The fire on Thursday that destroyed a building in Valencia’s Campanar district also meant the loss of ten lives, the destruction of 138 homes, and the disappearance of many families’ possessions. Since the tragedy, insurers have set up dedicated teams of experts and claim adjusters and have been reaching out to those affected to speed up the handling of the claim and to ensure indemnities are paid as soon as possible.
Mapfre, which renewed the building’s community policy this month and valued it at 26.5 million euros, has begun advancing payments for the contents of homes to its Home policyholders and has announced it will allocate another 12,000 euros per insured property for rental costs, the maximum amount covered by the inhabitability benefit.
Occident, the insurer for Catalana Occidente, offers a helpline to resolve questions and speed up procedures, as well as a medical and psychological guidance service. Generali has ordered priority treatment for the affected, agreed to make payments equal to 50% of the insured content value for the most immediate needs, and will provide immediate payments against the inhabitability coverage to help its policyholders access alternative housing. Allianz has also made advance payments available to address the most urgent needs.
Reference in Lorca
Beyond the urgent measures, insurers and brokers face an unprecedented situation in the Valencian Community, as César Barrón noted yesterday. His brokerage has several clients affected by the fire. “It is almost never a total loss like this,” he emphasized. “Usually a building fire affects one, two, or at most three homes. The closest thing we have seen to a building entirely ruined was the Lorca earthquake.”
Regarding the process for claiming the assistance and indemnities that begin once the fire is extinguished and owners are relocated, Barrón explains that two types of policies will come into play: the community policy, which is mandatory in the Valencian Community and in Madrid, covering structural damages and demolition if needed, but not individual contents such as furniture and personal belongings; and the home policy, owned privately by the property owners, which, in addition to rebuilding the living space, can include personal items.
In any case, the broker underscores that insured under private policies will receive a single indemnity, combining the two policies.
The Cost Rather Than the Value
As Barrón also reminds, the insurance guarantees the reconstruction cost of the dwelling, not its market value. “For example, a owner may have bought the apartment for 500,000 euros, but the policy pays for reconstruction costs around 150,000 to 200,000 euros,” he explains. In the best case, that is the amount that will be paid.
A number of families who had lived in Campanar have concerns about a mortgage-linked policy. If a loan existed, the bank may retain preferential rights to recover the outstanding loan amount. This clause is not mandatory by law (in some policies the bank’s beneficiary cap is specified), but banks rarely approve a mortgage if the borrower does not accept it.
“That means some people might end up with neither a home nor the entire insurance indemnity, with the bank claiming what remains on the loan,” Barrón warns.
He also notes that if the home was insured as a “primary residence,” there are policies that cover the cost of renting a similar home for a period, including the time needed for repairs or to find a new residence.
For those who were renting, the contents insurance covering personal belongings can be recovered in full. “In that case, the insurer will not second-guess whether all belongings were lost; the damage is evident,” he states.
A Difficult Accord
Finally, Barrón explains that property owners still retain the right to reconstruct a comparable home on the land where the destroyed building stood. “They can use the indemnity money for this construction,” he notes. “But they must reach an agreement with the other co-owners, and if everyone isn’t on the same page from the start, it will be difficult.”