Condominium insurance in Portugal: fire, multi-risk and claims

In a building under the horizontal property (propriedade horizontal) regime, only one insurance is mandatory: fire insurance (seguro contra incêndio), which must cover each unit and the common parts (Article 1429 of the Civil Code). It is up to the owners to take it out and up to the condominium administrator to check that it exists (Article 1436). Multi-risk (buildings) insurance (multirriscos) is optional, but it is the one that pays out for the most frequent damage, such as that caused by water or storms. In both cases, the sum insured should match the cost of rebuilding the building: if it falls short, the payout is reduced in the same proportion.

The mandatory fire insurance

What the law says

Article 1429 of the Civil Code establishes:

• Obligation: fire insurance for the building is mandatory, both for the units (frações autónomas) and for the common parts.
• Who takes it out: the insurance must be taken out by the owners. If they do not do so within the deadline and for the amount set by the owners' meeting, the administrator must take it out and is entitled to recover the premium from them.

Law 8/2022, which revised the horizontal property regime, did not change this article. Fire insurance is still the only one the law requires.

The administrator's role

It is the administrator's job to check that fire insurance is in place and to propose to the owners' meeting the sum to be insured (Article 1436 of the Civil Code). In practice, this means asking each owner for proof that their unit is insured and confirming that the common parts are covered too.

Individual policies or a building policy

Model	How it works	Point to watch
Individual policies	Each owner insures their unit and their share of the common parts, often through the insurance linked to their mortgage	A claim in the common parts may involve several insurers, with different sums insured
Condominium policy	A single policy covers the whole building and the premium is split between the owners	Owners with their own insurance should check they are not paying twice for the same risk

The choice should be discussed and recorded at the owners' meeting.

Multi-risk insurance

Multi-risk insurance adds other cover to fire, which varies from policy to policy. The most common in a condominium are:

• water damage, such as bursts in shared risers and pipework;
• storms, floods and other natural events;
• broken glass;
• the condominium's third-party liability, for example when a piece of the façade falls on a car.

A fire is rare. A leak through the roof or a burst in a water riser happens, sooner or later, in almost every building. That is why multi-risk is the policy that usually gets claimed on.

When comparing quotes, looking at the premium is not enough. Read the exclusions, the limits of each cover and the amount of the excess (franquia), the part of the loss that always stays with the condominium. Earthquake cover, for example, is usually optional.

The sum insured and the risk of underinsurance

How much to insure

A building's sum insured should match the cost of rebuilding, not the market value or the taxable property value (valor patrimonial tributário). This is what the standard policy conditions for mandatory fire insurance provide, approved by Regulatory Standard (Norma Regulamentar) 16/2008-R. The land is left out, because it does not need to be rebuilt. So the sum insured should not be copied from the deed or from the mortgage amount.

Underinsurance and the proportional rule

There is underinsurance when the sum insured is lower than the value of the property. In that case, unless otherwise agreed, the insurer only pays the corresponding proportion of the loss (Article 134 of the legal framework for insurance contracts, approved by Decree-Law 72/2008). This is known as the proportional rule.

	Amount
Cost of rebuilding the building	€3,000,000
Sum insured	€2,000,000 (two thirds)
Loss in the common parts	€60,000
Payout under the proportional rule	€40,000, before the excess

The missing €20,000 falls on the condominium. Some policies have different terms, such as a tolerance margin, and what counts is what is written in the policy.

Automatic indexation is not enough

In home-related insurance, unless otherwise agreed, the value of the insured property is updated automatically in line with indices published by the Insurance and Pension Funds Supervisory Authority (ASF) (Article 135 of Decree-Law 72/2008). The ASF itself points out that it is still up to the policyholder to check the sums insured: the indices are national and do not reflect works done on the building or regional differences.

Renewal is the time to review the sum insured, and the decision should be recorded in the minutes. See how to prepare the meeting in our owners' meeting guide.

What to do after an incident in the common parts

1. Make people and the building safe

Turn off the water or gas, call the fire brigade if needed and stop the damage from getting worse. The insured party must take reasonable steps to prevent or limit the damage, and the costs incurred for that purpose are, as a rule, borne by the insurer (Article 126 of Decree-Law 72/2008).

2. Tell the management

Whoever spots the problem should report it straight away. If the administrator is absent or unable to act, essential and urgent repairs to the common parts can be carried out on the initiative of any owner (Article 1427 of the Civil Code).

3. Record the damage

Dated photos and videos, before any cleaning or permanent repair. Damaged parts should be kept until the loss adjuster's inspection, whenever possible.

4. Report it to the insurer

The claim must be reported within the deadline set in the policy or, if there is none, within eight days of becoming aware of the incident (Article 100 of Decree-Law 72/2008), stating the date, circumstances, likely causes and damage. A delay does not automatically forfeit the payout, but it can reduce it if it harms the insurer.

5. Loss adjustment and repair

The insurer sends a loss adjuster to assess the damage. Having quotes for the repair lets you discuss the amount offered. The permanent repair should wait for agreement on the payout, except for anything urgent.

6. Inform the owners

The excess and anything the payout does not cover are condominium expenses. The owners' meeting should be told about the incident, the amount received and the final cost.

When the damage originates in a unit, for example in private plumbing, the responsibility lies with that unit's owner and it is their insurance that should be claimed on, even if the damage reaches the common parts.

Common mistakes

• Not checking that every unit has valid fire insurance.
• Keeping the same sum insured for years without comparing it with the cost of rebuilding.
• Choosing the policy on premium alone, without reading the exclusions and excesses.
• Repairing before the loss adjuster's inspection, without recording the damage.

This article is for information only and is not a substitute for legal advice or for reading the policy conditions.

Insurance that pays out when you need it

At Condgest, we check that the building and each unit have valid insurance, prepare the renewal 60 days in advance and compare policies. After an incident in the common parts, we report the claim and follow the process with loss adjusters and contractors until the payout. Find out more about our insurance and claims service or request a proposal.