Everything you need to know about home insurance for apartments or villas in Portugal

There are a lot of questions and doubts about home insurance and all that it entails. In order to make the best decisions on this subject, we have developed, in partnership with an expert in this area, an article in which we answer many of these questions. This way, the decisions you make will be more informed, helping you save time.

Housing

Regardless of typology and location, your home is certainly your most precious material asset, representing the family’s nest egg.

So, it is vital to defend our property from the increasing risks deriving from acts of nature, as well as those caused by acts or omissions of man or by various and accidental material misfortunes.

If, because of these facts, we feel the need and moral obligation to protect our assets, there are also other factors that fully justify taking out home Insurance. These factors are legal obligations and contractual obligations.

Legal Obligations

Is it mandatory to have home insurance in Portugal?

Yes, fire insurance, which covers the risk of damage caused to the property by fire, is mandatory for buildings under horizontal ownership.

It should cover each autonomous fraction and the common parts of the building (roof, stairs, elevators, garage, etc.). Insurance must be made by the owners of each fraction (condóminos).

Contractual Obligations

Under credit agreements for the acquisition of housing, financial institutions contractually oblige customers to take out a Home Insurance that protects the property subject to the credit operation, as well as a life insurance policy for those taking out the mortgage.

Although the legal obligation is only to carry out fire insurance in the case of horizontal property, when acquiring a property with a mortgage product, the contracts usually specify the obligation to take out a Multi-risk Insurance.

In addition to compulsory insurance, property owners, namely house owners, may be more concerned with the comprehensive protection of their assets and choose to take out a more complete insurance package. This multi-risk modality will cover other risks, thus offering further peace of mind.

What cover does a Multi-risk Home Insurance package offer?

Multi-risk insurance includes fire insurance, lightning and explosion. It also offers broader cover in the base pack, a set of damage cover options on the property or its content and may also include a civil liability cover.

What are the general insurance covers?

Multi-risk home insurance can guarantee: repair of damage caused to the building, in the fraction itself or in other fractions, as well as the repair of damage caused to the movable property of the dwelling (contents) as a result of:

. Floods;
. Storms;
. Water damage (plumbing issues);
. Subsidence;
. Electrical hazards;
. Accidental glass damage;
. Theft;
. Damage to Solar Panels;
. Damage by fallen trees;
. Aircraft Crash;
. Damage to Gardens, Walls and Fences;
. Civil liability of the insured and members of their household (if it is necessary to indemnify third parties for damages caused);
. Compensation for the death of the insured person or spouse as a result of fire, lightning strike, explosion or theft, when occurred in the dwelling.

Multi-risk insurance typically has a set of predetermined cover, and other complementary cover values such as the following which can be added:

. Acts of vandalism;
. Strikes, Riots and changes of public order;
. Damage to Garden Furniture;
. Accidental damage (content);
. Loss of Income;
. Seismic Phenomena.

What determines the price of insurance?

As Portugal is part of the European Community, we live in a free market, allowing each insurer to set its own prices, including compulsory fire insurance.

In addition to each insurer’s rates, other determining factors for home insurance prices are: the characteristics of the property (type of construction and materials, location, whether or not you have an alarm connected to a central location, etc.) and the type of cover chosen.

How to determine the insurable value of the property?

The policyholder is responsible for establishing, at the beginning and throughout the contract, what the insured capital is.

The value of the insured capital must correspond to:

The cost of rebuilding the property, taking into account the type of construction and other factors that may influence this cost.

In determining safe capital, all elements of the property (with the exception of land), including the proportional value of the common shares, should be considered in the case of horizontal ownership.

What is the insurable value in relation to the contents?

To properly insure the contents of your home, you should consider the cost of replacing all your goods with new ones.

In the insurance proposal, contents should be valued and clearly described.

Rare goods (e.g. antiques, works of art and jewellery) should be specifically identified and valued individually (if possible with photographic evidence, description of the pieces and professional evaluation).

For these types of objects, it is advisable for the policyholder to keep all documentation proving the existence of the goods.

Usually, insurers have a contents description form, which helps a lot in determining the value to insure.

At what point does the risk coverage for the contract begin?

Risk coverage starts on the day and time indicated in the contract, usually at midnight following the date of subscription to the proposal and depends on the advance payment of the premium.

What kind of information should we review before choosing home insurance?

Before taking out home insurance, you should check and be aware of the following information:

. The risks that are covered and those that are excluded;
. Optional coverage;
. The excess options and their impact on the price of insurance;
. Other factors influencing the price of insurance (e.g. theft or fire protection systems);
. The criteria used by insurers to determine the amount of compensation.

What is the contract duration?

The duration is indicated on the contract and may be:

. Limited to the period agreed between the insurer and the policyholder or the insured (temporary insurance);
. For one year, automatically extended for new periods of one year.

The contract ends at midnight on the last day of your term, if it does not automatically extend. 

Will the premium be returned if the contract ceases before the originally agreed date?

The insured person is entitled to a refund of the part of the premium corresponding to the time not elapsed until the end of the contract, unless otherwise agreed. 

Is it easy to choose the best insurance option?

This work can be greatly facilitated if you use an agent or broker, who is authorised and able to carry out this research and advice work in an impartial and professional manner, presenting you with the most convenient solutions, taking into account the typology of your home and the needs put forward.

This article was written in partnership with:

Jim Player- Insurance, Ltd.

Commercial Director:
Vladimiro Sousa

Access here to the website.