Extraordinary Risk Coverage
Compensation clause by the Insurance Compensation Consortium for losses arising from extraordinary events in insurances with combined coverages for injuries to people and property and civil liability on land motor vehicles.
In accordance with the provisions of the amended text of the Legal Statute of the Insurance Compensation Consortium, approved by Royal Decree Law 7/2004, of 29 October, the policyholder of an Insurance Contract that must necessarily include a surcharge payable to the aforementioned public business institution, is empowered to agree to coverage of extraordinary risks with any Insurance Company that meets the conditions required by current legislation.
Compensation resulting from claims caused by extraordinary events occurring in Spain and affecting risks situated therein and also, in the case of personal injury, those occurring abroad when the insured has their habitual residence in Spain, will be paid by the Insurance Compensation Consortium when the policyholder has paid them the relevant surcharges and any of the following situations occurs:
- Where the extraordinary risk covered by the Insurance Compensation Consortium is not covered by the Insurance Policy contracted with the Insurance Company.
- Although covered by said insurance policy, the insurance company's obligations could not be complied with because they had been declared insolvent by the courts or because they were subject to an intervened liquidation procedure or were assumed by the Insurance Compensation Consortium.
- The Insurance Compensation Consortium will adjust their actions to the provisions of the Legal Statute, under Insurance Contract Law 50/1980 of 8 October, in the Regulation on Extraordinary Risks Insurance, approved by Royal Decree 300/2004 of 20 February, and supplementary provisions.
SUMMARY OF LEGISLATION
1. Extraordinary events covered
- The following natural phenomena: earthquakes and tidal waves, extraordinary floods (including those caused by sea storms), volcanic eruptions, atypical cyclonic storms (including extraordinary wind gusts over 120 km/h and tornadoes), and falling astral bodies and meteorites.
- Events violently caused as a result of terrorism, rebellion, insurrection, riot, and civil disturbance.
- Acts or actions of the Armed Forces or Security Forces and Bodies in peacetime. Atmospheric and seismic events, volcanic eruptions, and falling astral bodies, will be certified, at the request of the Consortium of Insurance Compensation, through reports issued by the State Meteorological Agency (AEMET), the National Geographic Institute and other public agencies competent in the matter. In cases of events of a political or social nature, as well as in the event of damage caused by events or actions of the Armed Forces or Security Forces or Bodies in peacetime, the Consortium of Insurance Compensation may seek information about the events from the competent judicial and administrative bodies.
2. Excluded risks
- Those that do not give rise to compensation under the Insurance Contract Law.
- Those caused to property covered by an Insurance Contract, other than those where there is an obligatory surcharge payable to the Insurance Compensation Consortium.
- Those due to improper use or defects of the insured item, or its apparent lack of maintenance.
- Those caused by armed conflicts, even if they are not preceded by an official declaration of war.
- Those arising from nuclear energy, without prejudice to the provisions of Law 12/2011 of 27 May, on civil liability for nuclear damages or those produced by radioactive materials. Nevertheless, all direct damages in an insured nuclear facility are understood to be included, when they are the result of an extraordinary event affecting the actual facility.
- Those due to the mere effect of the weather and, in the case of property wholly or partially submerged on a permanent basis, those attributable to the mere effect of waves or ordinary currents.
- Those produced by natural phenomena other than those listed in section 1 a) above, and in particular those produced by a rise of the groundwater level, hillside movement, land slide or settlement, falling rocks and similar phenomena, except where these were clearly caused by the effect of rainwater that would have, in turn, caused an extraordinary flooding situation in the area and occurred at the same time as that flood.
- Those caused by disturbances produced in the course of meetings and demonstrations held as provided in Organic Law 9/1983 of 15 July, regulating the right of assembly, as well as during the course of legal strikes, except when those demonstrations could be classified as extraordinary events under section 1 b) above.
- Those caused by the bad faith of the insured.
- Those arising from disasters due to natural phenomena that cause damage to property or financial loss when the issue date of the policy or effective date, if later, does not precede seven calendar days from the date on which the incident occurred, except if previous contracting of the insurance is shown to have been impossible due to lack of insurable interest. This grace period will not apply in the case of replacement or substitution of the policy, in the same or another entity, without interruption, except for the part that was subject to increase or new coverage. Nor will it apply to the part of the insured capital resulting from the automatic revaluation indicated by policy.
- Those corresponding to claims arising before payment of the first premium or when, in accordance with the provisions of the Insurance Contract Act, the coverage of the Insurance Compensation Consortium is suspended or the insurance is terminated due to non-payment of premiums.
- In the case of property damage, indirect damage, or losses arising from direct or indirect damage, other than the pecuniary losses defined as compensable by the Extraordinary Risk Insurance Regulations. In particular, this coverage does not include loss or damage suffered as a result of cutting or altering the external supply of electricity, fuel gas, fuel oil, diesel oil or other fluids, or any other indirect damage or losses other than those mentioned above, even if these alterations result from a case included in the extraordinary risk coverage.
- Incidents which, due to their magnitude and severity, are classified by the National Government as a "national catastrophe or calamity".
- In the case of civil liability on land motor vehicles, personal injuries resulting from this coverage.
- The excess payable by the insured shall be:
- In the case of direct damage, in insurance against damage to things, the excess payable by the insured party shall be seven percent of the amount of compensable damage caused by the incident. Nonetheless, no deduction shall be made for any excess for damage affecting housing, communities of home owners, or vehicles that are insured by auto insurance policy.
- In the case of diverse pecuniary losses, the excess payable by the insured shall be the same under the policy, in time or amount, for damages produced as a consequence of ordinary claims of lost profits. If there are different excesses to cover ordinary claims for loss of profits, the provided excesses will be applied for main coverage.
- Where a policy establishes a combined excess for damage and loss of profits, the Consortium of Insurance Compensation will settle the property damage with a deduction of the corresponding excess by applying that which is provided for in the previous section a), and the loss of profits produced with deduction of the excess agreed upon in the policy for main coverage, reduced in the excess applied to the liquidation of property damage.
- In personal insurance there will be no excess deduction.
4. Extension of coverage
- Coverage of extraordinary risks will include the same people and property, as well as the amounts insured in the insurance policy for the purposes of ordinary risk coverage.
- Notwithstanding the above:
- In policies covering damage to motor vehicles, the extraordinary risk coverage by the Insurance Compensation Consortium will guarantee the entirety of the insurable interest even if the ordinary policy only does partially.
- Where vehicles only have a liability policy on land motor vehicles, the extraordinary risk coverage by the Consortium of Insurance Compensation will guarantee the vehicle's value in the state immediately preceding the occurrence of the accident according to the generally accepted market purchase prices.
- In life insurance policies that, according to the provisions of the Contract and in accordance with the regulations of private insurance, generate a mathematical provision, the coverage of the Consortium of Insurance Compensation will refer to the capital at risk for each insured, i.e. the difference between the amount insured and the mathematical provision that the Insurance Company that issued it should have provided. The amount corresponding to the mathematical provision will be paid by the above insurance company.
COMMUNICATION OF DAMAGE TO THE INSURANCE COMPENSATION CONSORTIUM
- The application for compensation for damages whose coverage corresponds to the Consortium of Insurance Compensation: will be communicated by the policyholder, the insured, or the policy beneficiary, or by anyone acting for and on behalf of the above, or the insurer or the insurance intermediary with whose intervention the insurance will be handled.
- Communicating the damage and obtaining any information related to the procedure and the state of processing claims may be done:
- By calling the Call Centre of the Insurance Compensation Consortium (+34 900 222 665 or +34 952 367 042).
- Through the website of the Insurance Compensation Consortium (www.consorseguros.es).
- Assessment of damage: The assessment of losses arising from extraordinary events will be made by the Insurance Compensation Consortium, without this being bound by assessments, if any, made by the insurance company covering ordinary risks.
- Compensation payment: The Insurance Compensation Consortium will make the compensation payment to the insurance beneficiary by bank transfer.