Insurance for a property you rent out, including unpaid rent

Terms used

• Continente — The continente is the building cover part of a policy, insuring the structure itself.
• Responsabilidad civil de propietario — The responsabilidad civil de propietario is owner's liability cover for damage the building causes to neighbours or other third parties.
• Impago de alquiler — The impago de alquiler is optional insurance that pays your unpaid rent, up to a limit, if the tenant stops paying.
• Desahucio — The desahucio is the court process for evicting a tenant.
• Carencia — The carencia is the waiting period after you sign the policy during which you cannot yet claim.

Key rules

• Core cover: Every landlord should hold building cover at full rebuild value plus owner's liability cover.
• Unpaid-rent cover: It is optional and only pays if the tenant passes the insurer's screening.
• Tenant's policy: A tenant's own policy does not replace your building cover.
• Tourist lets: Unregistered and short-term tourist lets are not covered by unpaid-rent insurance.

What you need as a landlord

Take out two covers: building cover and owner's liability cover. Unpaid-rent cover is optional, and it only pays if you and your tenant meet the insurer's conditions.

Building cover (continente)

Building cover protects the property itself against fire, water damage, explosion, storm and broken glass. Insure it for the full cost of rebuilding, not the market price. A lower sum can mean the insurer pays less after a claim.

If your home is in a community of owners, the community's policy may already cover common areas such as the roof, façade and stairs. Ask the community administrator for a copy so you do not leave gaps or pay twice.

Owner's liability cover (responsabilidad civil de propietario)

This pays when the building damages other people or their property. A leak into a neighbour's flat is the usual example. Limits are typically several hundred thousand euros or more. Compare limits before you compare prices.

Useful extras

• Contents cover for the furniture and appliances you supply.
• Legal defence.
• Cover for illegal occupation.

Your tenant's belongings and liability are the tenant's responsibility, not yours. Many contracts require the tenant to hold their own policy, but that does not replace your building cover.

Unpaid-rent cover (impago de alquiler)

This cover is optional. It typically pays unpaid rent, sometimes unpaid utilities and damage caused by the tenant, and the legal costs of eviction (desahucio). Payment is capped. The cap is usually 6 to 12 months of rent, or a maximum total per claim.

Conditions to expect

• Tenant screening. The insurer checks the tenant before it accepts the policy. Usually the rent must not be above about 30 to 35% of the household's net income. The tenant needs a stable employment contract or a pension, and must show payslips or a tax return.
• Waiting period (carencia). This usually runs 1 to 3 months after you sign. Rent that goes unpaid in that time is not covered.
• Start of claims. You can usually claim after one or two unpaid months.
• Prompt legal action. Start proceedings quickly, through the insurer's lawyers.

What is not covered

• Tenants the insurer did not screen.
• Rent unpaid before the policy started.
• Rent above the insured limit.
• Unregistered lets and short-term tourist lets. The cover is for long-term residential leases.

How to set it up

Ask for the screening before you sign the lease with the tenant. Have the signed contract and the tenant's income proof ready; the documents list below shows what to gather. The timeline below shows the order of the steps. Compare the monthly cap, waiting period and exclusions between insurers, not just the premium.

Timeline and deadlines

• Screen the tenant's income and employment with the insurer: before you sign the policy

• Start legal proceedings with the insurer's lawyers: promptly once you decide to claim

• Receive payment for unpaid rent up to the policy limit: for 6 to 12 months of unpaid rent

Documents you need

• The signed rental contract for the property, which the insurer needs for rent-default cover on a long-term residential lease.

• Recent payslips of the tenant, or a pension statement, to show stable income for the insurer's screening.

• The tenant's tax return, which the insurer may accept as proof of income instead of payslips.

Frequently asked questions

How many months of unpaid rent does rent-default insurance pay?

Rent-default insurance usually pays for 6 to 12 months of unpaid rent, or up to a capped total amount per claim. Some policies also cover utilities, damage by the tenant and the legal costs of eviction (desahucio).

What income does a tenant need for the insurer to accept them?

A tenant usually needs rent of no more than about 30 to 35% of net household income. The insurer also expects a stable employment contract or a pension, and will ask for payslips or tax returns. A tenant who has not been screened is excluded from cover.

Does rent-default insurance pay straight away after I sign?

No, rent-default policies usually have a waiting period (carencia) of 1 to 3 months after signing before you can claim. Rent left unpaid before the policy started is never covered.

Does my tenant's insurance replace my building cover as a landlord?

No, a tenant's policy covers the tenant's own belongings and liability, not your building. You still need building cover (continente) and owner's liability cover. If the property is in a community of owners, ask whether the community policy already covers the common areas.