Compulsory or voluntary? A frequently asked question among clients and friends is whether to it is compulsory to take out home insurance. The best answer would probably be: «not in principle, but it is highly recommended. So let's discuss when it might be mandatory and why it is advisable to take out home insurance.
What is covered by home insurance?
Through the homeowner's policy we can provide cover for:
- The housing container: i.e. the fixed parts of the real estate (ceiling, partition walls, floor, pipes, electrical network...). It is usually assessed according to the size of the house and the type of dwelling (detached house, flat...).
- The content: are the goods that we have in our house. We are talking about: furniture, television, our clothes, laptop, jewellery, mobile phones...
- Civil liability: this warranty covers damage that may be caused to a third party. (water leaks, something falling out of the window, etc.).
Taking out home insurance aims to guaranteeing peace of mind for the landlord or tenant who is otherwise assuming the risk of damage to both his own property and that of his neighbours.
Is home insurance compulsory or voluntary?
In this sense, home insurance is voluntary for both the owner of the home and the person who lives in it. The only case in which it is compulsory to take out home insurance is when purchasing a home with mortgage loan. There, the law does establish this possible obligatory nature, regulated in Royal Decree 716/2009, which implements the Mortgage Market Regulation Law, and article 10 of which states:
The property over which the mortgage collateral is provided must be insured against damage appropriate to the nature of the property.
Despite this, What is not compulsory is that this insurance must be taken out with the bank. A European Directive in 2013, known as the “European Mortgage Directive” prohibited banks from making the granting of a loan conditional on taking out insurance with the entity. We talked about this calmly in the article of a few months ago, where we also reflected on the difference of price of life insurance between a bank and a company.
Housing insurance statistics
According to data from a study by the ARRENTA Association, which promotes access to housing:
- The 30% of dwellings in Spain are uninsured today. This is double the number of years ago, due to the economic crisis. That is almost 8 million uninsured households.
- The half of the households that do have insurance have inadequate or insufficient policy cover; The loss would not be paid for all assets in the event of a major loss.
- The claims ratio in the home insurance branch is the highest in the world. The market share is second only to that of motor insurance.
For all these reasons, we must understand the importance of taking out home insurance, given that an unforeseen event can happen at any time. What we should be most concerned about is a possible burst pipe that could flood the flat below, as we do not know what may be in that house, and this compensation could amount to thousands of euros, when these policies exist from €100 per year.
If you want us to help you find the household insurance for you, call us or contact us. We have what you need.
