The High Level Atmospheric Depression (HLD) of October 2024 has become, in terms of personal and material damage, one of the most damaging natural disasters in recent years in our country. As we have already pointed out in previous articles, in terms of insurance coverage, this type of claims can be excluded from coverage by the contracted policies..
At Belzuz Lawyers, as lawyers specialising in Insurance Law, we have received numerous queries regarding the coverage of claims caused by the terrible and devastating floods that have affected the East and South of the peninsula, especially in the Levante region, where catastrophic floods have occurred which, unfortunately, have caused a large number of human losses and very considerable material damage.
The reconstruction of infrastructures, businesses and buildings in the affected areas will undoubtedly require an effort on the part of those involved: civil society, administrations and private entities, including insurance companies.
In this regard, it should be borne in mind that the vast majority of the thousands of vehicles swept away by the floods, buildings, commercial establishments and real estate were insured, so the victims will have to examine their policies and/or report the loss to their insurance company.
However, it should be borne in mind that, in Spain, insurance policies do not usually cover force majeure and the so-called extraordinary risks, and the Insurance Compensation Consortium is responsible for this task, Article 6 of Royal Legislative Decree 7/2004 of 29 October, approving the revised text of the Legal Statute of the Insurance Compensation Consortium (‘ELCCS’) establishes that the purpose of the Insurance Compensation Consortium is to compensate for losses arising from extraordinary events occurring in Spain and affecting risks located there.
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 natural aetiology are ‘the following natural phenomena: earthquakes and tidal waves, extraordinary floods, volcanic eruptions, atypical cyclonic storms and the fall of sidereal bodies and aerolites’.
For its part, Royal Decree 300/2004, of 20 February, which approves the Regulation of extraordinary risk insurance (‘RSRE’) that develops the ELCCS, defines extraordinary floods as ‘the flooding of land produced by the direct action of rainwater, water from melting snow or from lakes that have a natural outlet, rivers or estuaries or natural watercourses on the surface, when these overflow from their normal channels, as well as the battering of the sea on the coasts’.
In the same way, an exception to this classification is established, with the insurance companies having to cover this claim for those damages produced by water from dams and other infrastructures constructed by man when they suffer damage not produced by events that are not considered extraordinary risks (such as, for example, a defective execution), as well as rain falling directly on the insured risk.
This will not be understood as that produced by water coming from dams, canals, sewers, collectors and other underground channels, constructed by man, when they burst, break or break down due to events that do not correspond to extraordinary risks covered by the Insurance Compensation Consortium, nor rain falling directly on the insured risk, or that collected by its roof or flat roof, its drainage system or its patios.
Therefore, we understand that the damages caused by torrential rains falling directly on the insured risk (for example, dampness due to the accumulation of rainwater falling directly on the roof of a building) will be covered by the insurer, while the damages derived from the overflowing of a watercourse that overflows the riverbed and flows through the streets, will be covered by the Insurance Compensation Consortium.
It should not be forgotten that one of the requirements to obtain cover from the Consortium is to have insurance in force, being up to date with the payment of the premium, insofar as, on the amount of the premium, a surcharge is made in favour of the Consortium.
In this sense, article 7 ELCCS establishes the obligation of the surcharge, among others, in the insurance of the branch 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 way. Also in the field of civil liability in motor vehicles.
Another of the requirements demanded for the activation of the coverage provided by the Consortium of Insurance Compensation is that the extraordinary risk covered is excluded from the policy or that, in the event that the risk is covered by the policy, the insurer cannot provide coverage due to being in a state of insolvency, insolvency or bankruptcy.
In conclusion, the Insurance Compensation Consortium, with its extraordinary risk insurance, is configured as a second layer of cover in the event that it is excluded by the policy in relation to the so-called major risks, among which are floods and catastrophic floods.
It is important to point out that the compensation provided by the Consortium layer is often the one offered by the company with which we have taken out the insurance, so that, preferably, in the event of suffering a loss included in the extraordinary risks, we should analyse our policy and make sure that it is excluded in order to activate the layer of cover provided by the Extraordinary Risks Insurance.
As a final reflection, we would like to point out that the extraordinary risk insurance represents an enormous advantage for the insured party that allows them to enjoy wider coverage at very competitive prices given that the insurance companies can make exclusions of risks in their policies that will not leave the consumer without coverage for this type of event.
In the end, we can see that an institution created as we know it today in 1954, in a social, economic and legislative context different from the current one, has become an entity that is a central pillar in the avant-garde and protectionist system of catastrophic risk compensation that does nothing but carry out its activity in compliance with the demands of the our welfare state model, ensuring that no insured person is left without coverage.
From the Insurance Law Department of Belzuz Abogados, we are at your disposal to analyse your liability and insurance problem in the most professional, efficient and solvent manner.
Abogado Senior
Departamento de Derecho del Seguro
Belzuz Abogados – Madrid
