What decennial insurance does not cover

A named-perils policy, not all-risks cover

Decennial damage insurance for buildings is a named-perils policy. This means that it does not cover every possible damage to the building, only the risks that the contract expressly includes as insured.

The basic cover protects, for ten years, against material damage caused by flaws or defects affecting the foundations, columns, beams, floor slabs, load-bearing walls or other structural elements, and which directly compromise the mechanical resistance and stability of the building. Everything else is excluded, unless additional cover is taken out. The cover that can be added is explained in the guide to decennial insurance cover.

The specific exclusions depend on each policy and each insurer. Those set out in this guide are the ones commonly found on the market, and some can be removed by express agreement and payment of a specific premium.

Damage that is not structural

The Building Regulation Act (LOE) sets three liability periods: one year for defects in finishes, three years for those affecting habitability and ten years for structural defects. Mandatory decennial insurance only covers the last of these.

That is why the basic cover does not include, for example, a crack in a wall finish, a defect in the building services or a water leak that does not originate in structural damage. Some of these situations, such as waterproofing, can be covered with optional cover. The differences between the three periods are explained in the guide to decennial insurance for buyers.

Damage to people, other property and third parties

Unless expressly agreed otherwise, the insurer does not cover:

• Bodily injury and financial loss other than material damage to the building.
• Damage to properties adjoining or adjacent to the insured building.
• Damage to the external works that is not the result of structural damage to the building.
• Damage to existing property, such as the part of the building that already existed in a renovation. This can be protected with specific additional cover.
• Damage to movable property inside the building, such as furniture or belongings.

Works carried out after handover

The insurance covers the building as it is handed over. The following are therefore excluded:

• Damage caused by alterations or works carried out on the building after the handover certificate (acta de recepción) has been signed, except those intended to remedy the defects noted in it.
• The cost of finishing work that the contractor was obliged to carry out after handover and did not, as well as the consequences of not having done it.
• Material damage occurring during the works needed to remedy the reservations recorded in the handover certificate.

Damage to the works during construction is not covered by decennial insurance either: for that stage there is All-Risk Construction (TRC) insurance, which is complementary cover.

Misuse and lack of maintenance

The insurance does not cover damage caused by misuse of the building or by a lack of proper maintenance. Among other things, it excludes damage resulting from the building being subjected to loads greater than those planned for or to uses other than those it was designed for.

Nor does it cover the cost of routine maintenance of the building once the works have been handed over: keeping the building in good condition is the responsibility of its owners.

Fire, force majeure and causes unrelated to the works

Decennial insurance covers construction defects, not damage with an external cause. The following are usually excluded:

• Damage caused by fire or explosion, unless it results from flaws or defects in the building’s own services.
• Damage caused by an unforeseeable event, force majeure, or acts of third parties or of the injured party themselves.
• Damage from nuclear fusion or fission, radiation or radioactive contamination.
• Damage from war, uprisings, terrorism, riots, strikes, civil commotion or sabotage.
• Damage caused by acts of the authorities, such as expropriation, requisition or destruction ordered by a government or public authority.
• Natural events: earthquakes, volcanic eruptions, avalanches, hurricanes, storms, floods of any origin and tidal surges.
• Events classed as extraordinary in the Legal Statute of the Consorcio de Compensación de Seguros.
• Ground movements or changes after the handover of the works caused by variations in the water table, underground works or activities and, in general, by causes unrelated to the insured works or caused by third parties.

How to avoid surprises if there is a claim

Exclusions are part of the conditions of each policy, and their wording is not identical across all insurers. Before taking out the insurance, it is worth carefully checking:

• Which exclusions the policy contains and which can be removed by express agreement and an additional premium.
• What additional or optional cover the works need: for example, cover for existing property in a renovation or for waterproofing.
• What use and maintenance obligations the owners will have in order not to lose cover.

Working with a broker specialising in decennial insurance helps you choose the cover the works really need and understand from the outset what will be excluded. At Seguróx we explain the scope of their policy, including its exclusions, to every client.