The massive flooding that has been ravaging Valencia is set to become the most costly natural disaster in Spain’s history, with the insurance compensation costs alone expected to far exceed 1 billion euros. Those affected who have active insurance policies will see a significant portion of their damages covered by the Insurance Compensation Consortium (CCS), which operates under the Ministry of Economy but is funded by a small surcharge applied to premiums issued by insurance companies. Its primary purpose is to cover catastrophic damage—including damage caused by terrorist acts—which is difficult for private entities to insure due to the challenge of estimating the risk and potential cost.
Those affected who had a valid policy at least one week before the start of the DANA (isolated high-level depression) can claim compensation from the CCS. In fact, the agency has already loads of claims. To assess the damages, it has hired over 400 experts who are already contacting the affected individuals.
Here is a brief guide to understanding how the Consortium works and how claims should be processed:
What assets are covered? The key factor in all cases is knowing what was included in the policy. The Consortium only covers what the user had insured; it does not cover additional losses. This means that those with more comprehensive insurance contracts will be better covered than those with minimum policies, and those without insurance will not receive compensation. Nevertheless, the level of coverage in the affected area is relatively high: according to the industry, 76% of insurable assets in the Valencian Community are covered by some form of policy.
Automobile: With mandatory insurance, even third-party policies, the Consortium will cover the repair of damaged cars or compensation if it’s deemed not worth repairing them. The compensation amount will be calculated based on the vehicle’s market value, which depends on the model and age. Thousands of cars, vans, and trucks have been affected by the storm, but almost all of their owners will receive compensation, as car insurance is mandatory.
Home: Home insurance policies typically cover damage to the property (walls, doors, windows, ceilings, foundations, structure) and its contents (furniture, appliances, and belongings). Around 74% of households in the region have such insurance, but coverage is often partial and limited. If a home insurance policy (often tied to a mortgage) covers a maximum of 50,000 or 100,000 euros, the insurance consortium will pay up to that amount, regardless of the actual damage. And if the affected party had no home insurance, they will not be compensated. Some policies may even cover the inhabitable condition of the property, with the Consortium paying for hotel bills and alternative accommodation. Property owners renting out homes could also receive compensation for lost rental income, as long as this is specified in their contract.
Communities of owners: Apartment buildings also have insurance, and in the Valencian Community, these policies are mandatory to cover potential third-party damage (facade collapses, flooding, etc.). Therefore, the coverage for damages will depend on the terms of each community’s insurance policy.
Businesses: Shops and businesses with insurance policies will also receive compensation from the Consortium. Typically, this covers the cost of repairing the premises, loss of merchandise, and in some cases, compensation for business interruption. This same principle applies to industrial or agricultural insurance, covering the loss of operations.
Personal injury: If someone deceased had life insurance or a person injured had accident insurance, the CCS will pay the heirs or the injured party. In this case, the compensation amount depends on the signed contract and the coverage selected. An executive with a large life insurance policy will not receive the same compensation as someone covered by a policy tied to a credit card. If the victim was uninsured, there will be no compensation through this route.
When should I claim? The Consortium has emphasized that there is no rush to file for compensation. Unlike other types of claims, where clients are urged to begin the process within a week, the priority here is to recover bodies, repair infrastructure, and restore normalcy, without putting pressure on the affected individuals.
It is important to document the damages whenever possible, by taking photos that can later be sent to the experts.
Where do I file my claim? Normally, claims for these floods should be submitted on the website www.consorseguros.es or by calling 900 222 665. However, insurance companies and brokers have already offered to assist customers in processing their claims. The user should contact their insurer, who will then forward the claim to the CCS.
How much will I be paid? The Insurance Compensation Consortium (CCS) and insurers for homes, commercial properties, and communities of owners will indemnify the damages caused, but the amounts paid will not exceed the value of the destroyed property or the limit specified in the policy.
The “insured capital” is the maximum amount the Consortium or insurer will pay for damages to an asset. In this case, it is necessary to consider the insured capital in the community’s policy, as well as the amounts in each homeowner’s or business’s individual policy.
A homeowner with an expensive, comprehensive policy will receive more than someone with a smaller home and a less extensive policy.
The Consortium will also pay for the hours of cleaning that the affected person spent removing mud and belongings from their home.
Is it necessary for the area to be declared a disaster zone? It is not necessary for the area to be declared a disaster zone, nor is it required to wait for this declaration before beginning claims. Insurers and the CCS are committed to assisting anyone with insurance who has been affected, whether it is a car, house, business, etc. This assistance is automatic and completely independent of whether the government decides to declare the area a disaster zone and grant any type of public aid or subsidy.
Therefore, insured individuals can process their claims with the CCS or their insurer (who will act on their behalf) independently of any actions the government takes regarding the area.
Expat&Legal Spain