Rent default insurance in Spain: what it covers and whether it's worth it
Non-payment is every landlord's biggest fear. In Spain, rent default insurance (seguro de impago de alquiler) shifts that risk to an insurer: if the tenant stops paying, the company advances the rent and handles the court claim.
What it typically covers
- Unpaid rent: 6 to 18 months depending on the policy.
- Legal defence: lawyer and court agent for the eviction, up to a limit (€3,000–5,000).
- Vandalism by the tenant, with sub-limits.
- Some policies add unpaid utilities and final cleaning.
What it costs
Between 3% and 5% of the annual rent. For a €900/month rental (€10,800/year), roughly €320–540 per year. It is deductible against your Spanish rental income (see how rental income is taxed in Spain).
The tenant solvency check
The insurer runs a scoring check on the tenant before issuing the policy: rent below 35–40% of net income, a stable employment contract (or proven income for the self-employed) and no record in Spanish debtor registers. That filter alone is worth almost as much as the cover — it screens out the riskiest profiles.
Insurance vs. bank guarantee vs. extra deposit
- Bank guarantee (aval): strong security but expensive and awkward for tenants; many refuse.
- Extra deposit months: for a primary-residence lease Spanish law caps additional guarantees at two months.
- Default insurance: covers months of rent plus the entire court process, regardless of deposit size.
When it's worth it
If the rent matters to your income, or you can't absorb 12 months without payment while an eviction runs its course, the policy pays for itself. Check the real timeline of a Spanish eviction, and if you already face arrears, here's what to do with a non-paying tenant.
Informational guide; exact cover depends on each policy.
Frequently asked questions
- Is rent default insurance tax-deductible in Spain?
- Yes. It is an expense linked to the rental and is deducted from rental income (rendimientos del capital inmobiliario), like home insurance or the IBI property tax.
- Who pays for the insurance, landlord or tenant?
- The landlord takes out, benefits from and pays for the policy. Passing the cost directly to a primary-residence tenant is legally questionable; landlords normally absorb it.
- How fast does the insurer pay the first unpaid month?
- Most policies apply a one-month excess or waiting period and pay from the second unpaid month after you file the claim. Check that clause before signing.
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