Investment approach
Insuring a rental flat: what a policy covers and where the gaps are
The community's policy does not insure the owner's flat, and since October 2026 rent default insurance cannot be imposed on a tenant. Which policies are needed, what they cover, where money is lost.
A flat let to tenants is insured differently from a home for yourself: the community's policy covers the building and common areas, while the contents, the finishes and the owner's liability to neighbours are covered by the owner's own policy. If in the insurer's questionnaire the flat was declared as the owner's home, the letting must be reported: changes in the declared circumstances that increase the risk are reported "tan pronto como le sea posible" (as soon as possible) (art. 11 Ley 50/1980), and the incident itself no later than 7 days after (art. 16).
In this article, insurance of a rental flat means the owner's set of policies: property and liability and, if wanted, rent default insurance.
Which policies a rental flat has
Three policies are usually found, and each has its own zone.
| Policy | Who takes it out | What it usually covers | What it usually does not cover |
|---|---|---|---|
| Community policy | Comunidad de propietarios (owners' community) | The structure, facade, roof, common areas | The flat's contents, the owner's finishes, the owner's liability arising inside the flat |
| Owner's policy (hogar, home insurance, for a let property) | Owner | The owner's finishes, furniture and appliances, liability to neighbours | Wear and tear, the tenant's belongings, a void period between tenants without a separate option |
| Rent default insurance (seguro de impago) | Owner | Part of the unpaid rent for an agreed period, sometimes legal help | Cases excluded by the contract, often with no tenant check before signing |
Terms differ between insurers, so the table describes the typical structure, not a specific product. What the law and the bank require with a mortgage is covered in the article on insuring an investment property.
What has changed for rent default insurance
Since 8 October 2026, Real Decreto-ley 29/2026 has been in force, which supplemented art. 36.5 of the LAU (Ley de Arrendamientos Urbanos): a tenant cannot be required to take out rent default insurance or similar cover, and the additional guarantee on top of the deposit in a main-residence contract of up to five years (seven for a legal entity) may not exceed two monthly rents, and in a seasonal let one (LAU as worded by RDL 29/2026; BOE). The owner can still insure against non-payment themselves and at their own expense. The Congress has not yet validated the decree, so before signing a lease the wording in force is checked with a lawyer.
The same decree added to art. 36 a duty to draw up a written document on the condition of the flat at the end of the tenancy. If it was not signed or records no damage, the flat is deemed returned in normal condition. For insurance this matters: without such a document, damage caused by a tenant is harder to prove.
Which of the owner's duties affect insurance
An insured event often starts with a repair the owner must make. Under art. 21 of the LAU the landlord makes all repairs needed for habitability, except damage caused by the tenant's fault, and minor repairs from ordinary wear fall on the tenant. In the wording of RDL 29/2026, in force since 8 October 2026 and not yet validated by the Congress, the owner has 15 calendar days to answer the tenant's written request for a repair with a quote; with no answer, the tenant may carry out the repair and deduct its cost from the rent (art. 21.5). Hence a practical rule: the insurer and the contractor must be able to respond faster than that deadline.
Another point: subletting. A tenant may sublet the home in parts only with the owner's written consent (art. 8 LAU), and using the flat in a way the contract forbids is often grounds for an insurer to refuse a claim.
How much is lost with an understated sum: a worked example
Worked example, not a forecast. The flat is let furnished. The owner's furniture, appliances and finishes are worth 30,000 €, and the policy states the old sum of 15,000 €. A leak damaged property to the value of 10,000 €.
| Item | Amount |
|---|---|
| Real value of the insured property | 30,000 € |
| Sum insured in the policy | 15,000 € |
| Share of cover | 50% |
| Damage | 10,000 € |
| Payout under the proportionality rule | 5,000 € |
Under art. 30 of Ley 50/1980, if the sum insured is lower than the value of the property, the insurer pays the damage in the same proportion; the rule can be excluded by contract. So the sum is updated at each change of tenant and after renovation or the purchase of furniture. Insurance is built into the expense calculation together with fees and taxes: how that is done is shown in the article on net rental yield.
What to ask the insurer before signing
- Whether the policy covers a let property, and for what sum the owner's furniture and appliances.
- Whether liability extends to damage to neighbours caused by the tenant.
- Whether the proportionality rule is excluded.
- What conditions make rent default insurance valid: a check of the tenant's income, term, limits, exclusions.
- How quickly the insurer or its contractor attends to repairs.
When insurance does not work
A policy does not protect against ordinary wear, against void periods between tenants without a separate option, or against losses if the letting or the incident was not reported in time: if notice of an incident is late, the insurer may claim compensation for the harm caused by the delay (art. 16). If the risk changes without notice and an incident follows, the payout is reduced proportionally, and in case of bad faith the insurer is released from paying (art. 12). What to do if a tenant stops paying is covered in the article on the owner's course of action. DNPI Capital carries out the calculation of a rental flat as an investment within an investment analysis.
Questions and answers
Is it compulsory to insure a flat you let?
The law does not require a specific insurance for a let flat; with a mortgage the bank requires it. The community's policy does not cover the flat's contents or the owner's liability arising from inside it.
Can a tenant be required to take out rent default insurance?
Since 8 October 2026, under RDL 29/2026, no: art. 36.5 of the LAU prohibits requiring the tenant to take such cover. The Congress has not yet validated the decree, and the wording in force is checked at the date of the lease.
What does rent default insurance cover?
Usually part of the unpaid rent for a limited period and sometimes legal help with recovery. Limits and exclusions are stated in the insurance contract and are read before signing.
Do I have to tell the insurer the flat is let?
Yes, if the flat was declared as the owner's home when the policy was taken out. A change in the declared circumstances that increases the risk is reported as soon as possible, otherwise the payout on a claim may be reduced.
Who insures the tenant's belongings?
The tenant themselves, with a separate policy. The owner insures their own property in the flat and their liability.
