Expats and Home Insurance
I occasionally receive emails from expats who have fallen foul of insurance companies in their adopted countries. The problem is usually a lack of understanding of the cultural differences in terms and conditions, as well as language issues. Two readers, Debbie and John, raised an issue with me this week about property insurance.
The couple bought an apartment in the Costa Blanca about ten years ago, with the help of a mortgage from a Spanish bank. At the time of the purchase, the bank also insisted that they take out the bank’s property and contents insurance, which the couple did not think unreasonable at the time. Over the years, the couple paid their annual premium, but were irritated that the premium was always drawn from their bank account before they received their renewal notice. Again, this issue seems to be a regular pattern with insurance and utility companies in Spain, and is a blatant attempt to prevent customers from switching to another company at the time of renewal.
On two occasions over the years, the couple had to make small claims for damage to their home, and had become annoyed and disillusioned with the insurance company for their lack of courtesy and efficiency in dealing with their problems. Their many phone calls to the company were usually neither answered nor returned, which led the couple to wonder what would happen if they had a really serious problem that required their assistance.
The final straw came in November 2016, when Debbie called the company to ask what their likely premiums would be from January 2017, since the premiums had increased substantially the previous year. The poor response from the company was enough to convince Debbie that they should change insurance companies at the end of the year. The couple decided to insure their property with the same company that insured their car; not only would they receive a substantial discount on premiums, but they trusted the company having had a claim several years earlier, which had been well handled. As a bonus, the company had English speaking staff and the insurance policies were provided both in English and Spanish.
John went to the bank and cancelled the direct debit to the insurance company. He also wrote a letter to the company, explaining that they were dissatisfied and would not be renewing their policy in January. In addition, he sent a copy of the letter by fax to the head office of the company, knowing how much Spanish companies still value the humble fax machine.
Content in the knowledge that their home was now insured with a company that they could trust, Debbie and John went back to the UK for a few weeks. On their return, they were surprised to see a letter from the previous company confirming renewal of the old policy. John telephoned the company and after several attempts managed to speak to someone who told them that they couldn't cancel the policy, as they had not received a cancellation letter within the one month period prior to expiry; they were expected to pay the premium for another full year.
Over the next few weeks, there was a heated exchange of letters and phone calls between the couple and the insurance company demanding the premium. Despite having sent both a letter and fax, John had no receipts to prove that these had been sent. The situation turned into one of blame with the company denying receipt of the letter of cancellation, whilst John and Debbie argued that they had complied fully with the company’s terms and conditions.
Speaking to several banking and insurance contacts on Debbie and John’s behalf, it seems that their experience is not unusual and appears to be usual practice in Spain, with expats being particularly vulnerable to coercion. Once a policy is cancelled, many insurance companies will continue to demand unpaid premiums, make threats by telephone and letter as well as threatening court action for a period of time. In some cases, they take the premium from the bank without the customer’s permission. The advice is clear:
Ensure that you give at least 30 days’ notice of cancellation to the insurance company, in Spanish.
Send the letter ‘certificado’, ensuring that you retain the Correos receipt and track safe receipt of the letter, if possible.
Send a copy of the letter by fax, and retain the ‘send and receipt’ slip provided by the machine.
If the company denies receiving correct cancellation of the policy, send them copies of the receipts (again, send signed for), and ignore further communications from them. In most cases, the threats will cease after a few weeks, and in only rare cases is it worth the insurance company’s trouble and expense in taking legal action against the policyholder.
If the insurance company takes the money from a bank account without permission, insist upon a refund of the premium from the bank within 45 days of the transaction taking place.
Sadly, the ombudsman and complaints systems for banking and insurance are not as well advanced as in the UK, which is also a problem for those expats who have little understanding of the language. The insurance companies know this and many are only too willing to take advantage to boost profits.
Expat property owners with mortgages from Spanish banks should be aware that they are not obliged to accept a policy suggested by the bank, who also provides the mortgage. Customers are at liberty to shop around and find the best deal with a company with a proven track record of good claims support and customer service. The bank may insist upon a copy of the new policy, together with an entry in the policy document confirming that the bank has an interest in the property, together with the mortgage account number, which is a reasonable request.
Despite this issue, there are some good insurance companies in Spain, who provide a high-level of customer service and support when it is most needed. Some companies also offer excellent support in English too, which is helpful at times of crisis. It is a question of shopping around, but not only for price. It is also important to speak to other expats who have had experience of claiming from a company; after all it is help when you need it urgently that is most important.
If you enjoyed this article, take a look at Barrie’s websites: http://barriemahoney.com and http://thecanaryislander.com or read his latest book, ‘Footprints in the Sand’ (ISBN: 9780995602717). Available in paperback, as well as Kindle editions.
© Barrie Mahoney