Real Estate Property

A real estate portfolio lasts decades and changes use and tenant many times along the way, while the declared capital tends to remain at the valuation with which the property entered the balance sheet. Building that same building today costs what the construction costs, and the land is excluded from that account.

Where the claim enters

Buildings, escape of water and landlord liability

What decides the claim file

A building is reconstructed up to the declared capital

The building includes the structure and everything that would remain inside if the property were turned upside down, excluding the value of the land, which is a common confusion when setting the capital. Declaring it at book value, or based on an appraisal that has not been reviewed for years, places the sum below the cost of replacement as new and triggers the proportional rule of Article 30 of the Insurance Contract Law.

Water damage between common and private installation
The breakage of a downpipe, a roof or an underground network simultaneously affects the building's structure and the contents of the occupant's premises, so that in the same claim the community policy, the owner's policy and the tenant's policy are involved. It is advisable to check that the cover includes the location and repair of the fault, which is the item that supports the chipping work, and to specify in the lease which installation is common and which is private.
The responsibility of the landlord
The owner is liable to third parties for the condition of the property, its installations and its common elements, regardless of who occupies it. This responsibility coexists with that of the tenant and is not transferred with the lease: what the contract distributes is who assumes the cost between the two of them. Therefore, both policies are read together on the day of signing, which is when they can still be adjusted.
The waiver of subrogation in the lease
Many contracts include a reciprocal waiver of actions between owner and tenant that extends to the insurer's right of recourse. Article 43 of the Insurance Contract Law makes the insured liable for the damage caused to the insurer in this right, so that a waiver signed outside the policy can turn against the one who accepted it. What resolves the situation is to include it in the insurance contract by means of an endorsement, which is why these clauses are reviewed before signing the lease.
The loss of rent during reconstruction
Reconstructing a building takes months of licensing and work, and the damage cover reinstates the building without reinstating the rent for that period. The cover for loss of rent is contracted by months, sized on the real licensing process and execution period of the property.

What is contracted here

The covers that support a company in this sector

Each one is designed based on the company's real exposure. None are contracted the same in two companies in the same sector.

Frequently asked questions

Lo que nos preguntan en real estate property

What building sum insured should be declared for a rented property?

The cost of reconstructing it today, calculated on built square metres, qualities and fixed installations, leaving the land value out of the figure. Declaring the book value, or dragging a valuation that has not been reviewed for years, leaves the sum insured below that cost and activates the proportional rule of article 30, which reduces any compensation in the same proportion, including partial ones. Declaring the purchase price produces the opposite effect where the land is significant: a premium is paid for a sum that will never be compensated, because article 26 limits the benefit to the damage caused and article 31 allows the reduction of the sum and the premium to be demanded.

What is the owner liable for when the property is rented?

For the condition of the building, its installations and its common elements to third parties, because the lease transfers the use of the property and leaves the ownership where it was. The tenant's policy covers their contents and their own liability, so it is advisable to request a copy when signing the contract, check limits and covers, and repeat the check at each renewal.

Is it necessary to notify a tenant's change of activity?

Yes. The activity carried out in the property is part of the declared risk, and replacing offices with a workshop or a warehouse of flammable goods modifies the basis on which the policy was accepted. Articles 11 and 12 of the Insurance Contract Law regulate this communication and the consequences of omitting it.

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