Above a certain value, a standard home policy stops working

A Portuguese multirriscos policy is a good product for the house it was designed for. Above a certain rebuild figure, and once the contents include things that cannot be replaced from a catalogue, the same wording starts producing settlements that do not restore the property.

Part of our guide to home insurance in Portugal; for Spain, see insuring a high-value home in Spain. This page deals with the point at which the standard product stops fitting: what breaks, in what order, and what replaces it — in Portugal, and in Spain, where the underwriting is the same and the frame around it differs. If you would rather have the answer for your own property than read the general case, send us your current policy and we will reply in writing. As each proposal is specific and requires a detailed analysis of the risk, response times may vary.

Named perils and the list that runs out

Most Portuguese home insurance is written on a named-perils basis. The policy lists the events it responds to — fire, storm, escape of water, theft, and so on — and anything not on the list is not covered. An all-risks wording works the other way round: accidental loss of or damage to the property and its contents is covered unless a cause is specifically excluded.

The difference is invisible until an ordinary domestic accident happens. A ladder through a ceiling, a dropped sculpture, a solvent spilled on a floor, a contractor damaging a wall he was not working on: none of these is a named peril, and all of them are within an all-risks wording.

Named perils covers what the policy lists. All-risks covers what the policy does not exclude. On a house where a single accident can cost six figures, that is the whole argument.

The sums insured, and the rule that punishes getting them wrong

Portuguese policies apply the proportional rule (regra proporcional). If the building is insured for less than it would cost to rebuild, the insurer reduces every settlement in the same proportion — including partial claims well inside the sum insured. A house that would cost €1,000,000 to rebuild and is insured for €600,000 is 60 per cent insured, and a €100,000 claim can be settled at €60,000.

Two things follow. The first is that the building figure has to be a rebuild cost — construction, demolition, professional fees, and the cost of matching finishes and specialist labour — not a purchase price or a market valuation, which include land and location and are useless as a construction estimate. The second is that some specialist wordings waive the proportional rule outright, or within a stated tolerance, so a modest under-declaration does not cut the claim. Whether the rule is waived, and on what terms, is a specific question to put to each insurer rather than an assumption. The general problem of values drifting away from reality is set out in insured values that have stopped matching the thing insured.

Checking that one figure is the highest-value hour anyone spends on a Portuguese home policy, and it is the first thing we do on a free comparison across the insurers we work with — the rebuild figure before the premium.

Where the contents section gives out

The contents sum insured is one number, but underneath it sits a set of caps that decide most disputes:

• The valuables sub-limit. A percentage of the contents total — often a modest one — is the most the policy will pay across jewellery, watches, art, silver and collections combined.
• The single-article limit. Within that, there is a maximum payable for any one item. One watch or one painting can exceed it on its own.
• Cover only at the address. Contents are insured in the house. A ring worn to dinner, a watch taken abroad or a picture out for restoration may be outside the policy entirely.
• Indemnity rather than agreed value. Settlement is what the item is worth at the date of loss, in the insurer's assessment, rather than a figure fixed in advance.

The fix is to take the items out of the general figure and schedule them: listed individually, valued, insured on an agreed-value basis and covered away from the address. That is the subject of our guide to items a standard contents section will not carry.

The parts of the property nobody insures

On an Algarve estate the largest uninsured exposure is often outside the walls. A specialist wording can list them explicitly; a retail policy usually caps them so low as to be notional:

• Landscaped gardens, mature planting and the cost of replanting after a fire or storm.
• Pool structure, plant, covers and heating.
• Boundary walls, gates, automated gate mechanisms and fencing.
• Outdoor kitchens, pergolas, terraces and their fixed furniture.
• Guest annexes, pool houses, garages and staff accommodation, each of which has to be declared as a separate structure rather than assumed to be part of the house.
• Solar arrays, batteries, borehole and irrigation plant.

Occupancy: the condition most often breached

Every home policy contains an unoccupancy clause: after a stated number of consecutive days without anyone living in the house — commonly 30, 60 or 90 — certain cover is suspended, most often theft and escape of water. Owners who spend part of the year elsewhere breach this without ever reading it.

The answer is to declare the pattern of use at inception and have the clause written to fit: a longer permitted period, a condition that the water is turned off and the alarm set, or an agreed schedule of visits by a keyholder. Where the house is let, whether long-term or as Alojamento Local, that is a different occupancy again and a different policy — and one that a standard household wording generally does not permit at all. Our note on holiday homes covers the seasonal case.

Liability, staff and the rest of the household

A property with grounds, a pool, contractors coming and going and people working at the house carries liability that has nothing to do with the building. Public liability limits on retail policies are frequently low relative to what a serious injury costs. Where anyone is employed at the property — a cleaner, a gardener, a housekeeper — seguro de acidentes de trabalho is compulsory and separate; that is set out in domestic staff insurance. The wider household exposure is covered in the liability a household carries without noticing.

What the underwriting actually involves

Above a certain value the risk is read by a person rather than a rating engine, and the file has to be assembled:

For a large or unusual property a surveyor may attend. This is why terms take days rather than minutes, and why the process is described in how a specialist risk is placed.

Who writes this cover

For a conventionally-built house with valuable contents, the natural market is a high-value household wording, written by specialist private-client insurers. Where the property itself is the problem — non-conventional construction, mixed use, short-term letting, a prior claim — the placement runs to the non-standard market, through specialist underwriting agencies. Both are arranged the same way: a written submission, individual underwriting, terms in writing.

Where the risk changes

Everything above is the general shape of the problem. In practice the question an underwriter asks first depends heavily on where the property is — construction, exposure and rebuild cost are all local. These are the places we are asked about most, and what changes in each.

Comporta, Carvalhal and Melides. The one location in Portugal where a mainstream insurer’s first answer is often no. Thatch, timber structure and very large glazed elevations put these houses outside a retail wording altogether, and rebuild cost here has nothing to do with national construction tables.

Tróia and the Setúbal peninsula. Almost everything is inside a development, so the live question is where the condominium policy stops and the owner’s begins — interiors, fit-out, contents and liability to the neighbours. Add peninsular storm exposure and the highest seismic band on the mainland.

Quinta do Lago, Vale do Lobo and Vilamoura. The value is in what is outside the house: pool, guest annexe, staff accommodation, courts, landscaping, boundary walls. Bespoke finishes push real rebuild cost far past the per-square-metre tables, and domestic staff make workers’ compensation a legal requirement rather than an option.

Sagres, Vila do Bispo, Salema and Burgau. The most wind-exposed prime location on the mainland. Sustained Atlantic wind and salt corrosion damage property continuously rather than suddenly, which is precisely the line a policy is written not to cross — and isolation lengthens every claim.

Sintra: Linhó, Beloura, Penha Longa and Colares. Rural fire in the serra comes with a legal fuel-management obligation that can be raised at claim stage, the microclimate produces infiltration rather than burst pipes, and on the old quintas reinstatement means something far more expensive than a rebuild.

Lisbon and Cascais apartments. High values in buildings whose structure is insured collectively. The private policy is doing narrower but more expensive work: improvements, contents, and liability to the fractions below.

Lagos. Our own concelho, and one of the most varied for insurance: a lime-and-stone historic centre, the Porto de Mós cliff line, the low ground behind Meia Praia and a marina rental market, each needing a different policy.

Lagoa and Carvoeiro. Dense clifftop and hillside villa stock with a very high proportion of second homes, which makes the occupancy clause the dominant issue.

Loulé and Almancil. The service centre for the Golden Triangle, and where the split between substantial inland quintas and resort-adjacent villas shows up most clearly in the underwriting.

Tavira and the eastern Algarve. Older traditional construction, the Ria Formosa and its flood question, and lower values that make underinsurance easier to overlook.

Clifftop and coastal property generally. Subsidence, erosion and flood are three different perils in a Portuguese wording, and only some of them are insurable at all. Anywhere near an edge, that distinction comes before the premium.

Golf resort property generally. Shared liability, resort rules that bind the policy, and a boundary with the development’s own cover that owners consistently place too far out.

If the property is in any of these and you would rather start from the address than the article, our home insurance comparison for owners in Portugal takes the location, the rebuild figure and how the property is used, and comes back with the market priced side by side.

Portugal and Spain: what changes across the border

A high-value house in Marbella, Mallorca or Madrid is underwritten on the same principles as one in Comporta or Cascais: a rebuild figure that holds, all-risks wording, agreed values for what cannot be replaced from a catalogue, grounds and outbuildings named in the schedule, and occupancy declared as it really is. Standard Spanish home policies share the weaknesses of Portuguese ones — named perils, a regla proporcional that cuts claims on an under-insured house, token limits for walls, pools and gardens — and specialist wordings solve them the same way, typically waiving the proportional rule once the insurer’s own appraisal figures are accepted. What differs is the frame around the policy.

Two points deserve emphasis. The Consorcio settles against the sums insured in your own policy, so an under-declared rebuild figure is carried into a catastrophe claim as well as an ordinary one. And the bundled Spanish family liability section is welcome but rarely set at the limit a house with grounds, staff and guests needs; the private-client wordings we arrange carry several million euros worldwide in both countries. See high-value home insurance in Spain and insuring a high-value home in Spain, region by region.

Adler & Rochefort is a commercial brand of Ownizo, Unipessoal Lda., registered with the Portuguese Insurance and Pension Funds Supervisory Authority (ASF) under no. 425591790/3. General information only, not personalised advice; cover, sub-limits and conditions vary by underwriter and by risk.