Spain’s rental market is seeing a notable trend: landlords are increasingly turning to insurance policies to protect themselves against tenant defaults. This comes amid ongoing debate over tenant protections and a recent government decree freezing rent increases, fueling anxieties among property owners about potential financial losses. Even as official data suggests a slight decrease in eviction rates, the perceived risk – and the complexities of navigating the Spanish legal system – are driving demand for these “seguros de impago,” or non-payment insurance policies.
The rise in these policies isn’t simply about financial protection. it reflects a broader lack of confidence in the legal processes surrounding evictions. José María Font Spa, president of the Confederación de Cámaras de la Propiedad Urbana y Asociaciones de Propietarios de Fincas Urbanas, points to “a high distrust in the efficiency of judicial eviction processes” as a key driver. This sentiment is particularly strong among professional landlords who rely on rental income as a significant part of their revenue. The current situation is further complicated by a new decree, enacted on March 22nd, that limits rent increases to 2% – a measure that, while intended to protect tenants, has left some landlords feeling vulnerable. The Spanish Congress could potentially overturn this decree within a month, adding another layer of uncertainty.
A Growing Market for Rental Security
The insurance market has responded to this demand. Arag, one of the leading providers, now insures over 120,000 properties, and reports that it’s becoming increasingly unusual for a property to be rented without this type of coverage. Juan Carlos Muñoz, Arag’s commercial director, explains that the primary benefit is peace of mind, eliminating the financial strain of potentially months of lost rent while navigating the eviction process. However, he also acknowledges that a tight rental market – with more renters than available properties – makes finding solvent tenants less challenging, but doesn’t eliminate the risk entirely.
Despite the increased uptake of insurance, official statistics paint a somewhat different picture. According to data from the Consejo General del Poder Judicial, there were 25,540 evictions (lanzamientos) in 2025, a 10.9% decrease from the previous year. Of those, nearly seven in ten – 18,317 – were due to non-payment of rent. However, these figures don’t capture the full extent of the problem, as Notice no official statistics on the overall volume of rental arrears. Sector estimates vary, with Arag reporting that between 5% and 7% of rental contracts experience significant payment issues, while Alquiler Seguro estimates the total morosidad at €8,490 in 2025, a 16.5% increase year-over-year.
What Do These Policies Cover?
These insurance policies aren’t simply about covering unpaid rent. Coverage has expanded in recent years, now often including legal defense, protection against vandalism, and even compensation for unpaid utility bills or damage caused during an eviction. Ana González, vice-secretary of the Confederación de Cámaras de la Propiedad Urbana y Asociaciones de Propietarios de Fincas Urbanas, notes that even the cost of a locksmith for an eviction can be around €250. Importantly, the premiums for these policies are tax-deductible on Spanish income tax returns (IRPF).
While most policies offer up to €3,000 in coverage for vandalism, González cautions that this amount may not always be sufficient to cover the full cost of repairs. The policies typically cover rental arrears for periods of up to 24 months. Insurance companies don’t typically create “blacklists” of problematic tenants, citing data protection regulations and a reluctance to engage in potentially discriminatory practices, according to Muñoz.
The Solvency Check: What Landlords Look For
Before a policy is issued, insurers conduct a thorough solvency check, requiring tenants to provide documentation such as pay stubs, tax returns, employment records, and bank statements. The key metric is the ratio of rent to disposable income. While international organizations and the Banco de España generally consider a rent-to-income ratio of 30% sustainable, with 40% considered a strain, the reality of Spain’s rising rental costs has pushed these thresholds higher. Insurers and guarantee companies are now often willing to accept ratios of 40% to 45%.
Pedro Bretón, CEO of Sociedad Española de Alquiler Garantizado (SEAG), explains that this difference is due to the lower risk profile of rental agreements compared to mortgages. “The risk assumed by an insurer is different and lower than that of a bank granting a mortgage, which is why the accepted percentages are not the same,” he says. If a tenant’s income is insufficient, companies may require a personal guarantor.
Beyond Income: Stability and Reliability
Income isn’t the only factor. Insurers also prioritize employment stability, typically requiring a permanent contract or at least one year of tenure on a temporary contract. A history of debt or inclusion on credit blacklists is also a red flag. Some companies, like Grupo Mutua Propietarios, have developed their own proprietary solvency assessment models, incorporating social, economic, and behavioral data to assess a tenant’s willingness to pay. They require only a DNI (national ID), date of birth, and the property address for their initial assessment.
The cost of these policies varies depending on the rental amount. For example, a policy covering an €800 monthly rent for 12 months, with no deductible, could cost between €430 and €450 annually. However, landlords typically only begin receiving payments once legal proceedings for eviction have been initiated.
The increasing reliance on these insurance products highlights a fundamental tension in the Spanish rental market: the necessitate to balance tenant protections with the financial security of landlords. As the debate over rent control and eviction laws continues, these policies are likely to remain a popular – and increasingly necessary – tool for property owners.
The next key date to watch is the potential vote in the Spanish Congress on the decree freezing rent increases. The outcome of that vote will significantly impact the future of the rental market and the demand for these types of insurance products.
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