Is it mandatory to take out home insurance when buying a home?


After several years of inactivity due to the complicated economic situation in our country, something has changed: cranes are once again populating the landscape and construction, and, consequently, the sale of flats skyrockets, hopefully, with more moderation and not with the same consequences as before.

Given the sudden and sharp rise in rental prices, many citizens are currently opting for the purchase of a house. At this point, it is important to bear in mind an essential aspect, that of the casualty insurance linked to the purchase of the home, and for this, it is necessary to be up to date on how the situation is at this time.

Many will already know the answer to this essential question, but surely others do not. Is it mandatory to take out home insurance in Spain? The answer is no, which does not mean that it is not recommended.

The law in our country does not require the contracting of a policy in this field, despite which the statistics indicate that approximately three out of four houses in Spain have home insurance that protects them. Unespa, in its 2014 Social Insurance Report, pointed out that 75.8% of households are insured.

Therefore, it is up to us whether or not to have a home policy, beyond the fact that it is a recommended practice in view of the possibility that some serious incident may occur that affects not only us but also our neighbors. Namely: the breakage of a pipe that causes a flood, the possibility of a robbery in our home, a small explosion of an appliance that causes a fire… As always, insurance offers peace of mind to the policyholder, knowing that he will be covered against any possible unexpected.

However, it is mandatory to take out home insurance in the event that the home is mortgaged. According to a Royal Decree of the year 2009, the assets on which the mortgage guarantee is constituted must have a damage policy that can cover at least those derived from a fire. This insurance, therefore, is mandatory for those mortgaged homes whose owner is the bank since the reform of the mortgage market law requires that there be insurance that covers the damages that may be caused to the property.

Another possible situation is having the fortune of having already paid the price of our home, in case we have been able to pay it in cash or have finished paying our mortgage. Nothing really changes in terms of insurance obligation, since in this type of case, there is no obligation to take out home insurance either.

Two separate aspects

Of course: we must update you, if you are not already, on an important legislative change brought about by the first European Mortgage Directive, which was approved by the European Parliament barely five years ago, in 2013.

Since then, the legislation prohibits the linking of insurance to the granting of a mortgage loan. Said in Christian: the law no longer obliges us to take out home insurance with the bank with which we signed the mortgage, as was the case before. Therefore, the client is now free to seal a mortgage agreement with a bank and take out home insurance with an entity other than the insurer proposed by the bank. In short, banking and insurance can go hand in hand, but they should no longer.

And what about the rent?

Regarding the practice of renting – complicated as we said before at this time by the enormous rise in prices experienced in recent times – it must be said that it is not mandatory to take out home insurance when entering a home as a tenant.

However, this does not exempt, far from it, the person who enters the house from being responsible to the owner for the damage that may be caused to the property, especially in cases in which the damage has occurred due to negligent behavior. This can lead to a problem between the tenant and the landlord, a problem that the prior contracting of a policy can minimize and solve more easily.

In this case, therefore, the same thing happens as in purchase situations: hiring adequate insurance is not mandatory, but it is a recommended practice.