When purchasing a home, one of the first questions that usually arises is whether home insurance is mandatory. Some banks require it when formalizing a mortgage, although the law does not always regulate it in the same way. So, what does the regulation actually say? Is it an unavoidable expense for all property owners? In this article, we clarify the most important aspects of this topic.
Is Home Insurance Mandatory?
Home insurance is only mandatory under certain circumstances. If the property is purchased with a mortgage, the bank will usually require the buyer to take out an insurance policy to protect the value of the loan.
However, if the house is bought outright, the law does not require having insurance. Even so, it is highly recommended to have one in order to be covered against unexpected events.
When Is Home Insurance Required?
According to Article 10 of Royal Decree 716/2009, taking out home insurance is mandatory only when a mortgage is requested and granted. This insurance must include, at a minimum, coverage against fire and other material damage, including that caused by natural phenomena.
Do You Have to Take Out Home Insurance with the Bank?
Although home insurance is a requirement when signing a mortgage, you are not obliged to take it out with the same bank. The law allows you to choose any insurance company, as long as the minimum required coverage is met.
In practice, however, many people decide to take out their insurance with the bank that provides the mortgage, as it often offers better conditions or benefits linked to the loan.
What Happens If You Don’t Have Home Insurance?
If you don’t have home insurance, you will have to handle and pay for all damages or losses in your property out of your own pocket.
Moreover, a policy that includes Liability Coverage protects the homeowner against potential claims from third parties for damages caused by incidents such as water leaks, fires, or domestic accidents.
Having home insurance not only provides peace of mind but can also prevent financial losses that may amount to thousands or even hundreds of thousands of euros.
Having Home Insurance Even If It’s Not Mandatory
Even though it’s not a legal requirement for all homeowners, having home insurance provides essential protection against potential damage to the property and its contents.
Such policies typically cover incidents like fires, water leaks, electrical damage, theft, or deterioration of furniture and household appliances.
Is Home Insurance Mandatory for Tenants?
If you are a tenant, you are not legally required to take out home insurance. However, there are insurance policies specifically designed for renters that can be very useful.
Unlike homeowners with a mortgage, tenants are not obliged by law to insure the property. Still, it is highly advisable to have a policy that protects your personal belongings within the rented home.
This way, you’ll be covered against possible incidents such as fires, floods, or thefts, safeguarding your furniture, appliances, and valuable items.
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