Buying a house is one of the most important decisions in life and, as such, it involves some risks that we must always consider, especially if it is a new-build housing.
To protect us from the most serious damage, there is the ten-year building damage insurance policy. But what exactly does this policy cover? When is the ten-year insurance taken out and by whom? In this post we tell you all about it in detail.
What is ten-year insurance?
Let's start with the most frequently asked question: what is a ten-year insurance policy?
Decennial insurance is a policy that protects developers and owners of newly constructed homes against structural damage to the building that may threaten its safety and habitability requirements.
It is about a ten-year guarantee, This means that it will be valid for 10 years from the end of construction. In that decade, the buyers of the house will receive an indemnity or, more usually, the insurer will assume the repair costs in case any construction defect or soil problem affects the stability of the building, and entails a real risk to your home.
Ten-year building damage insurance is sometimes confused with the insurance of household insurance, but they are two very different policies. While the former covers damage due to construction defects affecting the structural elements of the building, a home insurance policy protects you against damage to personal property and damage to the interior of the home, such as theft, fire or water damage.
What does the ten-year building damage insurance cover?
So what is the ten-year insurance cover?
The main guarantee of this insurance is that of structural damage, i.e, covers damage to the building caused by defects or faults in the foundations, supports, beams, floors or load-bearing walls., and are compromising the strength and stability of their dwellings.
How does it cover them? Either by compensating the buyers and owners of the property, or by assuming the corresponding repair of the damage, as well as the costs to reinforce and prevent the threat of subsidence. This protection is valid for a period of 10 years since the completion of the work.
To give you a better understanding, a possible cause could be a problem in the beams, in the load-bearing walls or in the settlement of the ground.. But it is not enough that there is a defect in the structural or constructive elements: it has to pose a real risk to the safety of the inhabitants.
Depending on the level of protection desired by the developer, the policy may also include some additional guarantees, The following are less important, but may also be useful for the developer to avoid certain repair costs. For example:
- Waterproofing of facades and roofs. Protects against damage caused by possible water leaks due to construction errors, such as persistent damp.
- Basement watertightness.
- Asset protection in the event of subsequent alterations.
- Waivers of appeal. It includes the waiver of claims against contractors, planners and project management, encouraging faster resolution of problems.
In some of these guarantees, ehe temporal scope of coverage is limited to 12 months or 3 years.
Compulsory ten-year insurance
But is ten-year insurance compulsory? Yes, although only applies to residential buildings. For hotels, offices or shopping centres it is not mandatory, but recommended.
However, there is one important exception! If you are a self-promoter whoever builds a single-family dwelling for his own use, is exempt from taking out this insurance, unless it is to be sold to a third party within 10 years of construction.
Who takes out ten-year insurance?
It is the obligation of the insurer to take out ten-year insurance. building developer, The policyholder must therefore be the policyholder of the insurance policy, without the possibility of cancelling the policy within 10 years of taking out the policy. He must therefore be the policyholder.
This can be a development company or any private person who is in charge of promoting a building project.
The protection will be twofold, because the beneficiary will not only be the property developer: so will be the buyers of housing.
When is the ten-year insurance policy taken out?
With regard to when the ten-year insurance is taken out, it is necessary to do so before starting construction of the building.
At PIB Group Iberia we always recommend opt for a construction insurance, which, in addition to the ten-year insurance policy, covers the civil liability of the construction company and the developer, and all possible material damage that may occur on the construction site itself.
However, the actual coverage begins when the construction of the property is completed.
Is it possible to register a deed without ten-year insurance?
If dwellings do not have this policy, they will not be able to register the new construction in the land register. and therefore cannot be sold or receive mortgage financing.
Ten-year insurance law
But what exactly does the law say about this?
Article 19, Law 38/1999 of 5 November on building regulations defines ten-year insurance as a “property damage, surety or financial guarantee insurance”.
According to the text, it aims to “guarantee, for 10 years, compensation for material damage caused to a building due to faults or defects originating in or affecting the foundations, supports, beams, floors, slabs, load-bearing walls or other structural elements, and which directly compromise its mechanical resistance and stability”.
Ten-year insurance rates
One of the issues that most concern those who need to take out decennial insurance is usually its price. The truth is that, depending on the type of construction we are talking about, that cost can be highly variable.
Normally, this is a single premium and is split into two payments, the first being somewhat smaller than the second, which takes place at the end of the work. But the amount depends on many factors, The final cost of the work, the date on which it was completed, its location, the optional covers that you want to include...
It is important to compare between different insurers in order to perceive differences and to be able to compare at reasonable market prices. The most common companies in these risks are insurers such as Asefa, Mapfre, Zurich…
At Moné we act as insurance comparator, We can help you choose the most favourable and economical policy for your specific case, so don't hesitate to ask us!
Ten-year insurance without OCT
The majority of developers hire Technical Control Offices (TCOs) so that they are in charge of controlling, at a technical level, the execution of its construction in each of its phases. In fact, it is a requirement of the insurance companies in order to be able to subscribe the policy.
TCOs are usually architectural or engineering firms and their job is to develop a detailed report on the quality of the work in question. With these data, insurance companies can get an idea of the building they are going to protect.
It is not uncommon for insurers to refuse to protect a home if it is not supervised by an OCT. In fact, it is the most common thing to do. After all, it is a big risk that they must be able to take.
Even so, there are possibilities to take out a ten-year insurance without OTC. This is the case, for example, for completed construction sites where technicians have not had time to check the entire construction process.
Remember that at PIB Group Iberia we are here to help you and we work with a wide range of insurers. If you have any questions regarding this compulsory insurance and you want to find a policy that really suits your needs, we are at your disposal!Contact with us and don't let it pass you by!
