Two covers separated by a single moment: the one that protects the works while they go up, and the one that answers for them once they are handed over, paid for and lived in.
In construction, insurance splits in two for a chronological reason. While the works are being built, the asset is half-made and is protected by contractors' all risks, a damage policy over something that does not yet fully exist. Once the works are handed over, the asset passes to its owner and a different regime takes over: the liability of the agents involved in the building process, with periods the statute counts from the date of handover.
Those periods are three, not one. Article 17 of the Spanish Building Act sets ten years for damage affecting foundations, supports, beams, floor slabs or load-bearing walls that compromises the stability of the building; three for damage that breaches habitability requirements; and one, borne by the contractor, for defects in finishing. The habitual confusion is calling the whole block 'ten-year cover': only the first period is.
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Construction holds two regimes that are often confused because they share a site but not a calendar. While the works go up, the risk sits with a damage policy over an asset still being made. Once they are handed over, a liability regime begins that the statute imposes on the agents involved in building, and that lasts up to ten years.
Article 17 of Law 38/1999, the Spanish Building Act, makes those involved in the process liable to owners and to subsequent acquirers, counting from handover: ten years for damage to foundations, supports, beams, floor slabs, load-bearing walls or other structural elements that compromises the mechanical resistance and stability; three years for damage breaching habitability requirements; and one year, borne by the contractor, for defects in finishing.
Its paragraph 3 adds the rule that weighs most on a site with many hands: where the cause of the damage cannot be attributed, or concurrent fault cannot be apportioned between agents, liability is joint and several. And in every case the developer is jointly liable with the rest towards the acquirers.
Article 19 turns that into financial guarantees, and admits providing them through damage insurance or a surety bond. The second additional provision determines which is mandatory: the ten-year one, for buildings whose main use is residential.
The first is the declared activity. A company that started out building structures and now also installs, assembles or transports has widened its exposure without widening its wording, and finds out when the insurer declines the claim.
The second is the sub-limits on the critical sections. A serious construction loss is almost never decided by the general limit, but by the sub-limits for adjoining property, buried services and property being worked upon. It is the most profitable review of a construction wording.
The third is when the ten-year guarantee is bought. It requires technical control from early design stages, so it is not a policy that can be added at the end: if the project is already advanced without that monitoring, the market either declines it or prices it disproportionately.
As a brokerage registered with the Spanish insurance regulator, the Dirección General de Seguros y Fondos de Pensiones, under reference J0140, New Brokers acts on the client's mandate, not on any insurer's behalf.
In construction that comes down to two unglamorous jobs that are expensive to skip. One is coherence between contracts: reading the all risks policy, the liability cover, the ten-year guarantee and the surety facility together, and against what the signed contracts demand, rather than as four policies bought separately. The other is timing: fitting technical control and certificate issuance to the real rhythm of the site, so insurance is never the reason a crew cannot start work.
Accidental physical damage to the works in progress, including fire, theft, weather events and errors of execution, up to handover.
Material stored on site or in adjoining stores and its movement within the perimeter, which is where theft exposure concentrates on sites without effective fencing.
Cranes, platforms, formwork and site machinery, for their own damage and for third-party liability arising from their use.
The extension after handover, in its simple or extended maintenance form, covering damage caused while making good outstanding defects.
Damage to third parties outside the works during construction, with the sections that matter most in this sector: adjoining property, buried services and property being worked upon.
Settlement, cracking and undermining caused to neighbouring plots. It is the section that resolves the most serious losses and the one most often carrying a short sub-limit.
Indemnity for damage affecting structural elements and compromising the mechanical resistance and stability of the building, for ten years from handover.
Damage from constructive elements or installations that prevents the building meeting habitability requirements, for three years.
Defects in finishing borne by the contractor during the first year, replaceable by the developer retaining a percentage of the value of the works.
The independent monitoring insurers require before writing the ten-year guarantee, which conditions acceptance of the risk from the design stage, not from the end.
| Item | Statutory regime |
|---|---|
| Structural damage (art. 17.1.a) | 10 years from handover |
| Habitability requirements (art. 17.1.b) | 3 years from handover |
| Finishing, borne by the contractor | 1 year from handover |
| Mandatory guarantee (second additional provision) | Only the ten-year one, residential buildings |
| Retention in lieu of the one-year guarantee (art. 19.1.a) | 5% of the value of the works |
This table sets out the periods and percentages established by Law 38/1999, the Spanish Building Act, not the terms of any particular policy. The periods run from handover of the works without reservations, or from when any reservations are made good. Sums insured, sub-limits and deductibles are governed in every case by the specific conditions of the contract.
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Go to the client areaIn construction, what falls outside is almost never a type of damage: it is a phase, an undeclared activity, or a defect the insurer regards as foreseeable.
Design and specification defects, unless design risk cover is expressly bought, which is distinct from cover for execution.
Wear, corrosion and gradual deterioration, which are not accidental events.
Aesthetic and finishing defects without functional consequence once the one-year period has passed.
The cost of making good the defective part itself, as opposed to repairing the damage that defect has caused: the policy answers for the latter.
Delay penalties and the developer's loss of profit, unless advance loss of profits cover is expressly bought.
Damage arising from undeclared activities: the company that started out building structures and now also installs or transports has widened its exposure without widening its wording.
The surcharge on social security benefits for want of safety measures, which article 164.2 of the General Social Security Act places on the offending employer and declares any covering agreement void as a matter of law.
Soil contamination discovered or caused during earthworks, which requires its own environmental liability policy.
Cracks appear in structural elements of a residential building handed over eight years earlier. The job is closed and the joint venture that built it has since been dissolved.
What it means
The ten-year guarantee responds, and it is mandatory for residential construction. So does the developer, jointly and severally with the other agents towards the acquirers, regardless of who caused the defect. It is the only stretch of the programme still live almost a decade after invoicing.
The damage may come from the design, from site supervision or from execution, and the degree of each party's involvement is never established.
What it means
Article 17.3 then imposes joint and several liability on all the agents. Each ends up defending damage they may not have caused, and whoever lacks their own cover drags the rest into the recovery action.
The dig causes settlement in the adjoining property, and the claim arrives from the owner and their insurer, often with precautionary measures that stop the works.
What it means
Contractors' all risks and the adjoining property section of the liability policy operate at once. The general limit rarely decides here: the sub-limits for adjoining property and, where services were ruptured, for buried services do.
We review the design, the programme, the value of the works, the intended use of the building, and who is involved: developer, contractor, site supervision and subcontractors with their entry in the Register of Accredited Companies.
We separate what the statute requires — the ten-year guarantee in residential work — from what tenders and framework agreements require, which routinely impose minimum liability limits above what is in place.
The ten-year guarantee requires monitoring by an inspection body from early stages. Coordinating that appointment with the construction programme keeps the insurance from arriving late to a project already under way.
We issue the certificates the coordination rules require for each company on site, and track live guarantees through to handover and the maintenance period.
It is the policy behind the certificate required to get onto site, and the one that answers for adjoining property, buried services and the injured worker's claim.
The guarantees under article 19 of the Building Act admit damage insurance or a surety bond, and tender guarantees and retentions run through this line.
Contaminated ground found during earthworks falls outside general liability and can stop the works.
Protects fixed premises, stores and plant yards independently of whichever site is being built.
Mobile plant and site vehicles follow their own regime, distinct from machinery insured under the all risks policy.
Law 38/1999 sets out three guarantees in article 19 — of one, three and ten years — and refers to its second additional provision to determine which is mandatory. Under that provision, the ten-year guarantee against structural damage in paragraph 1(c) is required for buildings whose main use is residential. The one and three-year guarantees would only be compulsory if established by royal decree. The provision also contemplates particular situations, such as the self-developer of a single home for their own use.
The moment and the object. Contractors' all risks covers damage to the works while they are being built, and ends at handover. The ten-year guarantee covers structural damage to the finished building, and begins precisely then, running for a decade. One protects an asset being made; the other, one already delivered and occupied.
Yes. Article 19 expressly admits, for all three guarantees, 'damage insurance or surety insurance'. The choice has different practical consequences: damage insurance indemnifies the injured party and then pursues recovery if appropriate, whereas under a surety bond every payment the insurer makes must be reimbursed by the policyholder. The one-year guarantee may also be replaced by a retention of 5% of the value of the works.
You may be. Article 17 requires liability to be personal and individual, but its paragraph 3 imposes joint and several liability where the cause cannot be attributed or where concurrent fault cannot be apportioned. And in every case the developer is jointly and severally liable with the other agents towards the acquirers. That is why every link deserves its own cover, and why the technical documentation is worth keeping for the full ten years.
From the date the works are handed over without reservations, or from when any reservations are made good. Not from physical completion, nor from the first occupation licence. Documenting the handover certificate properly is therefore what fixes the start of all three clocks.
The design and its budgeted value of works, the intended use of the building, the construction programme, the list of agents involved, the geotechnical study, and the detail of the subcontracting chain with entries in the Register of Accredited Companies. For the ten-year guarantee, also the technical inspection body appointed.
The LOE's decennial guarantee requires liability for ten years for damage affecting a building's stability and structural soundness. We examine its scope, the liable parties and decennial damage insurance.
Read→This information is for guidance only and is not binding. Covers, limits and exclusions are governed in all cases by the specific terms of each policy. New Brokers Correduría de Seguros, S.L., registered with the DGSFP under reference J0140.