As lawyers specialising in Insurance Law, when natural phenomena occur which, due to their magnitude, generate considerable damage, we receive numerous queries from affected individuals.
In this sense, insurance policies in Spain do not usually cover force majeure and extraordinary risks, and may include within this category events such as the DANA in the Balearic Islands, which has affected all the islands, especially Menorca, with devastating effects in the municipalities of Es Mercadal and Alaior.
However, the fact that the policy does not cover these claims does not mean that the insured party does not receive any compensation, this task being taken care of by the Insurance Compensation Consortium.
Thus, according to article 6 of Royal Legislative Decree 7/2004 of 29 October, which approves the revised text of the Legal Statute of the Insurance Compensation Consortium (‘ELCCS’), the Consortium ‘in matters of extraordinary risks, shall have the purpose of compensating, in the manner established in this Legal Statute, on a compensation basis, the losses arising from extraordinary events occurring in Spain and affecting risks located in Spain’.
It also states that ‘personal damage derived from extraordinary events occurring abroad will be indemnifiable by the Consortium when the insured person of the policy has his habitual residence in Spain’.
In this way, it will be understood that extraordinary risks of a natural aetiology are ‘the following natural phenomena: earthquakes and tidal waves, extraordinary floods, volcanic eruptions, atypical cyclonic storms and falls of sidereal bodies and aerolites‘, likewise, examining the Royal Decree 300/2004, of 20 February, which approves the Regulation of the insurance of extraordinary risks (’RSRE“) that develops the ELCCS, Article 2 defines these phenomena, implicitly establishing a series of activation parameters, such as tropical cyclones, identified by the concurrence and simultaneity of wind speeds greater than 96 kilometres per hour and rainfall of an intensity greater than 40 litres of water per square metre per hour; or extraordinary winds, defined as those with gusts exceeding 120 km per hour.
In this way, we understand that the DANA could be an event which, in the event of lack of insurance cover contracted, could activate the cover by the Consortium.
However, we must bear in mind that the coverage by the Consortium would only occur in the event of payment of the surcharge in favour of the Consortium in the premium of the insurance policy.
In this sense, Article 7 ELCCS establishes the obligatory nature of the surcharge, among others, in the insurance of land vehicles, railway vehicles, fire and natural elements, other damage to goods, and diverse pecuniary losses, as well as the combined modalities of these, or when they are contracted in a complementary manner. Also in the field of civil liability in motor land vehicles
In order for the coverage of extraordinary risks to operate, it will be necessary that the extraordinary risk covered is not covered by the insurance policy due to the exclusion of the previously defined extraordinary risks or, although it is covered by the policy, the insurer cannot respond due to being in a state of insolvency, insolvency or liquidation.
Likewise, as we have already advanced, it will be an indispensable requirement to obtain the coverage provided by the Insurance Compensation Consortium to have insurance, given that, from the premium paid, a surcharge is paid for this coverage, with a peaceful doctrine stating that, the fact of not having insurance does not have to cover the claim by the Consortium, citing as an example the Judgement of the Provincial Court of Barcelona of 21 January 2007.
In conclusion, despite the fact that most policies exclude extraordinary risks caused by large-scale natural events, there is an insurance policy that provides coverage for damage caused by these events (which may be less than that provided by the contracted insurance) and whose premium is based on a surcharge added to the premium at the time of taking out an insurance policy.
On the one hand, it can contribute to reducing the amount of premiums, given that these risks are insured by a public body, financed by the premium surcharges and, on the other hand, it guarantees the insured the receipt of compensation which, although it may be less than that established in the premium, will undoubtedly help to mitigate the damage.
From the Insurance Law Department of Belzuz Abogados Exclusive Insuralex ‘s member in Spain and Portugal, we are at your disposal to analyse your problem regarding civil liability and insurance in the most professional, efficient and solvent manner.
Abogado Senior
Spain
BELZUZ ABOGADOS SLP
