Compensation Consortium

Compensation clause by the Insurance Compensation Consortium for losses arising from extraordinary events in insurance with combined coverage for damage to persons and property and civil liability in land motor vehicles.

In accordance with the established in the rewritten text of the legal Statute of the Insurance Compensation Consortium, approved by Royal Legislative Decree 7/2004, of 29 October, the policyholder of an insurance contract of which a surcharge must be incorporated in favour of the aforementioned public business entity has the power to agree the coverage of extraordinary risks with any insurance entity that meets the conditions required by current legislation.

Compensation for claims arising from extraordinary events occurring in Spain and affecting risks in Spain and, in the case of personal injury, also those occurring abroad when the insured party is habitually resident in Spain, will be paid by the Insurance Compensation Consortium when the policyholder has paid the corresponding surcharges in his or her favour and one of the following situations occurs

  • That the extraordinary risk covered by the Insurance Compensation Consortium is not covered by the insurance policy hiring with the insurance company.

  • That, even though it is covered by the said insurance policy, the obligations of the insurance company cannot be fulfilled because it has been declared judicially insolvent or is subject to a procedure of liquidation that has been intervened or assumed by the Insurance Compensation Consortium.

The Insurance Compensation Consortium will act in accordance with the provisions of the aforementioned Legal Statute, the Insurance Contract Act 50/1980, of 8 October, the Regulations on the Insurance of Extraordinary Risks, approved by Royal Decree 300/2004, of 20 February, and complementary provisions.

Summary of Legal Rules

1. Extraordinary events covered

  • The following natural phenomena: earthquakes and seaquakes; extraordinary floods, including those produced by sea storms; volcanic eruptions; atypical cyclonic storms (including extraordinary winds with gusts of more than 120 km/h and tornadoes); and falls of iron and airborne bodies.

  • Those caused violently as a consequence of terrorism, rebellion, sedition, mutiny and popular tumult.Events or actions of the Armed Forces or the Security Forces in times of peace.

Atmospheric and seismic phenomena, volcanic eruptions and the fall of iron and steel bodies will be certified, at the request of the Insurance Compensation Consortium, by means of reports issued by the State Meteorological Agency (AEMET), the Geographic Institute

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National and other public organisms competent in the matter. In the case of events of a political or social nature, as well as in the case of damage caused by events or actions of the Armed Forces or the Security Forces in peacetime, the Insurance Compensation Consortium may request information about the events from the competent jurisdictional and administrative organs.

2. Excluded risk

  • Those that do not give rise to compensation under the Insurance Contract Act.

  • Those caused to property insured by an insurance contract other than those in which the surcharge in favour of the Insurance Compensation Consortium is obligatory.

  • Those due to a vice or defect inherent to the insured item, or to its manifest lack of maintenance.

  • Those caused by armed conflict, even if it has not preceded the official declaration of war.

  • Those deriving from nuclear energy, without prejudice to the provisions of Act 12/2011 of 27 May on civil liability for nuclear damage or damage caused by radioactive materials. Notwithstanding the above, all direct damage caused to an insured nuclear installation shall be understood to be included when it is the result of an extraordinary event affecting the installation itself.

  • Those due to the mere action of time, and in the case of property that is totally or partially permanently submerged, those attributable to the mere action of waves or ordinary currents.

  • Those produced by natural phenomena other than those indicated in section 1.a) above and, in particular, those produced by the raising of the water table, movement of slopes, landslides or settlement of land, rock falls and similar phenomena, unless these are clearly caused by the action of rainwater which, in turn, has led to a situation of extraordinary flooding in the area and they occur simultaneously with said flooding.

  • Those caused by tumultuous actions produced in the course of meetings and demonstrations carried out in accordance with the provisions of Organic Law 9/1983, of 15 July, regulating the right of assembly, as well as during the course of legal strikes, unless the aforementioned actions could be qualified as extraordinary events of those indicated in section 1.b) above.

  • Those caused by the bad faith of the insured.

  • Those arising from claims due to natural phenomena that cause damage to property or pecuniary loss when the date of issue of the policy or the date of effect, if later, is not more than seven calendar days before the date on which the claim event occurred, unless it is proven that it was impossible to take out the insurance earlier due to the lack of insurable interest. This waiting period will not be applied in the case of replacement or substitution of the policy, in the same or another entity, without a solution of continuity, except in the part that was the object of increase or new coverage. Neither will it be applied to the part of the sums insured resulting from the automatic revaluation provided for in the policy.

  • Those corresponding to losses occurring before the payment of the first premium or when, in accordance with the provisions of the Insurance Contracts Act, the cover of the Insurance Compensation Consortium is suspended or the insurance is terminated due to non-payment of the premiums.

  • In the case of damage to property, indirect damage or loss deriving from direct or indirect damage, other than the pecuniary loss defined as compensable in the Regulations on Insurance of Extraordinary Risks. In particular, damage or loss suffered as a result of a cut or alteration in the external supply of electrical energy, combustible gases, fuel oil, diesel oil or other fluids, or any other indirect damage or loss other than those mentioned in the previous paragraph, are not included in this cover, even if these alterations are derived from a cause included in the extraordinary risks cover.

  • Losses which, due to their magnitude and seriousness, are classified by the National Government as a “national catastrophe or calamity”.

  • In the case of civil liability in land motor vehicles, personal damages derived from this coverage.

3. Franchise

I. The franchise to be paid by the insured will be:

  • In the case of direct damage, in the insurance against damage to things, the franchise to be paid by the insured party shall be seven percent of the amount of the compensable damage caused by the incident. However, no deduction for excess will be made for damage affecting dwellings, homeowners’ associations or vehicles that are insured under a car insurance policy.

  • In the case of miscellaneous pecuniary losses, the excess payable by the insured party will be the same as that provided for in the policy, in terms of time or amount, for damage resulting from ordinary claims for loss of profits. If there are various excesses for the coverage of ordinary claims for loss of profits, those foreseen for the main coverage will be applied.

  • When a combined excess for damage and loss of profits is established in a policy, the Insurance Compensation Consortium will settle the material damage with a deduction from the corresponding excess by applying the provisions of section a) above, and the loss of profits produced with a deduction from the excess established in the policy for the main cover, reduced by the excess applied in the settlement of the material damage.

II. In the case of personal insurance, no deduction shall be made for an excess.

4. Extension of coverage

4.1 The coverage of extraordinary risks shall cover the same goods or persons, as well as the same sums insured as have been established in the insurance policies for the purpose of covering ordinary risks.

4.2 Notwithstanding the above:

  • In policies covering own damage to motor vehicles, the cover of extraordinary risks by the Insurance Compensation Consortium will guarantee the entire insurable interest even if the ordinary policy only partially does so.

  • When the vehicles only have a civil liability policy for land motor vehicles, the coverage of extraordinary risks by the Insurance Compensation Consortium will guarantee the value of the vehicle in the state in which it is found at the moment immediately prior to the occurrence of the incident according to purchase prices generally accepted in the market.

  • In life insurance policies which, in accordance with the provisions of the contract and in accordance with the regulations governing private insurance, generate a mathematical provision, the cover provided by the Insurance Compensation Consortium will refer to the capital at risk for each insured party, i.e. the difference between the sum insured and the mathematical provision which the insurance company that issued it must have set up. The amount corresponding to the mathematical provision shall be paid by the said insurance company.

Communication of damages to the Insurance Compensation Consortium

1.The request for compensation for damage whose coverage corresponds to the Insurance Compensation Consortium shall be made by means of notification to the Consortium by the policyholder, the insured or the beneficiary of the policy, or by the person acting on behalf of and in the name of the former, or by the insurance company or the insurance intermediary with whose intervention the insurance will be managed.

2.The communication of damage and the obtaining of any information concerning the procedure and the state of processing of claims may be carried out:

− By calling the Insurance Compensation Consortium Call Centre (900 222 665 o 952 367 042).
− Through the Insurance Compensation Consortium website (www.consorseguros.es).

3. Valuation of the damage: The valuation of the damage that can be compensated in accordance with the insurance legislation and the content of the insurance policy will be carried out by the Insurance Compensation Consortium, without the latter being bound by any valuations that may have been made by the insurance company covering the ordinary risks.

4.Payment of the compensation: The Insurance Compensation Consortium will pay the compensation to the beneficiary of the insurance by bank transfer.

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