Getting the Best Deal On Luxury Holiday Homes In Portugal

Despite the fact that many southern European states in the Eurozone are dogged by questions about their long term financial viability – Greece is a certified basket case, Spain is at imminent risk and Portugal is said to be in the same boat – they still remain popular locations in the luxury holiday villa market.

Portugal in particular ought to have a reasonably secure future.  The Eurozone crisis has not impacted Portuguese plans for infrastructure improvements like a new international airport and a high-speed rail link to Spain.  Portugal’s banking system has shown great resilience and prospective luxury property owners know they can still get reliable rental and capital appreciation in the long term, especially in areas like the Algarve.

So, all things considered, Portugal is still worth going on holiday to and still worth investing in for luxury holiday properties and villas, either for rental income or for you own use.

Here’s a few tips on how to secure the best insurance deal for Portugal if you are thinking in investing in a luxury holiday property there.

Portuguese or UK-based insurance?

Getting insurance for holiday homes, no matter where they are, is the next most significant expense after purchase.  The first issue facing the owners of luxury homes in Portugal is whether to arrange cover with a Portuguese or UK based Insurer.    If your mortgage or lending source is Portuguese, when you exchange contracts on the initial purchase the solicitor acting on the lender’s will need proof that you have suitable buildings insurance cover in place.   Some may imply that you must go with a recommend Portuguese insurer, but this not necessarily the case.  Many holiday home owners are attracted by the notion that policies offered by European insurers seem to be cheaper.   However cover tends to be much more limited than UK policies, so any small cost saving up front could prove to be very costly in the event of you having to claim.  Before you choose a foreign policy it is important that you read the small print so you understand the scope and restrictions of the cover. Unless you are fluent in Portuguese or have trusted local agent or representative acting on your behalf, this can be a problem!

Watch out for Local Foibles

There are several elements of insurance cover that are specific to Portugal.  Portuguese building insurance generally covers the actual structure of your home as well as garages, walls, gates and fences.   You should carefully check whether this cover also extends to swimming pools as some Portuguese policies may exclude these along with outbuildings.  Buildings insurance should also cover permanent fixtures and fittings within the buildings, such as fitted kitchens and bathrooms.   The sum insured needs to cover the cost of rebuilding the property, not the current market value.  It is important that this figure is accurate and realistic because if you underinsure you may not get the full amount you were expecting in the event of a claim.   Portuguese holiday home insurance does not usually cover personal valuables as most properties are often left unoccupied for long periods or commercially let, so if you are going to use your home for holiday letting make sure that the policy that does not exclude cover if you let to paying guests as well as family members.

Make sure You’re Covered For the Pool

Making sure your policy includes public liability insurance, especially if you are planning to commercially let, is extremely important.  These are litigious times and liability insurance will cover you for legal costs and expenses.   Even if you aren’t planning to commercially let a property in Portugal, it is still advisable to get liability cover, especially if your property has a swimming pool.

If you do choose a policy written in Portuguese, have the document properly translated so you understand what you are getting into.   You may be better off buying a policy in the UK, written in English with claims resolved by UK-based experts.  This will also provide the additional security of knowing that under the terms of a UK policy, if you are a UK resident, UK law applies, so you don’t have to worry about the complications of Portuguese law.  You will also enjoy greater protection if the insurer is regulated by the Financial Services Authority.