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About Insurance
- What coverage does a ten-year insurance policy offer?
The law 38/1999 of 5th November, for Directives in Construction (LOE), which became effective on 6th May 2000, states that a property developer is obliged to take out a ten-year insurance policy on buildings whose use will be mainly domestic, and if the application for a building permit was placed after 6th May 2000.
In its article 19, clause 1.c), it declares that the developer must take out “a policy against material damage or surety to guarantee, over ten years, compensation for material damage that arise in the building through defects in the foundations, supports, beams, metalwork, load-bearing walls or other structural elements, and that directly compromise the mechanical resistance and stability of the building”.
This means it only covers the stability of the building and does not include other guarantees such as personal damages, the neighbouring building, etc.
Article 20 of the LOE states that “The Property Registry will not authorise or register any public document from a new construction of a building to which this law applies unless the necessary guarantees can be supplied according to article 19”. Therefore it is vital to have taken out the ten-year insurance policy to be able to hand over the homes.
This insurance policy is taken out by the developer. Those covered by the policy are the developer and the successive owners of the building or any of its parts.
The amount to be covered is the definitive value of the construction (building + urbanisation) at the moment of reception. This amount is made up of the cost of execution by contract plus the technical costs (for the project, the architect, geotechnical report and the technical control organism).
It is logical to assume that the moment of application will before work has finished on the development and it becomes operative from that moment. However, some banks make it a requisite for the mortgage loan the developer will need to be able to operate. But if we study article 19 of the law 38/1999 of 5th November of Directives for Construction, the developer is obliged to have this insurance towards the end of the period of construction.
The insurance company, after applying for information about the development, will be in a position to grant a policy. However, it will not take effect until the clause on the start of coverage has been drawn up. For that, they will to see, (as well as the declaration of definitive total value:
- Act of reception of the finished building.
- Final certificate from the directors of the building team, with necessary official stamps.
- Final certificate from the architect, with the necessary official stamps.
- Final report on construction (D.6) from the Technical Control Organism (OCT).
Once the policy has been granted, between 25-30% is paid in the calculation of the rates applied to the provisional value of the building. The remaining 75% will be paid on the foreseen date of the end of the construction.
Despite the above, once construction has really been finished, the definitive total value of the building will be handed over and a new calculation on the policy will be made - taking into account what has already been paid.
To be able to take out a ten-year policy, you must have a Technical Control Organism (OCT) responsible for the technical control of the works and produce a series of documents that are vital if you want to take out the ten-year policy.
law 38/1999 of 5th November
In its article 19, clause 1.c), it declares that the developer must take out “a policy against material damage or surety to guarantee, over ten years, compensation for material damage that arise in the building through defects in the foundations, supports, beams, metalwork, load-bearing walls or other structural elements, and that directly compromise the mechanical resistance and stability of the building”.
This means it only covers the stability of the building and does not include other guarantees such as personal damages, the neighbouring building, etc.
Article 20 of the LOE states that “The Property Registry will not authorise or register any public document from a new construction of a building to which this law applies unless the necessary guarantees can be supplied according to article 19”. Therefore it is vital to have taken out the ten-year insurance policy to be able to hand over the homes.
This insurance policy is taken out by the developer. Those covered by the policy are the developer and the successive owners of the building or any of its parts.
The amount to be covered is the definitive value of the construction (building + urbanisation) at the moment of reception. This amount is made up of the cost of execution by contract plus the technical costs (for the project, the architect, geotechnical report and the technical control organism).
It is logical to assume that the moment of application will before work has finished on the development and it becomes operative from that moment. However, some banks make it a requisite for the mortgage loan the developer will need to be able to operate. But if we study article 19 of the law 38/1999 of 5th November of Directives for Construction, the developer is obliged to have this insurance towards the end of the period of construction.
The insurance company, after applying for information about the development, will be in a position to grant a policy. However, it will not take effect until the clause on the start of coverage has been drawn up. For that, they will to see, (as well as the declaration of definitive total value:
- Act of reception of the finished building.
- Final certificate from the directors of the building team, with necessary official stamps.
- Final certificate from the architect, with the necessary official stamps.
- Final report on construction (D.6) from the Technical Control Organism (OCT).
Once the policy has been granted, between 25-30% is paid in the calculation of the rates applied to the provisional value of the building. The remaining 75% will be paid on the foreseen date of the end of the construction.
Despite the above, once construction has really been finished, the definitive total value of the building will be handed over and a new calculation on the policy will be made - taking into account what has already been paid.
To be able to take out a ten-year policy, you must have a Technical Control Organism (OCT) responsible for the technical control of the works and produce a series of documents that are vital if you want to take out the ten-year policy.
law 38/1999 of 5th November
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