Portugal Plans Mandatory Home Insurance Against Natural Disasters

The proposal creates part of the government’s Portugal Transformation, Recovery and Resilience programme (PTRR), which was developed following the destructive storms that hit the country earlier this year.

The idea is to create a compulsory insurance system linked to a new Natural and Seismic Catastrophes Fund, helping households and businesses recover more quickly after disaster strikes.

But for homeowners wondering whether they’ll soon face another bill, several important details have yet to be decided.

What would these homeowners have to pay?

At present, there is no confirmed price for the proposed insurance, nor have the government’s final requirements been announced.

It’s also unclear whether the same rules would apply to primary residences, holiday homes, rental properties and homes without a mortgage.

The government has said that lower-income households would receive financial assistance to help cover the cost, although the eligibility criteria and level of support would still need to be established.

The new system is intended to spread the financial risk of natural disasters more widely, rather than leaving affected families and the government to shoulder the costs of each major event.

And existing insurance?

Currently, Portuguese law requires fire insurance for properties in buildings divided into individually owned units, such as apartment blocks.

Banks also commonly require home insurance when providing mortgages, but this doesn’t necessarily mean every property is covered for earthquakes, flooding or severe storms.

Homeowners who already have a multirisk policy may therefore want to check exactly what is included.

The government has earmarked €20 million for developing the new insurance framework and catastrophe fund, although this is not the amount homeowners would be expected to pay.

The suggested system could also extend to business premises.

For now, the new insurance requirement remains a government plan, with the final legislation still needs to be introduced.

Until those details are published, homeowners won’t know exactly what additional protection they may need, or how much it might cost.