If you are an expat considering moving to Portugal or have recently relocated to the country, understanding the ins and outs of car insurance is essential. Car insurance in Portugal is mandatory, and it is crucial to have the right coverage to protect yourself and your vehicle.
In this comprehensive guide, we will explore how car insurance works in Portugal, the types of insurance available, the cost of insurance, applying for car insurance, car insurance companies in Portugal, making a claim, canceling a contract or changing providers, and making a complaint about a car insurance company.
How does car insurance in Portugal work?
Car insurance in Portugal operates similarly to many other countries. It is mandatory to have a minimum coverage of third-party insurance, which covers damages caused to third parties. However, you can choose to have additional coverage to protect yourself and your own vehicle.
In Portugal, the vehicle is insured rather than the driver. If you have multiple vehicles, each one needs to be insured separately. It's important to note that others can drive your car as long as they have a valid license.
The Insurance and Pensions Funds Supervisory Authority (Autoridade de Supervisão de Seguros e Fundos de Pensões – ASF) regulates car insurance in Portugal, along with other forms of insurance.
Types of Car Insurance in Portugal
There are three main types of car insurance available in Portugal:
Mandatory third-party insurance
Mandatory third-party liability insurance, known as "seguro obrigatório de responsabilidade civil automóvel," is the minimum legal requirement for car insurance in Portugal. This type of third-party liability insurance provides basic coverage and covers damages and costs caused to third parties, including vehicle damage, injury costs, and personal property damage. However, it does not cover any of your own costs.
The mandatory third-party insurance policy must provide coverage of at least €6 million for personal injury damages and €1.22 million for material damages. It is best suited for older or cheaper vehicles. It is also possible to purchase additional "add-on" insurance to supplement this policy and cover some of your own costs.
Supplementary third-party insurance
Supplementary third-party insurance, also known as "seguro intermediário," provides intermediate coverage that includes third-party coverage and some protection for your own vehicle. The exact coverage varies between insurers, but it often includes protection against fire damage, storm damage, and theft of vehicles. Some policies may also cover legal costs if a claim goes to court.
Similar to third-party coverage, supplementary third-party insurance can be tailored with supplementary policies. This type of insurance is suitable if you have a car that is between four and ten years old.
Supplementary third-party insurance is like a safety net for car owners. Let's say John gets into a car accident where his own car is damaged. With this insurance, the repair costs for John's car are covered, along with damages to the other vehicle involved. Plus, it includes fire insurance, protecting John's own vehicle from fire-related incidents. On top of that, roadside assistance is included, ensuring help is just a call away in case of a breakdown. And if John's car needs extensive repairs, the insurance even provides a replacement vehicle. It's extensive coverage that keeps John and his vehicles safe without leaving him to foot the bill.
Full car insurance
Comprehensive car insurance, referred to as "seguro contra todos," provides coverage against all risks. It typically covers all costs for yourself and any third parties, even when the accident is your fault. Full comprehensive car insurance coverage is a good option if you have a brand-new or expensive car. However, it's important to note that premiums for full car insurance are generally higher.
While full car insurance covers a wide range of risks, there are exclusions. These usually include deliberate damage to the vehicle and accidents that occur when you are in violation of Portuguese driving laws, such as driving while under the influence of alcohol.
Full car insurance offers the ultimate level of protection for car owners. With more extensive coverage, this insurance protects the insured person, John, and his vehicle in various situations. In the unfortunate event of a car accident, the insurance covers not only damages to John's own car but also injury costs for both John and any injured parties involved. It ensures that John doesn't have to worry about hefty medical bills or repair expenses.
Additionally, in the event of a claim, the insurer takes care of the payments. Whether it's covering medical expenses or repairing the vehicles involved, the insurer bears the financial burden. This gives John peace of mind, knowing that he won't have to personally pay for these costs.
Full car insurance also provides protection against unforeseen circumstances, such as theft, vandalism, or natural disasters. The insurer will assist John in recovering from these unfortunate events, whether it involves replacing stolen items or repairing damages caused by vandalism or natural disasters.
How much does car insurance cost in Portugal?
The car insurance costs in Portugal vary based on several factors:
- Age and value of the vehicle
- Driver profile, including age, driving record, and claims history
- Vehicle usage, such as personal use or work use
- Other risks associated with your driving, such as where you live in Portugal
The cost of premiums increases based on the level of insurance you choose. Third-party insurance premiums start at around €150 per year, third-party extra insurance at around €200 per year, and fully comprehensive car insurance costs around €350 per year. However, if you have an expensive car or a poor driving record, you will likely pay an increased premium.
Portuguese car insurance policies do not typically include a deductible (the amount you have to pay towards your first claim) as a standard. However, many all-risk policies include deductibles.
Additionally, you can often negotiate your contract with many insurance companies and reduce your premium costs by agreeing to pay a deductible. Some insurance companies in Portugal provide online cost calculators on their websites to help you estimate the cost of insurance.
Applying for Car Insurance in Portugal
Applying for car insurance in Portugal can be done through various channels, including over the phone, online, or in person at a local branch. Most insurance companies offer online quote forms that you can fill out, and with some, you can complete the entire policy application process online. In other cases, you may be directed to a local agent to proceed with the application.
While each company may have its specific process, you will typically need to provide the following information when applying for Portuguese car insurance:
- Valid driving license
- Vehicle registration document (you need to register your car in Portugal before insuring it)
- NIF number (Portuguese tax identification number)
- Portuguese address
- Bank account details
- Driver profile, including claims history
- Inspection certificate (if the vehicle is more than four years old)
Note that getting Portuguese insurance will require you to have a NIF number and a Portuguese bank account. You need your NIF number to sign contracts in Portugal and to take out other types of insurance, such as home insurance, unemployment insurance, and travel insurance. We can help you get a NIF and open a Portuguese bank account.
Once you have completed the application process and made the first payment, you should receive the following documents:
- Green card insurance certificate (to keep in your car)
- Claims forms
- Insurance disc (to place in your car window)
- Information pack with details about your policy, your no-claims bonus, whether anything is deductible, etc.
Car Insurance Companies in Portugal
There are many insurance companies in Portugal, many of which offer car insurance. Some of the main firms include:
- Ageas
- Allianz
- Fidelidade
- Santander
In addition to these companies, several English-speaking companies provide expat car insurance cover or brokerage and other services in Portugal. Examples of such companies include:
- Essencial Portugal
- Inov Expat
- GED Insurance
- Sterling
To compare car insurance options in Portugal, you can use comparison tools such as Compare o Mercado (available in Portuguese).
How to Make a Car Insurance Claim in Portugal
Each insurance company in Portugal has its own claims process, which should be clearly explained to you when you sign up for a policy.
In general, to file a claim, you will need to do so either online, over the phone, or by using a paper form. Claims usually need to be filed within eight days unless there is a valid reason for a delay.
In the event of an accident, you will need to collect the details (name, address, car details, and insurance policy number) from any third parties involved and complete a claim form. The claim form used depends on whether the claim is straightforward or contested.
For straightforward claims, the "Declaração Amigável de Acidente Automóvel" (DAAA) form is used, while the non-friendly claim form (Não Amigável) is used for contested events. It is also advisable to take photographs of any damage. If the accident is serious or involves severe injuries, contact the emergency services. In such cases, the police will issue a report.
Your insurance company will typically assign a claims manager to keep you updated on the progress of your claim. Most straightforward claims are resolved within a few weeks. However, if there are complications or additional information is required, the process may take longer.
Canceling a Contract or Changing Provider
Cancelation policies and procedures vary among insurance companies in Portugal. Insurance policies usually last for a year and may automatically renew if you do not cancel within the notice period, typically between 1 to 3 months. It is important to check the details of your contract regarding cancelation.
If you wish to cancel your insurance contract before its expiration date, you will usually need to provide a minimum notice period. Your insurer may charge an exit fee unless you have a valid reason for cancelation, such as being dissatisfied with the way your insurer handled a claim or if your premium increases.
In most cases, you will need to cancel the policy in writing, which can be done through a letter, email, or an online form, depending on the insurance company's procedures.
Making a Complaint About a Car Insurance Company in Portugal
If you have a complaint about an insurance company in Portugal, the first step is to contact the internal complaints department of your insurer in writing. The company should inform you of its complaints procedure when you take out your policy.
If you are dissatisfied with the outcome of your complaint or do not receive a response, you can escalate your complaint to a Customers' Ombudsman (Provedor do Cliente das Empresas de Seguros).
In Portugal, all insurance companies are legally required to appoint independent external Customers' Ombudsman. The contact details for the ombudsman will be available in your insurance contract and online. You can approach the ombudsman if you have not received a satisfactory response to your claim within 20 days.
The ombudsman will aim to resolve your complaint within 30 days. If you are still unhappy with the outcome after this period, you can approach the ASF complaints service.
Conclusion
Car insurance in Portugal is mandatory, and it is crucial to have the right coverage to protect yourself and your vehicle if you are a car owner. Understanding the different types of insurance available, the cost factors, and the claims process is essential for expats considering a move to Portugal or those who have recently relocated to the country.
By choosing the right car insurance coverage and knowing how to navigate the insurance landscape, you can ensure peace of mind while driving in Portugal.
For more information on Portuguese private health insurance, please read our blog on Portuguese private health insurance and public health insurance here. You may also enjoy our blog posts "Moving to Portugal from the USA: A Comprehensive Guide" and "Living In Portugal As An American: Why You Should Move There Right Now".
If you're considering moving to Portugal, we can help you get a NIF and Portuguese bank account. Contact us today, and we can help you with your move.
Frequently Asked Questions about Car Insurance Portugal
How much is car insurance in Portugal?
The cost of car insurance in Portugal varies depending on several factors such as the age and value of the vehicle, driver profile, vehicle usage, and location within Portugal. On average, car insurance premiums in Portugal can range from €150 per year for third-party insurance to €350 or more per year for fully comprehensive insurance. However, it's important to note that premiums can be higher for expensive cars or drivers with a poor driving record.
Do you need car insurance in Portugal?
Yes, car insurance is mandatory in Portugal. It is a legal requirement to have at least third-party insurance (seguro obrigatório de responsabilidade civil automóvel) that covers damages caused to third parties. This insurance is necessary to drive legally in Portugal and provides financial protection in case of an accident.
Is CDW mandatory in Portugal?
CDW (Collision Damage Waiver) is not mandatory in Portugal. CDW is typically an optional coverage that short-term visitors use to provide protection against damages to a rental car in case of a collision. Whether you choose to include CDW in your car rental agreement depends on your personal preference and the level of coverage you desire. However, it's advisable to consider CDW or similar coverage options when renting a car to insure yourself from potential financial liabilities such as material damage or other damage caused.
