Understanding insurance in Spain

Life in Spain Tuesday, March 7, 2017
Understanding insurance in Spain

If you buy a property in Spain then you will need to take out insurance. Insurance in Spain works very similarly to that in other European countries, more or less. You pay a Premium and, unless you have to make a claim, that is it. However, there are a few differences and some issues that you should watch out for if you want to make sure that you get the best deal from your insurance company.

To begin with, the payment system might be slightly different to what you’re used to. Insurance is usually paid in bigger chunks such as annually, biannually or quarterly. It is unlikely, except in the case of health insurance, that it will be a monthly payment. This is partly because of Spain’s system whereby there is an eight week period during which you can reverse a spending decision when it involves a direct debit.    

If you want to cancel Spanish insurance it should be straight forward as long as you inform the insurance company around two months before the renewal date. You should put your intention to change in writing. Do not leave it until a few days before as you may find that you are unable to cancel it at this point.

Home insurance

If you are either a resident or a non-resident you will want to take out home insurance for your property in Spain. If you have a mortgage then the bank will be keen to ensure that you have done this. However, be aware that depending on the conditions of your mortgage, you do not have to take out the insurance with the bank. If you do, check that the insurance covers contents sufficiently.

Be aware that there have been problems with water leaks in Spain and although you should be covered for any damage to your property or possessions, you will not be covered for the lost water. In some cases, where the leak has gone undetected for days, and occasionally weeks, there can be a significant bill. Now some water companies are offering insurance of their own in case this happens and it is well worth considering taking this, especially if you know that neighbours have had problems in the past.

If you are unfortunate enough to suffer a break in then you must make a denuncia as soon as possible at your local police station. The insurance company will need to see this in order to pay for any loss you have sustained.   

Banks behaving badly

Home insurance has been the target of some rather dubious bank activity. Some banks in Spain have been taking it on themselves, illegally, to check people’s accounts in order to identify when their insurance policy is due for renewal. Where they can see the possibility of a change they have been contacting their clients to suggest that they take out the bank’s own home insurance in future.

They then ‘undercut’ the current insurance premium but without having any idea whether the level of cover is the same. Frequently it isn’t and what their clients end up doing is taking out a new policy, at a slightly reduced cost but with less beneficial terms and conditions. Don’t forget that the bank already know how much you have been paying and this gives them important leverage when trying to win you round.

If this wasn’t bad enough, in some cases the bank has even omitted to pay a direct debit premium prior to renewal day.  When the insurance company contacts the client to inform them their bill hasn’t been paid, the client makes enquiries with the bank. At this point they might be ‘offered’ the bank’s alternative insurance policy, usually under a promotional offer. They can be very persuasive!

Car insurance

If you come over to live in Spain then it is important that you change the plates of your car as soon as possible. In the meantime you should continue to be on the car insurance you took out in your home country. You should inform the insurance company that you are moving and what your intentions are.

Once you have changed your plates then you must take out car insurance in Spain. This works very similarly to other countries and you can have your no claims transferred from the insurance company you have used previously. They should send a letter to you informing you of your current status. If you are changing insurance companies in Spain they will communicate between themselves.

Be aware that if you are a non-resident but frequently drive your foreign car in Spain that you should inform your insurance company of this to check that you are still covered when abroad.

One difference between car insurance in the UK, for example, and Spain is that it is the car that is insured rather than the driver. You may be used to a system whereby all those who will drive the car must be named on the policy. This is not  the case in Spain and you only need to name drivers where they are under the age of 25.

If you do sell your car during the term of the insurance you will not normally get any of your insurance money returned. However, if you buy another one, they will transfer any remaining cover to the new vehicle.

Other insurances

As a non-resident your life insurances, health, pets, dental insurances will be taken out in your home country. These are also available for residents in Spain under similar conditions. If you do have a funeral plan in your home country but spend a portion of the year in Spain do make sure that your insurance covers the cost of repatriation.

If you are planning to live in Spain but are not of state retirement age then you will need to show the authorities that you have full private health insurance. Make sure that this covers you for everything that you would receive as part of state health cover. Otherwise it may not be accepted.

Insurance can seem like a never ending pay out with minimum pay back when anything happens. However, the theft of your TV can be the least of your problems. If your property is not insured and it is linked to damage to others then you can find yourself with a very hefty bill. For example, if you do have a water leak and the water damages someone else’s property you can be liable to pay out.

Public liability is included in insurance policies and this covers you for eventualities that you might not even have considered a possibility. After all, insurance is a necessary burden that can be managed to make sure it works better for you.

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Comments

Hi There We Are Soon Going To Live In Spain How Does Health Insurance Work For Us, Do We ,Still Get NHS In Spain From UK And Take Out Extra Cover For A Serous Health Problem If It Should Happen Please Advice, Kind Regards Mr David Grant

Dear David

The issue of health care in Spain is a very important one for those considering moving here. We have several articles about the provision that is available Are you entitled to health care in Spain? and Health care entitlement in Spain are two examples. 

If you are a pensioner then you are currently still eligible for national health care in Spain. If an early retiree you will need to either take out private health care or invest in a regional scheme as we explain in these articles. 

I own a Spanish registered motorcycle, my insurance is due for renewal 10/04/17 I will not be using the motorcycle after this date as I intend to sell it, do I have to renew the insurance even though the vehicle will not be used ?
Your advice would be greatly appreciated, thank you

Hi

It depends on where your bike is being stored. If it is off the road and in a garage or forecourt then it doesn't need to be insured. If it is still on the road then you must have insurance even if you are not riding it. 

can you advise if earthquake cover is included or excluded in all building insurances, I am some what confused on this issue.

Regards

Eamon Murphy

Natural disasters are covered by the Spanish government. A small percentage of your policy goes towards this and if there were to be an earthquake you would claim from the government. 

I am a non resident, my wife is a Spanish citizen. Our car is in her name. We leave the car disconnected and in a private garage for nearly 8 months a year, but our insurance company will not give us any discounted rate for this idle time. Is this typical?

Dear Peter

Yes, this is typical. You will be lucky to find an insurance company who will make allowances for this currently. 

Hi can you advise me as I live in a residential block of town houses l pay a community charge that includes building insurance should I now only buy contents insurance only?

Hi John

My advice is to be careful with this as many community insurances cover only the common areas of the building such as pools, stairwells, perimeter walls etc. Even if your own property is covered we still recommend that you take out your own buildings insurance to be sure that you are fully covered and that the insurance is paid and up-to-date. That way you are also in charge of any claims that you may to have to make. 

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