What is the Property Damage Insurance Policy (Seguro Decenal)?

The Property Damage Insurance Policy, or in Spanish “Seguro Decenal”, guarantees the liabilities of developers, builders and architects for damages caused to the building by construction defects or hidden vices originating in or directly affecting the mechanical resistance or the stability of that construction.


The origin of this Insurance Policy is the Building Act Law 38/1999 passed in 1999 that established the damages and associated liabilities that may affect a building within specified time frames. Three potential damages associated to time frames were defined:

• The liability period for damages originated on construction defects or faults affecting the finishes of the construction works is one year.

• The liability period for damages originated on construction defects or faults which may result in the building failing to meet habitability requirements is three years.

• The liability period for damages originated on construction defects or faults that may affect the structural elements in a way that alters the mechanical resistance and stability of the building is ten years. 

Is it compulsory on all buildings? Although the Law established that Insurance Policies could be contracted by the agents intervening in the construction to cover the three different liabilities, only the ten year warranty was compulsory. That is why the Policy I am referring to is commonly called “Decenal” (decennial in English). However, if you build a house for yourself, what is called auto-development, with the intention of living in it and not selling it, the Policy is not compulsory. If, in the first ten years of the building, the auto-developer decides to sell the property, a Property Damage Insurance Policy will be required.

Can you sell a property without the Property Damage Insurance Policy? No, because the Land Registry will require the Property Damage Insurance Policy to register the new building and that registration is required to be able to sell it. If, as said on the previous paragraph, the building was build as an auto-development and the ten year period after the construction is over, the Property Damage Insurance Policy will not be required to register the property as a new building and, therefore, can be sold without the insurance.

Who is liable? The agents intervening in the construction: architects, technical architects, developers, builders, etc. Contractors will be also liable for the work performed by their subcontractors without prejudice of the recourse they might have against them. Those agents are the ones that have to be covered by the insurance. Usually the policy is paid by the developer.

Which is the claiming deadline period? The period is two years from the detection of the damages. The start of the claim should be within those two years.