Is home insurance compulsory in Spain if I am a non-resident and my property is empty or let out?

Many foreign owners of a house in Ibiza or elsewhere in Spain wonder whether they need to take out home insurance and what it should cover. The answer depends on whether the property has a mortgage, whether it is let and how long it is left empty.

Is it a legal requirement?

As a general rule, there is no legal obligation to insure a property you own. However, there are situations in which insurance is required or, in practice, essential:

• Mortgaged property: Spanish mortgage legislation requires the mortgaged property to be insured against damage (fire and other damage to the building). The bank may require this insurance, but it must accept a policy from another insurer with equivalent cover; you are not obliged to take it out with the lender.
• Holiday lets in the Balearics: Balearic tourism regulations require anyone marketing holiday stays in homes to hold public liability insurance covering damage to guests and third parties.
• Comunidad de propietarios (owners' association): the building usually has its own insurance for communal areas, but it does not cover the inside of your property or its contents.

What to check as a non-resident

• Unoccupied property: many policies restrict or exclude cover, such as theft, if the property is empty for more than a set number of consecutive days. Check this clause if you only spend a few weeks a year in Spain.
• Use of the property: tell your insurer if you let it, whether as a holiday let or long-term. A policy designed for owner occupation may not cover claims caused by tenants or guests.
• Sum insured: the building should be insured for its rebuild value, not its market value. If the sum insured is lower than the actual value, the average (proportional) rule for underinsurance may apply in the event of a claim (Article 30 of Ley 50/1980, de Contrato de Seguro – the Spanish Insurance Contracts Act) and the payout will be reduced.
• Liability cover: escape of water damaging neighbours' property is among the most common claims; make sure your liability cover has a sufficient limit.
• Landlord cover: for long-term lets, it may be worth adding protection against unpaid rent or damage caused by the tenant.

Practical advice

Before signing, ask for the exclusions and the unoccupancy conditions to be explained to you, and review the policy whenever the use of the property changes. Well-tailored insurance avoids nasty surprises when the owner is far away and cannot react straight away to an incident.