Many buyers wonder, on a day-to-day basis, if the home insurance when renting or buying a home. It is a complicated subject with nuances that can cause problems, so today we will tell you all the details about home insurance and its links with owners and buyers.
In either case, we recommend you contact us at Euroteide Insurance to advise you in the best possible way in your particular case. Each situation has different factors and characteristics, which may influence when determining whether it is compulsory to purchase home insurance.
When is it mandatory to have home insurance?
Before going on to detail all the important aspects related to this type of insurance, let's answer the most important question: is it mandatory to have home insurance? Despite what many may think, there is no obligation when purchasing home insurance, except in two particular situations: when required in the rental contract, or when the home is mortgaged.
Home insurance linked to mortgages
Home insurance linked to mortgages is designed to protect the owner in cases where the buyer does not meet the payment terms and the property is seized. They are usually somewhat more expensive than normal home insurance, especially if you hire it from the lender itself.
The latter usually offers it to the client, since it is the option that interests them the most, but there is no type of regulation that obliges the tenant to take out the home insurance from the same person who is offering the mortgage. In these cases, we recommend you contact professionals like us to help you find the best option in your particular case.
They are mandatory?
According to article 10 of Royal Decree 716/2009, home insurance is mandatory when it is a home with a mortgage, must have, as a minimum, the basic coverage (ie, damages from fire). However, and as we mentioned before, there is no obligation to do it with the same entity that offers you the mortgage.
Another important issue to deal with in relation to the obligation is found in other insurance related to homes, such as renters insurance. You also do not have an obligation, but many banking entities tend to include it as a requirement in the contract, so you should review it in depth so as not to be tied to any type of clause of these characteristics.
Can home insurance linked to mortgages be altered?
There is the possibility of altering a home insurance linked to a mortgage, but there are several important nuances that can cause you a problem in the process. First of all, you must give notice of the cancellation of your current policy at least one month in advance, so that it is not automatically renewed.
On the other hand, you will have to gather all the documentation related to the new insurance, to demonstrate to the entity that you have the required minimum coverage. In addition, it is important that you review the clauses of your mortgage, because there is a possibility that you will lose some conditions such as interest rate discounts.
How to choose a good home insurance
Now that you know everything about the mandatory nature of home insurance, it is time to talk about how to choose it based on your case. In either case, it will always be more advisable to have all possible protections and coverages facing any problem. The main coverages that include home insurance are:
- Civil liability.
- Damages caused by water (leaks, broken pipes, leaks…).
- Robbery and theft.
- Lightning strikes, fires and explosions.
- Ceramic hob, crystals and mirrors broken.
- Atmospheric phenomena.
As you can see, there are many coverages, so having them all in your home is going to mean a fairly high cost in your home insurance. Thus, It is important that you evaluate your situation particular and prioritize those situations that could appear more frequently, in order to have protection against them.
For a second home or a vacation rental home, Basic insurance is adequate to cover essential damage at affordable prices. However, it is recommended to consider adding additional protection clauses, such as robbery and theft clauses, especially if it is a property through which many tenants will pass regularly.
Advantages of having home insurance
Having home insurance is a smart way to protect your home and belongings from possible damage, theft or loss. These are some of the most important benefits of having home insurance:
- Protection against unexpected risks. Home insurance offers protection against a wide variety of unexpected risks, such as natural disasters, giving you peace of mind should such a problem occur.
- Repairs and replacements. In the event that you suffer damage to your home or your belongings, the insurance will cover the costs of repair or replacement. This can include anything from repairing a roof or wall to completely rebuilding your home, depending on your insurance coverage.
- Civil liability. If someone is injured on your property, homeowners insurance may cover medical and legal expenses associated with the accident. It also covers damage you may cause to the property of others (for example, an object falls from your balcony and causes damage to a neighbor).
- Home insurance can cover the costs of replacement of your personal belongings in case of theft or vandalism: jewelry, furniture, clothing, electronic devices.
- Assistance in case of emergency. Many home insurance companies offer emergency assistance services, such as emergency plumbers and electricians. This can be especially helpful if an emergency occurs at your home outside of office hours.
Now you know everything about whether home insurance is mandatory, how to choose it properly and the advantages that having one provides you on a day-to-day basis. In any of the cases, do not hesitate to contact us to receive personalized advice adapted to your particular circumstances.