photos you can make sure that you are suitably protected so your property is rebuilt and the costs involved in reproducing your important legal documents are covered.
The main protections of home insurance in Spain are usually Split into building insurance and contents insurance.
To calculate your buildings cover you need to calculate the rebuild cost and not the resale value.
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 a number of factors that do not alter the rebuild cost. For example, the area may be very desirable. Perhaps it has good schools nearby, some wonderful views or maybe good connections to other towns and cities. These factors affect the market value but they don’t change the rebuild costs.
The rebuild costs should also make sure your home insurance in Spain includes an amount for clearing away debris, planning permissions, architect and surveyors fees and IVA (VAT plus other connected costs.
The insurance companies themselves will calculate an estimated cost per square metre based on the post code but this is very general. You need to bear in mind the quality of the build. If the materials used were of higher quality than normal then this needs to be factored in.
Do not be tempted to undervalue your property when taking out the insurance. If, for example, the insurance company has suggested a figure for rebuild, 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.
- You leave yourself open to a claim of under insurance. When you take out a policy the insurer expects the premium paid to reflect the risk they are taking. If the property is valued at 300,000 but you are paying a premium for a policy worth 150,000 then you are underinsured. You will have paid the insurer a lower premium than the actual risk is worth. This would enable the insurer to reduce the payout to you. So not only would your payout not be sufficient to rebuild your property it could be further reduced because you have not paid the correct premium for the risk.
In the rare case that you feel the insurance company’s rebuild value is too high then we do not recommend you lower it but choose another company instead.
How to calculate your contents insurance in Spain
The best way to calculate the amount you need for your contents cover in your Spanish home insurance policy is to go from room to room adding up everything. Go into one room and take a look at what is in there. Curtains, curtain rail, wardrobes, clothes, chest of drawers, beds, matresses, shelving etcetera. Add it up and write down the figure. Then move to the next room and do the same.
It is particularly important to remember that your kitchen forms 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 ítems 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. These should be itemised in the policy. You may also be asked to provide a valuation i fan individual ítem excedes a certain amount. In the case of jewellery this usually means getting it valued by a reputable local jewellers.
Again do not under insure as in the event of everything being destroyed then you will not receive sufficient to replace your loses.
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.
Please think about the cover you require to avoid disappointment at what will probably be a very difficult time.