21 September 2026
Many property owners assume that damage originating from a rented property will automatically be covered by their home or building insurance, as long as it includes civil liability cover.
A recent ruling by Spain's Supreme Court (STS 2168/2026), however, shows that this assumption can be dangerous and carry significant financial risk.
The case
The proceedings originated in a fire at a rented property that caused considerable damage to neighbouring properties.
Although the exact cause of the fire could not be clearly established, liability was attributed to the tenant, since the property was in their actual possession and within their sphere of responsibility at the time of the incident.
The central legal question was this: must the owner's civil liability insurance cover damage caused by a tenant who is not expressly named as an insured party in the policy?
The Supreme Court's answer is clear: not necessarily.
The Supreme Court's reasoning
The Court expressly rejects the idea that a kind of "automatic coverage of the property" exists.
In the Court's view, civil liability insurance does not protect just anyone who uses or occupies the property — only those who qualify as insured parties under the terms of the policy.
This means:
- The owner is insured for their own liability.
- The tenant is not automatically insured simply by occupying the property.
- If the tenant causes damage to a third party and is not expressly named as an insured party, the owner's insurer may not be obliged to pay out.
Cover attaches to the insured person, not to the property.
Why does this ruling matter so much?
The decision directly affects thousands of tenancies in Spain.
In practice, neither owners nor tenants usually know precisely what their insurance actually covers. Both sides often assume comprehensive cover exists, when legally that is by no means a given.
If a fire, water leak, explosion or other incident causes damage to a third party, this mistaken assumption can lead to substantial compensation claims.
What owners should do now
From a preventive standpoint, the ruling underlines the importance of professional risk management.
Owners are advised to:
- Carefully review their existing insurance policies.
- Establish who actually qualifies as an insured party.
- Check whether the tenant's liability is expressly included in the cover.
- Include an obligation in the lease for the tenant to take out personal civil liability insurance, or tenant's contents insurance with sufficient liability cover.
- Periodically request proof that the insurance cover remains in force.
What tenants should bear in mind
Tenants, too, should never assume that the owner's insurance automatically protects them.
Personal civil liability insurance, or tenant's contents insurance with liability cover, is usually low-cost, but can prevent significant financial exposure.
A single moment of carelessness can cause damage to neighbouring homes, common areas or other third-party property, and lead to substantial compensation claims.
An important takeaway for property investors
Investors tend to focus on yield, tax considerations or a tenant's creditworthiness.
Insurance-related risk prevention, by contrast, is frequently underestimated.
STS 2168/2026 shows clearly that an insufficiently reviewed insurance policy can reveal major coverage gaps at precisely the moment that protection is needed most.
In the rental context, simply taking out insurance is not enough. What matters is knowing who is actually insured, and exactly which risks are covered.