Mandatory Insurance for Tenants and Landlords in Portugal: What Do You Need to Know?

Did you know that, when renting a property, tenants and landlords are required—in addition to paying rent and carrying out improvements to the building—to have insurance coverage?

In order for someone to rent a house or list a property for rent, they must have certain types of insurance; this is a requirement if, for example, they want to participate in the Rental Support Program (PAA).

Insurance for Landlords: What Types of Insurance Are Required?

Anyone who intends to list their property on the rental market must, in accordance with Article 1429 of the Civil Code, purchase one of the following types of fire insurance:

• Fires and Elements of Nature;
• Included in a multi-risk insurance policy.

The law states that this insurance must cover the individual unit and the building’s common areas, such as elevators, stairwells, or the garage; however, please note that while insurance for the common areas is mandatory for the property owner, the condominium association is responsible for insuring the common areas.

If the building is divided into separate units, the landlord may, instead of purchasing fire insurance, have the homeowners’ association purchase insurance that covers not only the common areas but also the individual units, which may be more cost-effective overall.

Wary of the possibility that a fire could destroy their investment, landlords who wish to enroll their property in the Rental Support Program are required to purchase new insurance.

Mandatory insurance included in the Affordable Rental Program

As provided for in Decree-Law No. 69/2019, of May 22, anyone who wishes to have their property included in the PAA must purchase mandatory insurance designed to protect the landlord’s interests.

This mandatory insurance is known as rent default insurance or rent insurance, and it covers potential instances of the tenant’s failure to pay rent.

Therefore, if the tenant fails to pay the rent specified in the lease, the landlord can file a claim under this insurance to ensure that he or she does not suffer financial loss.

Insurance for Renters: What Types of Insurance Are Required?

According to the data from INE (National Institute of Statistics), 22% of Portugal's housing stock is intended for rental, a percentage that has proven insufficient to meet the observed demand.

Renting a house in Portugal can be complicated due to the costs involved, but there are insurance policies that help offset those expenses, such as the Income Protection Insurance and the Multi-Risk Home Insurance.

As is the case with landlords, tenants who wish to enroll in the PAA are required to purchase certain types of insurance—in this instance, two.
These are insurance against involuntary loss of income and contents insurance.

a) Insurance against involuntary loss of income: if the tenant suffers an accident that prevents them from working or suddenly becomes unemployed, this insurance covers their expenses and contractual obligations to the landlord.

In addition, this insurance covers the financial obligations of the tenant’s household in the event of the head of household’s death or temporary or permanent disability, as certified by a doctor.

b) Contents insurance (if the tenant owns the property’s contents): This insurance protects the tenant in the event of damage to their belongings.

EXS Seguros helps you choose the insurance that's right for you

The best way to prepare for the unexpected is, without a doubt, to get insurance that allows you to face the future with greater comfort and peace of mind.

Given the vast array of options available, the hardest part will be choosing the insurance and coverage that best suit your financial interests and everyday needs, but there’s a way to make this search simpler and more effective: choose EXS Seguros as your lifelong partner.

Whether you're a tenant or a landlord, EXS Seguros offers you the services of an experienced and specialized team that will provide you with all the support you need to compare and choose the best insurance option for you.

After taking advantage of a free initial assessment based on the coverage you’re looking for, EXS Seguros will present you with a range of flexible solutions to protect your income and assets.

Conclusion

Renting a property poses a significant risk to both tenants and landlords.

Rent that goes unpaid due to a sudden drop in income, a storm that renders the building uninhabitable, or even a burglary that devastates the home—these are situations that result in financial and logistical difficulties that can jeopardize the investment made, which are more than enough reasons to seek insurance that covers these and other unforeseen events.

As we mentioned, the market offers you dozens of insurance policies with different coverage options and prices, but regardless of your protection needs, the EXS Seguros has the perfect solution for you.

With over two decades of experience in the insurance market, giving it in-depth knowledge of the available options, EXS Seguros offers you personalized support to ensure you secure an insurance policy with comprehensive coverage at a very competitive price.

To protect yourself, your assets, and your income, get your free initial assessment at EXS Seguros today and find the ideal solution for your needs.