Renting a property remains a popular choice in Spain — approximately one in four residents lives in rented accommodation. As a result, more and more landlords are taking out rental payment default insurance to protect themselves from potential financial risks. This measure directly affects tenants as well, so it’s essential to understand how this insurance works, why it’s used, and what is expected from you.
What is rental payment default insurance?
This is a specific insurance policy taken out by the landlord to receive compensation in case the tenant stops paying rent.
The insurance company reimburses the unpaid rent for a certain period — typically between 6 and 18 months, depending on the policy terms.
In addition to rent reimbursement, the policy may also include:
- Legal assistance in case of eviction proceedings,
- Payment of unpaid utility bills,
- Compensation for damage to the property,
- Cleaning and restoration services after the tenant vacates the property.
How does it work?
1. Tenant screening
Before issuing the policy, the insurance company conducts a background check on the tenant — evaluating financial stability, employment contract, credit history, and any existing debts. Without this approval, the policy cannot be issued.
2. Policy issuance
If the tenant meets the criteria, the landlord signs the insurance policy. It specifies the coverage duration (6, 9, 12, or 18 months), covered risks, and optional add-ons.
3. Insurance claim
If the tenant stops paying rent, the landlord files an eviction claim in court and notifies the insurance company.
4. Compensation payout
Once all required documents are submitted, the insurance company starts compensating the landlord according to the policy terms.
What are the tenant requirements?
To be approved by the insurance company, the tenant must meet the following conditions:
- Not be listed in debtor registries (e.g., ASNEF, RAI),
- Have a valid employment contract lasting more than one year,
- Earn a stable income where the rent does not exceed 40–45% of annual income,
- Provide supporting documents: a valid job contract, recent pay slips (nóminas), tax return, or income certificate.
If you meet these conditions, the landlord can secure the policy without requesting additional guarantees (e.g., a bank guarantee or large deposit).
How much does it cost and who pays for it?
The average cost of this insurance ranges from 3% to 5% of the annual rent.
For example, if the rent is €500 per month, the annual premium would be around €180 to €300. Over 5 years, this could total up to €1,500 — comparable to potential legal expenses in case of rent disputes, making it a worthwhile investment for many landlords.
Who pays for it?
- There is no legal requirement stating who must pay for the insurance — it depends on the agreement between tenant and landlord.
- In most cases, the landlord pays the premium, as they are the direct beneficiary.
- Sometimes, landlords may include the cost of the insurance in the rent — but this must be discussed and agreed upon in advance and clearly stated in the rental contract.
- Tenants are not obligated to pay for the policy unless this was explicitly agreed beforehand. Including it without the tenant’s consent may render the clause invalid.
How can it benefit tenants?
Although this insurance is designed to protect landlords, it can also make life easier for tenants, especially in the following ways:
Advantages for tenants:
- Renting without needing a bank guarantee,
- Avoiding large security deposits if the insurance covers potential risks,
- Higher trust from landlords,
- In some cases, faster approval of rental applications, especially if your income is stable.
This is particularly helpful for expat tenants who have just started working in Spain or do not yet have a local credit history. If you meet the insurance criteria, your chances of securing a rental agreement improve significantly.
Is the insurance mandatory?
No. Rental default insurance is not mandatory by law — neither for landlords nor tenants.
It is entirely optional, but due to increasing rent defaults and legal disputes, many property owners prefer to protect their interests this way.
Which insurance companies offer such policies?
Here’s a comparison of major insurance providers offering rental payment default policies in 2025:
Insurance Providers in 2025: A Quick Comparison
| Company | MAPFRE | ALLIANZ | AXA | CASER | Mutua de Propietarios |
|---|---|---|---|---|---|
| Rent Coverage | Up to 12 mo | Up to 12 mo | Up to 12 mo | Up to 12 mo | Up to 12 mo |
| Legal Support | ✔️ | ✔️ | ✔️ | ✔️ | ✔️ |
| Tenant Screening | Optional | ✔️ | ✔️ | Optional | ✔️ |
| Property Damage Coverage | ❌ | ✔️ | ❌ | ✔️ | ✔️ |
| Average Cost | ~4% | ~4.5% | ~3.5% | ~4% | ~4.2% |
| Waiting Period | 1 month | None | None | 1 month | None |
| Screening Criteria | Financial docs | Risk assessment | Credit history | Internal review | Personal analysis |
What should tenants pay attention to?
If you’re asked to provide documents “for the insurance,” this is a normal procedure. Here’s what to look out for:
- Coverage period — how many months the insurance will cover missed payments,
- Legal assistance — crucial in case of eviction,
- Damage compensation — not all policies cover property damage,
- Waiting period (carencia) — a time frame during which the insurance does not yet apply,
- Tenant vetting process — the simpler and more transparent it is, the faster you can move in.
Tips for tenants:
- Ask early whether the landlord plans to use insurance,
- Provide documents calmly — it’s part of the standard process,
- Ensure the terms are clearly stated in the rental agreement,
- If the cost is included in the rent, make sure it’s been agreed in writing,
- If in doubt — consult a real estate agent.
Rental default insurance in Spain isn’t just a way to protect landlords — it’s also a tool that makes quality housing more accessible for reliable tenants.
Our real estate agency can help you pass the screening, gather the necessary documents, and rent a home without unnecessary complications.
Get in touch with us if you’re looking to rent in Spain smoothly and without bureaucratic hurdles.
