Disaster damage with no policy or too little cover

Terms used

• Consorcio de Compensación de Seguros — The Consorcio de Compensación de Seguros is a Spanish public body that covers extraordinary risks such as floods and acts as liquidator of insolvent insurers.
• Regla proporcional — The regla proporcional cuts a claim in the same ratio as your sum insured bears to the property's real value.
• Protección Civil — Protección Civil is Spain's civil protection service, which coordinates emergency response and disaster aid.
• BOE — The BOE is Spain's official state gazette, where laws and aid decrees are published.

Key rules

• No policy: Property with no insurance policy receives nothing from the Consorcio.
• Unpaid premium: If your policy is suspended or lapsed when the event happens, neither your insurer nor the Consorcio pays.
• Under-insurance: A sum insured below the real value reduces your payment in the same proportion.
• Public aid: Aid for uninsured damage is discretionary and set by a decree for each event.

No valid policy means little or nothing from the Consorcio

The Consorcio de Compensación de Seguros pays for disaster damage only when your property is covered by a valid policy. Think of home, vehicle or life policies, which include its extraordinary-risk cover. If you have no policy, you get nothing from the Consorcio. Too little cover means a reduced payment, as explained below.

A lapsed or unpaid policy removes cover

If your premium was unpaid and the policy was suspended or lapsed on the day of the event, the Consorcio does not pay. Its surcharge is collected with your premium. If your insurer would not be liable because you did not pay, the Consorcio is not liable either.

The usual rules work like this:

• If the first premium is unpaid before the loss, there is no cover.
• Later premiums suspend your cover one month after their due date.
• If you pay late but before the damage happens, the cover normally stays in place.

The timeline below shows these dates.

Too little cover shrinks the payment

The Consorcio pays on the sum insured in your policy, up to the real value of the property. If that sum is lower than the real value, the payment is cut in the same proportion. For example, if you insured half the real value, expect about half of the loss to be paid. This is called the regla proporcional.

To avoid this, compare the sum insured with what your property is really worth. If it is lower, ask your insurer to raise it. The decision below helps you weigh this.

If your insurer goes insolvent

If your insurer is declared insolvent or put into liquidation, the Consorcio takes over as liquidator. It pays claims from the insurer's assets. Its own funds cover a shortfall only in the cases the law sets out. You keep your claim and normally file it as before, or with the Consorcio once it is named liquidator. How much gets paid depends on the specific liquidation, so ask the Consorcio about your case.

Public aid for uninsured damage

If you are uninsured, public aid is the route to look at. It is discretionary and tied to a specific event. Contact Protección Civil, the Government delegation or subdelegation, your regional government and your town hall.

After a major disaster, the Government may declare the area gravely affected and approve aid by decree in the BOE. Regions and towns publish their own aid in their official gazettes. Read the exact decree for your event, because aid is time-limited. The climate content on this guide covers public disaster aid in detail.

If your home cannot be lived in after a disaster, see the "What if your home becomes uninhabitable" section below.

Choosing between options

Should you raise your sum insured or keep your current policy?

• Raise the sum insured to the real value: Your sum insured is lower than the real value, so any payment would be cut in the same ratio.

• Keep the current sum insured: Your sum insured already matches the real value of the property and your premiums are paid on time.

• Pay overdue premiums now: A premium is unpaid and the damage has not happened yet, as paying before the loss normally keeps the cover.

The Consorcio pays on the sum insured, up to the real value, and only if the policy is valid on the day of the damage. Fix any gap in value or payment before then.

Timeline and deadlines

• Pay your first premium so cover starts: before any loss happens

• If you pay late, pay before the damage happens to keep the cover: before the loss

Checklist

• Check that your premium is paid up and your policy is not suspended or lapsed.

• Raise the sum insured with your insurer if it is below the real value.

• Ask the Consorcio how your claim is handled if your insurer is declared insolvent.

• Look for the decree in the BOE or your regional gazette that sets out the aid for your event.

What to watch out for

• No policy means nothing from the Consorcio: The Consorcio pays nothing for property with no valid insurance policy in a class that includes its cover, such as home, vehicle or life. Look to public disaster aid instead, and insure the property before the next event.

• An unpaid or lapsed policy removes cover: If the premium was unpaid and the policy was suspended or lapsed when the damage happened, neither your insurer nor the Consorcio pays. Pay every premium on time. A late payment made before the loss normally keeps the cover.

• Your insurer may become insolvent: If your insurer is declared insolvent, the Consorcio becomes its liquidator, but how much is paid depends on the liquidation procedure. Keep your policy papers and ask the Consorcio how to file your claim.

What if your home becomes uninhabitable after a disaster?

If a disaster makes your home unlivable, temporary accommodation is paid only if your policy includes it. Tenants' rent depends on the lease and on how badly the home is damaged. For owners and tenants in Spain.

Who pays for temporary accommodation

Temporary accommodation is paid only if your home policy includes it. Many policies do, usually with a spending limit or a time cap. Read your policy for the words "rehousing" or "alojamiento temporal" and note the limit before you book anything.

The Consorcio generally pays for direct damage to the insured property, not for knock-on costs such as a hotel or a rental flat. Do not count on it for accommodation.

After a major disaster, public aid sometimes covers rehousing. It is set event by event, so look at the exact decree for your area. Your town hall can tell you where to apply.

If you rent

Your rent duties depend on your lease and on tenancy law. In general:

• Home destroyed: the lease ends and you stop owing rent.
• Home partly damaged: you can ask for a lower rent or end the lease.
• Deposit and damages: these depend on who was at fault. A disaster is usually nobody's fault, but check with the landlord in writing.

Tell your landlord in writing as soon as it happens, and keep photos of the damage. If you and the landlord disagree about how bad the damage is, get legal advice before you stop paying.

Who insures what in a rental

By common practice, the landlord insures the building and fixtures. You insure your own belongings and your liability to others. Your lease may say something different, so check it. If the building has a community of owners, the community's policy usually covers the structure.

If you have contents insurance, ask whether it pays for temporary accommodation.

Frequently asked questions

What happens to my claim if my insurer goes insolvent?

Your claim is kept: the Consorcio takes over as liquidator of an insolvent insurer and pays policy claims from the insurer's assets.

Does being under-insured reduce what the Consorcio pays?

Yes, the Consorcio pays on the sum insured in your policy, and if that is lower than the real value of the property, the payment is cut in the same ratio. For example, a policy covering half the real value pays about half of the loss. Check your policy valuation against the real value.

Where do I look for public aid if my damage is uninsured?

Start with Protección Civil, the Government delegation, your regional government and your town hall. After a major disaster the Government may declare an affected area and approve aid by decree in the BOE, the official state gazette. Regions and towns publish their own aid in their own gazettes, and aid is discretionary and time-limited.