Sure to be of relevance to many of those searching for competitive expatriate house insurance in Portugal is a law that came into effect in November 2018, making it mandatory for individuals to register a business activity with the Portuguese Tax Department (Financas) and register with their local council for Alojamento Local if they plan to let any property on a short-term basis for holidays.
Although there is nothing new about this registration requirement, the law now requires that a minimum level of liability cover is in place to cover claims made for injury to anyone renting a property and evidence of the liability cover must be displayed in the rented property.
If you own a holiday rental property, it is more than likely that you will be away from Portugal for more than six months per year, and you are therefore required to appoint a fiscal representative to monitor your tax affairs, and it would be normal practice to use the services of a property manager to maintain the property, carry out routine maintenance and cleaning between lets and be available to meet and greet tenants to hand them the keys and be available during their stay. If your property manager is able to also act as your fiscal representative, it would probably be a cheaper option than using two different people/companies.
The terms of the Alojamento Local legislation mean that the liability policy must be issued by a Portuguese insurer with specific mention of the Alojamento Local cover and that the policy complies with the relevant law.
The statutory levels of liability cover are €75,000 or €150,000, either of which could potentially be woefully inadequate if a claim was to be made for serious injury. In the event of arranging the statutory minimum cover and a large claim being made and upheld by a court, the property owner would be liable for the excess of any award made by a court over and above the amount of insurance cover. This could result in having to sell your property to meet the costs awarded or even being declared bankrupt!
It is an insurance industry standard that some level of liability cover is included within the buildings section of a home insurance policy but with most Portuguese insurers it is set at a low level of just €125,000. However, because there is a now a legal requirement to have an Alojamento Local licence and the mandated liability insurance, any liability cover included in a home insurance policy cannot be used instead of the Alojamento Local liability insurance.
Furthermore, Portuguese insurers will not generally extend any liability cover in a household insurance to cover anyone renting the property for holiday lets, precisely because of the legal Alojamento Local requirements.
However, within a buildings or combined buildings and contents policy, Ibex Insurance automatically includes public liability cover up to €2m as standard, and we have no problem about extending that cover to include injury to tenants so, unlike Portuguese insurers, in the event of a large claim and the Alojamento Local policy being insufficient to cover the total, the liability cover in an Ibex home insurance policy will supplement the statutory requirement of the Alojamento Local liability policy
As above, all buildings or combined buildings and contents policies have some level of liability cover, but Ibex also has an exclusive facility whereby liability cover can be added to a contents only policy – no other insurer offers this option!
Whilst the Alojamento Local liability policy is available only in Portuguese, Ibex offers competitive premiums to include liability cover, with the policy wording and schedule in English, and our advisors all speak English so there are no communication problems.
If you have any queries, please don't hesitate to call into one of our offices in Almancil or Tavira to get the most suitable policy to meet your needs or call us on 800 860 708 / 289 399 774 for Almancil or 281 325 842 for Tavira. Or if you prefer, send an e-mail to firstname.lastname@example.org