Frequently asked questions

Frequently asked questions about insurance and pensions

Home > Frequently asked questions

About insurance in general

What is legal defense insurance for?

Legal defense insurance is, in general, designed to cover the expenses that may be incurred by the insured as a result of their involvement in a judicial or administrative proceeding (either as a plaintiff or defendant), and to provide them with legal assistance services, both judicial and extra-judicial.

They normally guarantee cover for  professional fees, bail bonds and urgent expenses arising from a trial. They may also cover specialized face-to-face advice and counseling, surveillance in official bulletins, drafting of legal documents such as contracts, and the defense and claiming of inheritances.  This insurance is an assistance insurance, in other words, it does not indemnify the insured but offers a service (advice or payment of the corresponding expenses).

Does a fully comprehensive insurance cover any damage?

No. All insurance policies have certain limits and exclusions that are reflected in the policy conditions. Calling an insurance policy “fully comprehensive” means that it covers a very wide range of risks, but it can never cover all possible situations.

What is the small print of a policy?

The “small print” is popularly interpreted as:

  • Adding a lot of detail to something that does not need it as a way of hiding important information.
  • Using very complicated language, full of technical details, so that the reader does not understand it.
  • Using a very small font size, which makes the text difficult or impossible to read.

In order to protect the insured party, the wording of contracts must be clear and precise. In fact, it is legally established that the limitations of the insurance must be highlighted in a special way.

Can an insurer refuse to sell me insurance?

Yes, insurance companies must select their risks according to objective technical criteria, to guarantee the service and benefits promised to all policyholders and, in short, to ensure their continuity as a company.

If an insurance company considers that insuring something poses a risk to its solvency and to the protection of its policyholders, it may refuse to insure it.

The insurer may refuse to insure a homeowners’ association in a very old building because of the intrinsic risk it represents or, for example, if it has an extensive history of water damage.

What is the difference between an insurance agent and a broker when it comes to paying premiums?

First of all, it is important to distinguish between insurance agents and brokers.

Insurance agents are professionals who work for one or more companies. Depending on who they work for they are:

  • Captive insurance agents: these work with a single insurance company.
  • Independent insurance agents: these work with several insurance companies.

Brokers are experts who offer professional and independent advice to people who wish to take out insurance policies, without maintaining ties to particular insurance companies.

Therefore, amounts paid to captive insurance agents is deemed to have been paid to the insurer, whereas the amounts the customer pays to an independent insurance agent are not deemed to have been paid to the insurer unless, in return, the independent insurance agent provides the policyholder with the premium receipt from the insurer.

A premium payment made to a broker is not deemed to have been made to the insurer unless, in return, the broker provides the policyholder with the premium receipt from the insurer.

About automobile insurance

What happens if you drive without car insurance?

In Spain, it is forbidden to drive without the mandatory civil liability insurance. The penalty may be significant and the vehicle may be immobilized.

How do I fill out the Amicable Accident Declaration?

The Amicable Accident Declaration (AAD) is a document whose main objective is to expedite the processing of material damages caused by the use of motor vehicles.

Filling out a AAD is very simple, just follow the recommendations below:

  • Write clearly: fill in the information in capital letters and do not confuse the information for vehicle A (blue column) with that of vehicle B (yellow column).
  • Fill in as much detail as possible.
  • Use only one form for a collision between two vehicles.
  • Look closely at the middle column, which determines the circumstances of the accident.
  • If anybody witnessed the accident, take down their telephone number and address.
  • If someone is injured or there are more vehicles involved, fill in the corresponding section.
  • Draw a sketch of the accident scene.
  • Sign the accident report, check that the other driver also signs it and keep a copy for yourself.

Does car insurance cover me abroad?

In order for car insurance to be valid abroad, the insured party must contact the insurance company and request a Green Card if they do not have one. The Green Card will contain a list of all the countries where the Civil Liability Insurance is in force.

Can I insure a car with a foreign license plate?

Yes, some insurers provide cover for this.

About home insurance

Can I take out home insurance if the residents' association already has one?

Yes, the residents’ association insurance only covers damage caused in the common areas. A home insurance policy mainly covers situations that occur in a private dwelling. In addition, the residents’ association insurance does not cover any furniture in the house.

For example, if a pipe bursts and water damage is caused to a neighbor, if they do not have home insurance, the homeowner will have to pay for the cost of repairs. 

Who receives the indemnity if an accident occurs in a rented home?

This depends on whether the incident affects the building or the contents. If the damage is caused to the building, in other words, the structure of the property, the insurance company will indemnify the owner of the property. However, if the loss affects the contents, the insurer will recognize the owner of the insured property as the beneficiary (this could be the owner of the property or the tenant).

Do I have to inform the insurance company about any furniture changes?

Whether you get new furniture or add new things, it is advisable to review the list of insured goods so that, if necessary, the policy can be extended or modified. Most home insurance policies allow you to readjust the sums insured and, therefore, modify the premium according to the new additions.

Can a bank force me to get home insurance when I take out a mortgage?

Spanish mortgage market regulations do not require you to take out any insurance when you get a mortgage. However, the bank may, in accordance with the principle of freedom of enterprise, make the granting of a loan subject to the fulfilment of certain requirements, including the taking out of a home insurance policy.

Normally, the banks offer more advantageous loan conditions if the insurance is arranged through the insurance company linked to the bank granting the loan. In these cases, and if the client so wishes, it is recommendable to negotiate with the bank about the possibility of taking out insurance with a different company that covers the same contingency.

In any case, the insurance policy must always be taken out with the client’s consent.

About life insurance

Is it compulsory to undergo the medical check-up requested by the insurance company in order to take out the policy?

Spanish law does not say anything about this, so the principle of party autonomy applies. This means that a person can refuse to undergo the medical check-up but, in that case, it is very possible that the insurer will refuse to issue the insurance policy.

For certain types of life insurance policies, insurance companies need to know the state of health of their policyholders, as well as other issues, in order to assess the risk faced and, consequently, adjust the premium accordingly.

Can I change the beneficiaries at any time?

The policyholder may modify the beneficiaries as many times as they wish, normally by writing to the insurance company or in the will. In the first case, the new designation of beneficiaries must be made explicitly, identifying the policy to which the modification is being made.

Can I take out more than one life insurance policy?

Yes, you can have several life insurance policies at the same time.

Is it mandatory to take out a life insurance policy when I am granted a mortgage?

At present, financial institutions usually require that this insurance is taken out at the same time as the mortgage is signed; however, it is not compulsory.

About pension plans and funds

What does the managing body of a Pension Fund do with my contributions?

The financial contributions made by each individual to the pension plan, together with those of the other participants, form the Pension Fund assets, which are invested in the interest of the participants and beneficiaries. Future benefits are obtained from these assets.

Can a participant subscribe to more than one Pension Plan?

There is no maximum limit of Pension Plans per person. What the participant must bear in mind is that the sum of the contributions they make to the range of Pension Plans they own may not exceed the annual limit legally established according to their age.

Can you stop making contributions to a Pension Plan for a certain period of time?

Yes, you can stop making contributions to a pension plan at any time.The accumulated capital will continue to grow based on the revaluation of the fund it forms part of. Participants in this situation have opted out.

Can I withdraw, at any time, the amounts contributed to the Pension Plan?

The participant cannot freely withdraw the amounts contributed by them or the pension plan promoter. They can only receive their rights in the event of any of the contingencies covered by the plan.

Generally speaking, the contingencies that entitle the participant to receive benefits are the following:

  • Retirement
  • Total and permanent incapacity to work in their habitual profession or absolute and permanent incapacity for all work, and severe disability.
  • Death, in which case the beneficiaries designated by the participant will receive the benefit.
  • The participant’s high to severe dependence.

This situation has two exceptions. Pension plan rights may be exercised, in whole or in part, in the event of serious illness or long-term unemployment, whenever this is provided for in the plan specifications and under the conditions and limitations established therein.