Home insurance: when is it necessary
When purchasing real estate in Spain, many face the question: is it mandatory to have a home insurance policy? The answer depends on how the property is acquired. If the home is bought with a mortgage loan, the bank requires insurance coverage. This is because the lending institution aims to protect its financial interests in case the property is damaged or lost.
If the property is purchased with personal funds, without bank loans, the law does not oblige the owner to take out insurance. Nevertheless, real estate experts recommend not neglecting such protection, as it helps avoid significant expenses in case of unforeseen circumstances.
Legal requirements and bank conditions
According to current legislation, specifically Article 10 of Royal Decree 716/2009, home insurance is only mandatory when taking out a mortgage. The minimum set of risks that must be included in the policy are fire protection and damage caused by natural events. Banks usually offer to arrange insurance together with the loan, but the client has the right to choose any insurance company, not just the one recommended by the bank.
In practice, most buyers prefer to sign both contracts in one place, as banks often offer more favorable terms for bundled services. Nevertheless, the law does not restrict the choice of insurer, and the borrower can select a suitable option independently.
Benefits of insurance for property owners and tenants
Even when insurance is not mandatory, having a policy provides additional protection for both the property and its contents. Modern insurance products cover a wide range of risks, from fires and floods to theft and appliance breakdowns. In the event of an insured incident, all restoration costs are borne by the insurance company, which helps prevent significant financial losses.
If the owner does not purchase insurance, they will have to cover all losses from accidents or other incidents themselves. Additionally, a policy with liability coverage protects the owner from possible claims by neighbors if, for example, water leaks cause damage to someone else’s property.
Insurance for tenants: features and recommendations
There are no mandatory home insurance requirements for tenants. However, there are special products on the market specifically designed for renters. These policies offer protection for the tenant’s personal belongings against damage, theft, or other unforeseen events. In the event of incidents such as fire, flooding, or break-ins, the insurance company will compensate for the loss of property.
Thus, obtaining an insurance policy is not only a requirement of the bank for mortgages but also a sensible way to protect one’s interests, whether you are a homeowner or a tenant.
