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You suffer a loss. A fire, a flood, an explosion.

The good news: you’re insured.

The bad news: your insurer says your compensation will be much lower than expected.

And suddenly, you hear a term no one explained when you signed your policy: the proportional rule.

No worries — this article explains what it is, why it’s applied, how it’s calculated and how to avoid it.

The Root of the Problem: Insufficient Sum Insured

When you buy an insurance policy (home, business, contents, etc.), you choose a sum insured — the maximum value the insurer will cover in case of a claim.

But many people insure for less than the real value, often unknowingly. This is called being underinsured or having an insufficient sum insured.

For example:

You insure a house worth €150,000 for only €100,000.

You insure business equipment worth €80,000 for just €50,000.

Result? If a loss occurs, the insurer applies the proportional rule and reduces your payout accordingly.

What Is the Proportional Rule?

The proportional rule is a formula used by insurers to adjust compensation when the insured value is lower than the actual value of the property or contents.

The idea is simple:

If you only insure a part of the real value, you’ll only be compensated proportionally.

Proportional Rule Formula

(Insured Value / Real Value) × Loss Amount = Final Compensation

Real-life example:

Real property value: €150,000

Insured value: €100,000

Damage from a fire: €60,000

Calculation: (100,000 / 150,000) × 60,000 = €40,000 payout

➡️ You lose €20,000 due to underinsurance.

When Is the Rule Applied?

The proportional rule is applied whenever underinsurance is detected, that is, when the declared insured value is lower than the actual value.

Common scenarios:

Home insurance with poorly calculated structure or contents.

Business insurance with undervalued machinery, stock, or property.

Outdated policies that haven't been updated after renovations.

Using market or cadastral value instead of rebuild cost.

What If the Claim Is for a Total Loss?

The rule doesn’t apply in total losses. In those cases, the insurer pays up to the declared sum insured, which still might be insufficient.

Example:

Your house burns down.

Insured value: €100,000

Actual reconstruction cost: €150,000

➡️ You receive €100,000, even if you need €150,000 to rebuild.

Why Do These Errors Happen?

❌ Confusing market value with rebuild cost

Market prices vary; rebuild cost is what matters in insurance.

❌ Going for the cheapest premium

Lower sum insured = lower premium. But that comes at a big cost later.

❌ Not updating the policy

If you renovate or buy new things, your policy may no longer reflect the real value.

❌ No technical assessment

No use of rebuild cost modules (PEM), inventories, or professional valuation.

How to Avoid the Proportional Rule

✅ 1. Insure based on rebuild cost, not market value

Include: construction, labor, licenses, fees, taxes, and VAT.

✅ 2. Make a detailed inventory of your contents

Avoid vague declarations — list real items, models, and costs.

✅ 3. Review your policy annually

Especially after changes to your property or contents.

✅ 4. Get expert help

At MataSeguros, we review your policy and tell you if you're underinsured.

📩 Contact us here — no strings attached.

Already Affected by the Proportional Rule?

You can still fight back:

Request the insurer’s perit report.

Submit your own professional valuation.

File a complaint with the insurer.

Take it to the Spanish Insurance Ombudsman (DGSFP).

Let professionals like MataSeguros handle your case.

Conclusion

The proportional rule can cost you thousands — just for having a poorly calculated policy.

Make sure your insurance truly protects you. At MataSeguros, we’re here to help you claim what you deserve.

👉 Contact us now . We only get paid if you do.