Consorcio compensates the damages and injuries produced to properties and individuals caused by the list of extraordinary hazards, that can be natural and human-made, on the condition that these properties and individuals hold an insurance policy in one or some of the fields with respect to which the Spanish legislation establishes the obligation of including the guarantee for these hazards in its corresponding cover.

The legal framework of the cover of the so-called Extraordinary Risks in Spain is currently presided over by the Legal Status of the Consorcio, approved by the Law 21/1990, of the 19th of December, and which, after successive modifications, has been collected in the consolidated text approved by the Royal Legislative Decree 7/2004, of the 29th of October, with several subsequent modifications.

The terms in which the cover is performed by Consorcio are currently developed in the Regulation of the Extraordinary Risk Insurance, (passed by Royal Decree 300/2004, of the 20th of February, and modified by Royal Decree 1265/2006, of the 8th of November), in which each of the risks covered, the damages that may be compensated and the scope of the cover are defined. This regulation represents the General Conditions that must be applied by Consorcio in the cover of these risks and it represents the protection that the insured party must hold as a minimum.

It is Consorcio’s duty to pay the compensations derived from extraordinary hazard-caused claims to the policyholders who, having paid the corresponding surcharges in Consorcio’s favour, find that the extraordinary hazard in question is not covered by the insurance policy contracted with the insurance company.

The rather extraordinary case may arise that even having paid the corresponding surcharge for extraordinary risk, the insurance policy entrusts the insurance company itself to compensate the extraordinary risks. However, if the insurance company cannot meet its compensatory obligations as it is bankrupt, in temporary receivership or winding-up procedure, Consorcio would take on these obligations.

In virtually all cases neither of the abovementioned instances occur, therefore the compensations derived from extraordinary hazard-caused claims are paid by Consorcio itself.

The Consorcio's aim is to compensate the losses derived from extraordinary events occurring in Spain and affecting properties located in the country. In the case of an extraordinary event occurring abroad, the Consorcio will not pay any compensation for the material damages; it will only pay personal injuries, if the policyholder's residence were to be in Spain.

For the purposes of Consorcio's cover, losses will comprehend the direct damages to properties and individuals, as well as the loss of profits/business interruption when this cover is included in the original policy, they are a result of these damages to the property and they result an alteration in the normal results of the economic activity of the insured party, derived from the shutdown, suspension or reduction in the production processes or business of the aforementioned activity.