The severe DANA (Isolated Depression at High Levels) that struck the Balearic Islands in August 2024 has generated numerous questions regarding the insurability of the resulting damages. This article provides a concise overview of the applicable legal framework and the mechanisms that govern compensation for losses caused by extraordinary natural events.
The August 2024 DANA—which heavily affected Menorca, particularly the municipalities of Es Mercadal and Alaior—raised significant concerns among policyholders as to whether the resulting damages fell within the scope of their insurance coverage. In Insurance Law practice, major meteorological events typically trigger a surge in enquiries from affected individuals seeking clarity about their rights and the limits of their protection.
In Spain, standard insurance policies usually exclude losses arising from force majeure or events classified as “extraordinary risks.” These include natural phenomena such as extraordinary flooding, earthquakes, volcanic eruptions, and atypical cyclonic storms—categories under which certain DANA events may be included.
However, the exclusion of such risks from private insurance contracts does not leave policyholders unprotected. In these circumstances, responsibility shifts to the Insurance Compensation Consortium (Consorcio de Compensación de Seguros, CCS), a public entity responsible for providing coverage when extraordinary risks occur.
Under Article 6 of Royal Legislative Decree 7/2004 of 29 October, which approves the Legal Statute of the Insurance Compensation Consortium, the CCS is empowered to compensate—based on loss assessment—damages caused by extraordinary events occurring in Spain and affecting risks located within Spanish territory. The statute also extends coverage to personal injuries occurring abroad, provided the insured party is habitually resident in Spain.
Additional details are set out in Royal Decree 300/2004 of 20 February, which implements the Regulation on Extraordinary Risk Insurance. The regulation defines the natural events considered extraordinary and establishes objective parameters, such as:
- Tropical cyclones: simultaneous wind speeds above 96 km/h and rainfall exceeding 40 litres per square metre per hour.
- Extraordinary winds: gusts exceeding 120 km/h.
When a meteorological event meets these thresholds—as may occur with a DANA—the CCS may assume coverage, provided that all statutory conditions are fulfilled.
A key requirement is that the insured must have paid the mandatory surcharge included in the premiums of certain insurance policies. Article 7 of the CCS Statute specifies the classes of insurance in which this surcharge is compulsory, including land and railway vehicles, fire and natural elements, property damage, various pecuniary losses, and certain combined or complementary coverages. It is also mandatory in motor third‑party liability insurance.
The CCS will intervene in only two situations:
- When the extraordinary event is excluded from the private insurance policy; or
- When the insurer is unable to meet its obligations due to insolvency or liquidation.
It is also important to highlight—consistent with established legal doctrine and case law such as the judgment of the Provincial Court of Barcelona dated 21 January 2007—that individuals who do not hold any insurance policy and therefore have not paid the CCS surcharge are not entitled to compensation from the Consortium.
In conclusion, although most private insurance contracts do not cover large-scale natural disasters, the Spanish system provides a public compensation mechanism that guarantees a minimum level of protection for policyholders. This structure helps to keep premiums affordable while ensuring that individuals affected by extraordinary events can receive financial support, even if the compensation may be lower than what conventional coverage would have provided.
The Insurance Law Department of Belzuz Abogados, S.L.P. remains available to analyse each case and provide rigorous, effective legal advice on all matters related to insurance and liability.