What interest must the insurer pay if it pays late?

Question

José Manuel Alburquerque · Accepted Answer

The interest provided for in article 20 of the “Ley de Contrato de Seguro”, Spain's Insurance Contract Act. It is the statutory interest rate increased by half, 4,875 % a year in 2026, for the first two years from the insured event. After that, at least 20 % a year. It runs from the date of the insured event and the judge imposes it even if it has not been requested. The insurer only escapes it if there is a justified reason for the delay, something the courts rarely accept. When it is owed If the insurer does not pay within three months of the insured event, or does not pay the minimum amount it may owe within 40 days of being notified of the claim. It is owed to the insured, to a third party claiming against the insurer of the person who caused them damage and to the beneficiary of a life insurance policy. It replaces ordinary late-payment interest, which is not added to it. It is calculated on the compensation finally recognised. If the insurer carries out the repair, on the cost of the repair. It runs from the date of the insured event until the day of payment. If the insurer was notified of the claim late, from the notification. If a third party is claiming and the insurer proves that it had not known of the insured event before, from the claim. An example An insurer owes 20.000 euros on a home insurance claim and pays it three years later. For the first two years it owes 1.950 euros in interest, at 4,875 %. For the third, a further 4.000 euros, at 20 %. In total, 5.950 euros on top of the payout. When it is not owed Only if there is a justified reason for the delay or the delay is not the insurer's fault. A reasonable doubt as to whether the insured event happened or was covered, one that only a judge could resolve, may be enough. It is not enough for the insurer to dispute the amount or for there to be a lawsuit. And if it refused to pay by applying a clause that was not highlighted and signed as the law requires, it cannot later argue that it had a justified reason. In road traffic accidents, it is not owed either on what the insurer offered within the time limit in a reasoned offer (the “oferta motivada”) and paid or paid into court. When the “Consorcio de Compensación de Seguros”, Spain's state insurance compensation fund, pays as a guarantee fund, it is only late if it does not pay within three months of the claim.