The lava flows from the Cumbre Vieja volcano, erupting since Sunday, advance across the island of La Palma, destroying houses and crops. So far, the volcano has forced 6,000 residents to evacuate, and has destroyed about 200 homes and 300 farms. A situation that could be aggravated when these tongues of fire reach the sea. Although it is still too early to calculate the material damages that those affected will have to face, legal experts warn that there are a series of compensation mechanisms to turn to.
First of all, it must be taken into account that volcanic eruptions are often considered force majeure events in many insurance policies. This is a concept that regulates the Civil Code and that refers to unforeseeable or unavoidable circumstances or events. In this way, explains Amanda Cuns, a lawyer at Acierto.com, “insurers consider volcanic eruptions as an extraordinary risk, as are, among others, falls from sidereal bodies and aerolites.”
In the conditions of Mapfre’s policies, the lawyer points out, “we read, for example, that they do not cover extraordinary floods, hurricanes, storms, volcanic eruptions, seismic movements, etc.”. The same occurs with Caser insurance, where they exclude: “Losses occurred in the event of: fires, floods, earthquakes, volcanic eruptions, hurricanes and other similar seismic and meteorological phenomena …”.
According to José Manuel González Pellicer, legal director at Kennedys, it is traditional for these natural events to be excluded because they are “irresistible or inevitable for man, not unpredictable.” As in the case of the lava tongues of the pretty island volcano that devastate everything in their path. The scholars had the Cumbre Vieja monitored and knew that it could wake up at any moment, but once it roars it is impossible to stop. The current Tort Law, González believes, “is allergic to unpredictability.”
If damage from volcanic eruptions is not covered by home or land insurance, then who bears the losses?
“As indicated by Royal Decree 300/2004, of February 20, which approves the Regulation of extraordinary risk insurance, in this case we should take advantage of the Insurance Compensation Consortium”, points out Amanda Cuns.
This body is a public entity attached to the Ministry of Economy and Finance at the service of the insurer, “which acts in a subsidiary manner to cover policyholders in situations such as the Cumbre Vieja volcano,” explains the lawyer. It is an “unprecedented” body in Europe, adds González, “originally born in 1941 to respond to the losses caused by the Spanish Civil War, as an original model that combines public and private action to cover certain risks” . “It is the maximum expression of the mutualisation of catastrophic risks, by virtue of which a solidarity common fund is created, nurtured by surcharges that are mandatory for many of the insurance policies that are paid in Spain,” says the lawyer.
Now, Cuns warns, in order to use this compensation system, “the affected person must necessarily have current insurance”. This means that if the injured party was not up-to-date in the payment, he could have problems collecting this compensation. “Hence the importance of having insurance, especially if one lives in a floodplain, seismic or volcanic area,” says González. “Fortunately, currently in our country, 75% of the homes have taken out home insurance, even if it is not compulsory,” says Cuns, on the other hand.
The request for compensation to the consortium can be submitted directly by the insured himself, or through the insurer. The advice in these cases is to present it as soon as possible so that the process begins its march. Regarding the amount of compensation, the agency is based on the policy contracted, so it will take into account the assets and insured capital that appear in it and the rest of the conditions.
The same situation of homes and land is transferred to the vehicles affected by the volcanic eruption. As it is an extraordinary risk, the Insurance Compensation Consortium will compensate its owners. In this case, as it is compulsory insurance, they will always have coverage (unless they have stopped paying), “even if the vehicle is stationary”, explains Amanda Cuns.
It is very likely that the Government will declare a catastrophic zone the perimeter affected by the eruption of Cumbre Vieja. The El Paso area was already classified as such last August by a fire that burned hundreds of hectares and affected dozens of homes.
In this case, residents may request aid from the Ministry of the Interior within a month, once the emergency is over and the damage caused by the volcano is evaluated. These subsidies are independent of private insurance or other public aid and are launched when these fail to cover the total damage produced. This is, therefore, the limit value of the aid.
However, warns Amanda Cuns, “the declaration of national catastrophe or calamity excludes the consortium from bearing the costs because the declaration of catastrophe or calamity is not covered.” These aids, he adds, can be of a very varied type, “sometimes it is not even necessary that the national calamity be declared, for example.”
As for those who can go to the Government, it must be emphasized that not only individuals or families can apply for these subsidies, but also municipalities and affected companies or legal entities. Also the citizens or companies that have been required by the pertinent authority to face the expenses of the catastrophe.
The amount that residents receive will be approved in proportion to the economic resources available to them to face the disaster.