Part of our guide to high-value home insurance in Portugal. For the household as a whole — collections, family liability, family protection — see private clients.
Madeira has become one of the most sought-after addresses in Portugal for international owners: restored quintas above Funchal, contemporary villas on the slopes of Calheta and Ponta do Sol, penthouses on the Funchal waterfront, and second homes on Porto Santo. The houses are Portuguese risks, insured under Portuguese law — but the island asks questions of a policy that a mainland wording rarely has to answer.
This guide sets out what those questions are, and the conditions a high-value home on the island should be insured on.
The island perils, stated plainly
Madeira’s south coast is built at the foot of steep volcanic catchments. When rain is intense, the ribeiras do not rise like a mainland river: they carry water, rock and soil down to the towns at their mouths. The reference event is the aluvião of 20 February 2010, a flash flood and debris flow that hit Funchal and Ribeira Brava hardest — the most serious of its kind on the island in two centuries.
For insurance, the point is the wording. Cover for rainwater entering a building is not automatically cover for a debris flow, the soil that comes with it, or the retaining wall that fails because of it. Water from the sea is a separate line again, often excluded or limited even where rain flood is covered; landslip, where offered, is elective and carries its own excess. On a high-value home each of these is read in the wording before a policy is recommended — never inferred.
Seismic hazard in the archipelago is lower than on the mainland and in the Azores, but not absent: on 7 March 2020 a magnitude 5.2 earthquake south of Funchal was felt across Madeira and Porto Santo. Earthquake cover is an optional extension with its own excess, and on a house built into a slope it is a decision to take deliberately.
Slopes, walls and terraces are part of the house
A Madeira quinta is rarely just a building. It is a house on terraces held up by retaining walls, with access lanes, water tanks, gardens, a pool cut into the hillside and often a guest house below. On a retail policy these are capped at a token figure, or left out. On the private-client wordings we place, walls, grounds and outbuildings are part of the buildings cover and, with Chubb, retaining walls are not reduced to a sub-limit.
What an underwriter needs is where the house sits relative to a watercourse and to the slope, how the terraces are drained and maintained, and how the property is reached — not the word “Madeira” on a proposal. Porto Santo is a different island: lower, sandier and without the same catchments, with wind and sea the dominant exposures. The proposal names the island.
The conditions a high-value home should carry
On an island, the consequences of a loss last longer: specialist trades and materials come from the mainland, and a house can be out of use for many months. That makes some conditions matter more here than anywhere else in Portugal:
- Rebuild cost and appraisal. Claims are settled on rebuild cost. With Chubb, for homes with a rebuild value above €1.5 million, the insurer carries out an on-site appraisal at no cost to you, to confirm the rebuild cost, advise on contents and valuables sums insured and recommend risk-management measures.
- No proportional reduction. The wordings we place carry no proportional rule, so a partial loss is not reduced for underinsurance.
- Rebuild after a total loss. With Hiscox and Liberty, up to the buildings sum insured, with fees on top; with Chubb, even if the cost exceeds the buildings sum insured, provided the appraised sums were kept.
- Alternative accommodation. While the house cannot be lived in: up to two years with Hiscox and Liberty, and with no time limit with Chubb — not the few months typical of the retail market.
- Grounds, walls and outbuildings. Gardens and trees, boundary and retaining walls, pools and outbuildings within the buildings cover, at the limits each wording sets; with Chubb, outbuildings up to 20% of the house sum insured and retaining walls without a sub-limit.
- How claims are settled. Repair, replacement or a cash settlement. With Chubb, the choice is yours, as is the choice of suppliers, craftsmen and restorers; with Hiscox and Liberty, the insurer decides.
With Chubb, the appraisal for higher-value homes is carried out on site, on the island; keeping its recommended sums is what secures the rebuild guarantee.
A quinta above Funchal, a villa in Calheta, a house on Porto Santo?
Send us the policy you hold and tell us how the house sits on the slope. We reply in writing with what it covers, where it stops, and what we would change.
Contents, art and Madeira wine
Homes on the island often hold what the owner values most: art, furniture brought from elsewhere, and in many cases a collection of old Madeira wine, some of it older than the house. Contents on the wordings we place are insured against all risks. Art, jewellery and wine are scheduled on an agreed value, with loss in value after restoration addressed in the wording. A wine collection needs its storage conditions — temperature, humidity, security — described at the outset.
Empty months, short lets and the Funchal apartment
Much international ownership in Madeira is seasonal. Retail wordings restrict theft and escape-of-water cover once a property has been empty beyond a stated number of consecutive days; private-client wordings deal with unoccupancy through agreed conditions — a key-holder, periodic visits, water shut-off — written into the contract. If the house is let, including as alojamento local, that use has to be on the policy. See second homes that sit empty for months.
In Funchal, most apartments sit in propriedade horizontal. The condominium policy insures the shared structure; it does not insure interior finishes, contents, or liability to the apartment below — which on a high-value penthouse are usually the largest part of the rebuild. See where the condominium policy ends and yours begins.
Family liability on the island
Guests, staff, a pool on a terrace, a boat in the marina at Funchal or Calheta: the liability that comes with a Madeira home is the household’s, not the building’s. The wordings we place carry family liability at limits of several million euros, with defence costs covered — covering the household in Madeira, on the mainland and abroad.
How we work
Adler & Rochefort is an ASF-registered insurance broker with its head office in Lisbon, placing private-client risks across Portugal — the islands included — and Spain. Everything runs in writing: you send the address, the island, how the house sits on the slope, the rebuild figure and how the property is used; the insurer arranges its appraisal on site where the value calls for it; we set out the proposal against the conditions above, and handle the claim if it comes to it.
Related: Private clients in Portugal · High-value homes · Wine cellars · Earthquake cover
Adler & Rochefort is a commercial brand of Ownizo, Unipessoal Lda., registered with the ASF under no. 425591790/3. These are the reference conditions of the high-net-worth wordings we place. Cover, limits, excesses and exclusions vary by insurer and by risk, and are confirmed only in the policy documentation issued to you.