Home

The insurance that covers homes; today’s multi-risk home policies cover much more than the building and contents.

Despite being the third class of insurance that Spaniards spend the most on, it remains complex for reasons such as the following:

The description of the risk:

• The valuation of the building:

The already difficult task of valuing a property on the basis of a value per built square metre has become harder with the rise in repair and reconstruction costs: the IPRI (Industrial Producer Price Index), reached 35.6% in the first 3 quarters of 2022.

Whereas some time ago the valuations of different insurers generally diverged by no more than 10%, today the different insurers’ valuations, without proper correction by an expert, can cause very significant difficulties in the event of a claim.

In addition, of course, to the need to take into account:

1. The quality of construction.
2. The age of the property, the materials of the pipework.
3. Adjoining areas, swimming pools, porches, installation of solar panels and batteries.
4. The home’s protections.

• Valuation of contents:

A very high percentage of the policies sent to us for review have a declared contents sum insured that is therefore far below the real one.

In our homes we accumulate far more value than we initially estimate. Here you can find a small valuation tool, a short reminder of everything you need to include.

By the way, we must not leave certain items uninsured because we think that, if a claim occurred in which they were lost, we would not need to replace them: a loss adjuster assessing the damage would identify underinsurance and the Average Clause (proportional rule) would be applied under article 30 of the Insurance Contract Act. 

If, at the time the claim occurs, the sum insured is lower than the value of the interest, the insurer will indemnify the damage caused in the same proportion in which the sum insured covers the insured interest. The parties, by mutual agreement, may exclude in the policy, or after the contract has been concluded, the application of the proportional rule provided for in the preceding paragraph.

One more thing: not all insurers have exactly the same concept of building and contents.

Policy covers:

The classic covers:

• Fire, explosion, lightning and smoke.
• Impact, breakage of glass and sanitaryware, rot.
• Water action, pipe bursts, overflow, leaks, failure to turn off taps.
• Electrical phenomena such as lightning strikes, power surges and short circuits.
• Natural phenomena, storms, floods, forest fire, 
• Theft and damage caused by theft.

Insurers may set sub-limits on some of these covers, or impose minimum thresholds on the intensity of events such as wind or rain.

It is common to think that home policies cover only the dwelling, but today there are many more important covers:

• Leaks 

Additional covers.

There are many covers, perhaps less well known, that policyholders use less often, especially when they take out policies through direct or non-professional channels. Here are some examples:

• Theft away from home
• Medical telephone helpline
• Home medical assistance service
• Appliance repair
• Fraudulent use of cards
• Medical assistance while travelling
• Home DIY service
• IT assistance and data recovery
• Excess water consumption

Other differentiating values of insurers:

There are around 200 insurance companies operating in Spain, most of them in the home class, where competition is very aggressive.

It is important to work with experienced insurers and established professionals: remember that insurance companies have one-year contracts with their clients and longer-term contracts with their suppliers, and neither is perfectly flexible.

Changes in market trends or claims experience can create imbalances in the effectiveness and efficiency of insurers.

If the agreements with repair companies are not satisfactory for both parties, the repair company has to handle too many cases, does not attend to repairs on time, does not use the right materials, and does not employ good professionals for plumbing, painting, bricklaying, drain unblocking, electrics, plasterboard, gardening, etc., so the work they carry out does not satisfy policyholders.

As a result, insurance brokers react by using good professionals who are not part of the insurer’s repair panel; these professionals charge higher prices and increase the cost of repairs for the insurer. The insurer can only offset this in two ways: by raising its premiums and by saving costs, for example by rejecting claims or using poorer professionals in its call centres, a vicious circle.

Technology and flexibility.

The systems and their ability to communicate with the systems of:

1. Underwriters and claims handlers, some already working remotely.
2. Repairers and loss adjusters.
3. Lawyers and third parties, claimants and respondents.
4. The brokers’ management systems.
5. The property registry (cadastre).
6. Client records, non-payments, etc.

They are extremely important for speeding up the resolution of all procedures, avoiding countless emails, calls and misunderstandings.

For all these reasons, always rely on the advice of a professional intermediary to take out the policy that truly protects your assets and those of your loved ones.