Types of insurance that cover damage to buildings

There is some confusion among owners about the different types of insurance that homeowners’ associations have taken out, and what each of them covers. We will try to explain the main ones, so that they are not confused, and so that you know which ones cover construction defects:

1.- The insurance equivalent to “multi-risk home insurance” is the policy normally taken out year by year by the property administrator (all insurers offer it), covering the risks of fire, or accidents occurring on the community premises, or in swimming pools, garages, falling objects, roof terraces, and even water damage caused by carelessly leaving a tap running….etc. Risks arising from the operation of the lifts are also covered, but it NEVER covers damage caused by poor or defective construction.

2. –10-year structural insurance (seguro decenal). Without going into too much detail (it is taken out for ten years and was paid for by the Developer), this is the insurance that covers, for 10 years from completion of construction, damage that may occur in the building originating in the structure, foundations, columns or floor slabs, but which seriously threatens the stability of the building. It can be said that if the building is less than ten years old, it has this insurance, but if it is older the Spanish Building Act (Ley de Ordenación de la Edificación, LOE), which requires it, will not apply (it is provided by Caser or Mapfre, and a few others). Sometimes the Beneficiary is the bank that granted the mortgage (although that is prohibited without the authorisation of the insured party, who is now the owner).

It is not easy to collect on this insurance, since insurers rely on a distinction between fundamental works and ancillary works…in most cases (as was only to be expected) they refuse to cover the damage; moreover, the claim must first be pursued out of court and started within two years of the damage appearing.

3.- The insurance of the parties involved in the construction. When the architect and the quantity surveyor carried out the works, they should have taken out, individually, construction civil liability insurance to cover their liability in the event of construction defects. The architect most likely took it out with “Asemas” (in a very high percentage of cases), and the quantity surveyors with “Mussat” (these are the main insurers for these professionals). As these policies cover the construction itself, they often pay out.

If we are dealing with damp, the first and second groups of insurance are no use to us, whatever the date, because the insurance does not cover it. We could only claim under the 10-year structural insurance if water -which is different from damp- floods, for example, the garage, whether due to poor design, or a poor solution for a nearby water table, or the presence of an underground stream, and affects the foundations or the slab, or its reinforcement, to such an extent that there is serious reason to fear corrosion and therefore for the stability of the foundations.

Therefore, ultimately, only the insurance taken out by the works directors, the Architect and the Quantity Surveyor, will pay out, covering damage that appears and is proved within the time limits laid down in the Spanish Building Act. But they will most likely only pay out if their insured parties (the site management team) are found liable. In the 30 years we have been claiming for building defects, however obvious, verifiable and evident the damage has been, insurers have never paid (as is usually the case with insurance in general) without a prior legal claim. Sometimes before, sometimes after, but unfortunately always with legal proceedings involved.