Mandatory insurance for short-term rentals in Portugal

Insurance isn't optional for short-term rentals (Alojamento Local). The AL legal regime — Decree-Law no. 128/2014, in its article 13-A (added by Decree-Law no. 62/2018, with origin in the 2019 State Budget Law) — requires the operator to take out and keep valid an extracontractual civil liability insurance.

What that insurance must guarantee, under the law: material and non-material damage caused to guests and third parties arising from the accommodation activity, including damage to third parties from fire or explosion originating in the accommodation unit. The legal minimum capital is €75,000 per claim.

This insurance is a condition of registration. Proof of cover is required in the prior communication to the RNAL (National Register of Local Accommodation), and its absence is grounds for cancelling the registration — meaning that without valid cover, the establishment is irregular and the registration number can be revoked.

Amounts, deadlines and the exact scope can be adjusted by ministerial order and legal changes. Before signing, confirm the minimum capital and cover in force with your insurer and the legal source (Turismo de Portugal and the updated text of DL 128/2014).

There are two different pieces people often confuse, and the distinction matters:

• Civil liability insurance — this is what the law requires. It covers damage your activity causes to other people: a guest who gets hurt, a third party affected by a fire originating in the unit, damage to neighbours. It protects you from what you have to pay others.
• Multi-risk insurance (buildings/contents) — this protects your own assets: the structure, furniture and appliances, against fire, flood, theft and natural events. It isn't, in itself, the mandatory civil liability cover, although many multi-risk AL policies include a civil liability section.

In practice, many insurers sell a multi-risk product specific to short-term rentals that bundles both: the mandatory civil liability plus protection for the property and contents. But don't assume you have the legal cover just because you have "an insurance policy" — verify that the policy expressly includes the extracontractual civil liability on the required terms.

There's also an extra obligation for anyone running a unit in a building under horizontal property (condominium): besides civil liability, the operator must hold (or prove) insurance covering the material damage directly caused by fire in, or originating from, the accommodation unit.

The exact scope depends on the policy and insurer, but AL insurance usually revolves around three big blocks:

• Civil liability — damage to guests and third parties: bodily injury, material damage, and damage to third parties from fire or explosion originating in the unit. This is the mandatory core.
• Fire and property risks — direct damage to the property itself and, where there's horizontal property, fire damage originating in the unit. This is the part that overlaps with the law's extra obligation.
• Contents (frequent, but not always included) — furniture, appliances and equipment; some policies add theft, water damage, or loss of rent.

What's covered, what's excluded, the deductibles and the per-claim limits vary from insurer to insurer. Read the general and particular conditions before signing, and confirm that tourist use (not just residential) is expressly covered.

There's no single price, and any concrete figure only makes sense with a quote for your specific property. What can be said honestly is which factors typically push the premium up or down:

• The establishment's capacity — number of occupants, rooms and beds.
• The modality and property type — house, apartment, hospitality establishment; and features such as year of construction and materials.
• The cover and capital chosen — the broader the scope and the higher the capital, the higher the premium.
• The location and claims history.
• The operator's profile — individual or company — and turnover.

So instead of quoting a number, ask more than one insurer or a broker for quotes and compare cover, not just price. The premium varies by property and insurer — any figure you see online is only indicative.

Insurance doesn't live apart from the AL paperwork — it's tied to the registration. Proof of valid insurance is one of the elements of the prior communication to the RNAL, alongside title over the property and the declaration of activity start at the tax office.

More importantly: keeping the insurance is continuous. It isn't enough to take it out on registration day and forget it. If the policy lapses or is cancelled and not renewed, the establishment stops meeting a legal requirement, and the absence of valid insurance is, by law, grounds for cancelling the RNAL registration.

In an inspection (by ASAE or the municipal council), you may be asked for proof of insurance in force. Keep the policy and payment receipt accessible, and mark the renewal date in your calendar so you don't end up uninsured.

The most frequent — and most expensive — mistake is assuming that your "normal" home insurance covers the short-term rental. Many home policies are made for own use or residential letting and exclude tourist use. In a claim involving a guest, the insurer may refuse to pay because the use isn't covered. If you're doing AL, tell your insurer expressly and take out (or adapt) a policy for tourist accommodation.

Other common slips:

• Confusing multi-risk with civil liability and ending up without the cover the law requires.
• Forgetting the extra fire obligation when the unit is in horizontal property.
• Under-sizing the capital or ignoring high deductibles that make the cover almost useless for small claims.
• Letting the policy lapse and, without noticing, falling into registration non-compliance.

This guide is informative and doesn't replace legal or insurance advice. The exact cover, exclusions and obligations are always to be confirmed with the insurer and the legal source (updated DL 128/2014 and Turismo de Portugal).