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Buying Home Insurance in Portugal, what you need to know !

Updated: Dec 26, 2023

Luso Insurance Agents is an independent insurance agent based in Portugal, providing a full range of insurance products and services to people living in Portugal. In this article Luso insurance Agents outlines some key features all homeowners need to be aware of when buying Home Insurance in Portugal.


Choosing Home Insurance !


What risks are covered ?


All multi-risk housing policies have a wide range of covers. We have selected the most important ones, which we recommend to anyone who wants to comprehensively insure the home and contents. Below Luso Insurance Agents -  explain what each one covers:


Fire, lightning strike or explosion. Will pay, up to the limit of the insured capital, for damage caused by fire, heat or smoke. Damage caused by lightning, explosions or as a result of emergency intervention and salvage is also covered.


Water damage. If the water and sewage distribution network breaks, clogs or overflows, the insurance company will for the damage caused to the insured assets (walls, floors, furniture, etc.). Some policies also cover the costs of finding faults, repairing pipes and restoring the original condition (painting and tiles). In others, coverage for these expenses must be contracted separately. Damage from slow infiltration of water, humidity and condensation and from open taps (except after a supply cut) are excluded.


Theft or robbery. Compensates the insured for stolen or stolen goods, as well as for damage to doors and windows, up to the limit of the insured capital for the contents. It does not pay claims occurring as part of another incident already covered by insurance and theft or robbery committed by family members, employees or other people linked to the insured. As a general rule, theft or robbery of money is excluded or has a very low limit (€60, for example).


Storms. Strong winds, such as typhoons and cyclones, can damage your property and possessions. Damage to protective devices, such as shutters, awnings, fences or gates, is excluded, unless the building is destroyed. Damage caused by the sea and the ingress of rainwater on roofs, doors, windows and terraces is also excluded, unless these structures are damaged due to the storm.


Floods. The months with the highest rainfall intensity can cause flooding and cause damage to your home. The insurer will cover these damages, as well as those resulting from the bursting of dikes and dams and the overflow of river beds. It does not cover damage caused to protective devices, nor damage resulting from the action of the sea.


Civil liability. will for losses caused to third parties involuntarily. For example, the case of a vase that falls on someone passing by on the street or hits a neighbor's car. On the contrary, it does not cover damages suffered by the insured person and their family, nor situations arising from a professional activity carried out on the property.


Temporary re-housing and storage. If the property is destroyed as a result of one of the insured accidents, the insurer pays for the transport and storage of undestroyed insured objects, as well as the stay of the insured and their family members in a hotel or in a rented house during the repair work. In addition to the compensation limit, some companies define a maximum period for taking advantage of this coverage (usually 180 days).


Demolition and removal of debris. Covers the costs of demolition and removal of debris resulting from the collapse of the house facade or roof, for example, following one of the covered accidents.


Land subsidence. Compensation for damage caused to insured assets due to landslides and subsidence. It does not pay for damage to buildings with construction defects or previous problems with walls, roofs and foundations, nor to illegally constructed buildings.


Troubleshooting. In the event of a pipe breaking, for example, the insurer covers the costs of locating the problem (if, for example, you have to drill into the wall to locate the break) and the expenses necessary to restore the initial situation. As a general rule, pipe replacement is excluded.


Asthetic damage. The insurer covers the costs necessary to guarantee the aesthetic continuity of the building. Returning to the previous example, if the wall destroyed to locate the defective pipe was covered with tiles that no longer exist on the market, the insurer will pay to replace them all, up to the limit of the insured capital.


Home assistance. It guarantees the sending of professionals for repairs (plumbers, electricians, etc.) and pays for the hotel, property storage, restaurant and laundry if the house becomes uninhabitable. If an accident occurs at home, resulting in the hospitalization of a member of the household, you will pay for transport to the hospital, nurses, nannies, etc.


Electrical risks. This coverage pays for damage to refrigerators, televisions and other appliances resulting from electrical overload or short circuit.


Is it worth buying additional cover against earthquakes ?


Yes. If you use bank credit to buy a house, the bank obliges you to take out earthquake coverage. This pays for damages that arise within 72 hours of an earthquake, volcanic eruption or tsunami, except those caused by poor conservation of the building. All insurers guarantee compensation up to the limit of the insured capital and, as a general rule, impose a minimum excess of 5% of the capital.


The cost of cover varies depending on the seismic risk of the location where the property is located, the amount insured and the year of construction. You can use higher excess or assume part of the risk to lower the premium, but Luso Insurance Agents  advise against both. Even so, if you think the total premium is too high, it is better to have earthquake cover.

How to calculate the value of goods ?


Be strict. If the value indicated is below or above the actual amount, you risk not receiving fair compensation in the event of a claim, or losing money.


In the case of building  insurance, a simulator makes the calculation automatically, taking into account the area of ​​the property and the percentage of common areas (stairs, elevators, roof and garage), the location and the value of reconstruction per square meter. The reconstruction value of the property is, as a general rule, much lower than the market value, as the land does not count. Valuation factors such as proximity to commercial areas or transport, exposure to the sun, flooring, etc. are also not taken into account. If you take out the insurance through the bank where you applied for a mortgage loan, compare the proposed premium with those in the market. Sometimes banks want insurance to be done for the loan value instead of the reconstruction value, which is not correct.


For the contents, calculate how much you would have to spend to replace all the goods you have at home, from furniture and appliances to clothes, dishes, records and films, for example. Consider the new replacement value as of today and add 10% as a safety margin to prevent possible evaluation errors. Exception for works of art and antiques, which must be insured at their real value. To determine this, use the specialty market. Special objects, such as antiques, works of art, jewelry, computers, collections, weapons and fur coats must be itemized and valued individually in the policy, otherwise, in the event of an accident, the insurer will only pay up to a certain value per object ( as a rule, 1000 euros).


Update the capital for the filling every 4 or 5 years. If you carry out improvement works on the property (painting, replacing plumbing, air conditioning, etc.), also update the value with the insurance company.


Submitted by Luso Insurance Agents 



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