Updating the insurance capital of Multi-risk Policies - Buildings and Premises
Did you know that you have to update the capital of your policy yourself? Yes, this is the sole responsibility of the insured.
How and when to do it:
- In the case of contents cover, you should periodically update the value attributed to each item, taking into account the increase in the cost of a new item, i.e. the current replacement cost may be higher than what you indicated when you took out the insurance or when you last updated it. We recommend an annual capital update.
- For Building cover, annual updating of the insured capital is compulsory. It is possible to automatically update the insured capital, and the policyholder has two ways of doing this: by agreed update and by indexed update, depending on whether this is done on the basis of a percentage indicated by the policyholder or according to the variations in the IE (buildings), IRH (contents) or IRHE (both) indices published by the ASF (Portuguese Insurers Association), the insurance sector's supervisory body.
For the 1st quarter of 2023, the ASF says that the capital insured in new contracts or renewals of residential policies should foresee an increase of more than 14% in the capital of buildings to be insured.
The ASF says that in the first quarter of 2023, the values should rise by 14.17% compared to the same period last year for buildings and by 8.15% for residential property. Overall, in the so-called Housing and Buildings Contents Index (IRHE), the update rate to be used for insured capital is 12.32%.
The previous year the ASF had recommended an upgrade of around 4%, but a year later the inflationary outlook penalises it by another 10 percentage points.
Why is it important to keep capital up to date?
In the event of a claim, if the capital is out of date, the consequences can be worse when the proportional rule is applied. This is applied when the insured capital is less than the cost of reconstruction, in the case of buildings, or the cost of replacement with new, in the case of furniture and furnishings.
In this situation, the insurer only pays a portion of the damage proportional to the ratio between the cost of reconstruction or replacement on the date of the accident and the insured capital.
The ASF website gives an example: “if a building with a reconstruction cost of 100,000 euros is insured for 80,000 euros, the insurer will only be responsible for 80% of any level of damage, with the remaining 20% being borne by the insured.”.
When renewing your private or company multi-risk policies, ask for the capitals to be updated, especially for Recheio.
Also check if you have Nature Phenomena cover.
There are more and more storms and natural phenomena in Portugal, which has made everyone aware of the need for more extensive protection through insurance.
In the wake of last December's floods in Lisbon, indemnity payments from insurers have already exceeded 47.4 million euros, according to APS (Portuguese Insurers Association) figures from the beginning of January.
Speak to your intermediary and make sure you have the right, up-to-date insurance.
Contact us - 214 131 310
Grumese, always with your confidence.
Updating the insurance capital of Multi-risk Policies - Buildings and Premises
Portuguese 
Spanish 
English