Home and building insurance in Spain: what may the bank require?
The seguro de hogar is the damage policy on the mortgaged property. Contrary to what is widely written, it is not a legal duty of the buyer: the regulator DGSFP states that taking out a mortgage creates no statutory duty on the borrower to insure. The duty is contractual.
What does “Seguro de hogar (buildings insurance)” mean?
The seguro de hogar is the damage policy on the mortgaged property. Contrary to what is widely written, it is not a legal duty of the buyer: the regulator DGSFP states that taking out a mortgage creates no statutory duty on the borrower to insure. The duty is contractual. Article 17.1 of Ley 5/2019 prohibits tied selling. Article 17.3 carves out an exception: the lender may require damage insurance on the mortgaged property. That is the bank's power, not your statutory duty. The duty is contractual — which is why it is negotiable. This is the point that saves money. Article 17.3 obliges the bank to accept equivalent policies from other providers, at the outset and at every renewal. It may charge nothing for reviewing one. And accepting one may not worsen the loan terms in any respect.
What matters about these two points
The answer box above states the case. The two points it is built from carry their own heading here — together with what each of them means in practice.
What the law actually says
In practice the policy is written into the loan agreement, not into the statute book. Read those conditions before you sign and you can see what the bank actually requires — and what it merely offers.
You choose the insurer, not the bank
If you bring your own policy, put it forward early: before signing, with the cover the bank has set out in writing. Switching later stays possible, but it costs you a renewal cycle.
Building insurance Spain: the sum the policy must carry
Not the purchase price, and not the loan amount. Article 8 of Ley 2/1981 and Article 10.1 of RD 716/2009 point to the valuation less the value of the land. The reason is simple: land does not burn down and is not lost in a claim. Insure for the full purchase price and you pay years of premium on something that cannot be insured. Where cover is clearly excessive, the policyholder may demand that both sum and premium be reduced.
What is not compulsory: contents, theft, life cover
What is required are classes 8 (fire and natural forces) and 9 (other damage to property) — theft is expressly excluded. Contents cover is not required by law. That banks frequently ask for a full multirriesgo policy is market practice, not statute. Life cover is not prescribed either; the bank may require it or offer it against better terms, but here too it must accept an equivalent outside policy.
The Consorcio covers earthquake, flood and storm
Every Spanish buildings policy in these two classes automatically carries a compulsory surcharge for the Consorcio de Compensación de Seguros. The Consorcio compensates extraordinary events in Spain: earthquakes and seaquakes, extraordinary floods, volcanic eruptions, atypical cyclonic storms, falling astronomical bodies, plus terrorism and civil unrest. This is not an optional extra — the surcharge is collected with the premium as a matter of law.
What has to be on the table at the notary
What is evidenced is the duty to inform: under Article 14.1 f) of Ley 5/2019, a lender requiring insurance must hand over the conditions of the cover it demands, in writing, at least ten calendar days before signing. The notary checks this and records it in the acta previa; without that record the deed may not be authorised. That the finished, paid-up policy must also be produced is not in the statute. That is market practice and a contractual condition.
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