Article 38 of the Insurance Law in the Balearic Islands | Complete Guide

When an insurance company offers compensation that doesn't cover the actual damages suffered, many policyholders in the Balearic Islands are unaware that the law itself provides them with a powerful tool: the expert appraisal procedure outlined in Article 38 of Law 50/1980 on Insurance Contracts. This mechanism allows any policyholder to appoint their own expert to challenge the company's valuation, and it can make a decisive difference in the final amount of compensation.

At Optima Pericial, an expert appraisal firm based in Ibiza and operating throughout the Balearic Islands—Mallorca, Menorca, Formentera, and Ibiza—we help individuals and companies exercise this right with technical rigor and in-depth knowledge of insurance company protocols. If you need to understand how this procedure works and how it can benefit you, this guide is designed specifically for you.

What is Article 38 of the Insurance Contract Law?

Law 50/1980, of October 8, on Insurance Contracts, is the law that regulates the relationship between insurers and policyholders in Spain. Article 38 establishes a specific procedure for resolving disagreements regarding the economic valuation of damages caused by a claim.

In essence, this precept recognizes that damage assessment is a technical matter and that both parties have conflicting interests. Therefore, it establishes a system of bilateral expert appraisal with the possibility of intervention by an impartial third party acting as a technical arbitrator.

The literal content of the precept and its scope

Article 38 stipulates that, once an incident has occurred, if the parties disagree on the amount of the damage, each may appoint its own expert. Both experts will prepare their respective reports and attempt to reach an agreement.

If the two professionals cannot reach an agreement, a third expert, chosen by mutual agreement or, failing that, by the College of Experts or the competent judge. The resulting report—whether agreed upon by the first two experts or issued by the third—is binding on both parties.

It is important to understand that this procedure applies exclusively to the quantification of damages, not to the determination of coverage or liability. If the insurer denies coverage, the appropriate course of action is an out-of-court claim or legal proceedings, not Article 38.

The protective purpose of the precept for the insured

The legislator designed this mechanism to balance the positions of the parties. Insurance companies have their own in-house experts who, due to their employment relationship, may tend to assess damages conservatively.

Article 38 breaks this asymmetry by guaranteeing the insured the right to a second, independent technical opinion, backed by law. Thus, the final result of the valuation does not depend solely on the company's expert's judgment, but on the consensus between professionals from both parties or on a neutral arbitrator.

For those residing in the Balearic Islands, where insularity can hinder the mobilization of specialized technical resources, having a local expert firm like Optima Pericial represents a considerable strategic advantage.

The phases of the expert procedure regulated in article 38

Understanding each stage of the process is essential for carrying it out correctly and within the legally established timeframes. The phases are described below in an orderly and practical manner.

Phase 1: The discrepancy and the activation of the procedure

It all begins when the insured receives the insurance company's compensation offer and disagrees with it. At that point, they have the right to formally express their disagreement and request the initiation of the expert assessment procedure outlined in Article 38.

It is advisable to do so in writing—by registered mail with acknowledgment of receipt or certified mail—to provide irrefutable proof of the date and content of the communication. This documentary evidence can be crucial should the process lead to subsequent litigation.

At this stage it is also advisable to carefully review the policy conditions and the coverages contracted, to determine if the discrepancy only affects the amount or also the extent of the coverage.

Phase 2: Appointment of the expert by the insured

Once the procedure is activated, the insured must appoint their expert within the timeframe stipulated in the policy or, failing that, within a reasonable timeframe. Choosing the right professional is a critical step, because the quality of the expert report they prepare will largely determine the final outcome.

The insured's expert must be an independent professional, technically competent, and with specific experience in the type of claim being assessed. Damage to an electrical installation is not the same as structural damage to a building or losses from an industrial fire.

If you want to understand in depth how to select the right professional, you can consult our guide on how to hire an independent expert to make an insurance claim, where the most important criteria are detailed.

Phase 3: Appointment of the expert by the insurer

At the same time, the insurance company appoints its own expert. In most cases, insurers work with trusted experts who are familiar with their internal valuation criteria and the limits of their work.

For this reason, the insured's expert must also be familiar with these internal protocols in order to present an effective argument. Experience in the insurance sector, such as that accumulated by the Optima Pericial team, makes a real difference in negotiations between experts.

Phase 4: Preparation of reports and negotiation between experts

Both experts prepare their respective valuation reports and then attempt to reach an agreement on the amount of damages. This technical negotiation process is the core of the procedure under Article 38.

An experienced expert not only knows how to accurately quantify damages, but also how to defend that quantification against the opposing expert. The technical soundness of the report, the methodological rigor, and the supporting documentation are the factors that determine the outcome of this phase.

At this point, services such as causal analysis are fundamental: accurately determining the origin and mechanics of the loss allows the valuation to be based on irrefutable technical grounds, which significantly strengthens the insured's negotiating position.

Phase 5: Intervention of the third expert witness

If the experts from both sides cannot reach an agreement —which happens in a significant percentage of cases—, a third expert with deciding functions is appointed

This professional is chosen by mutual agreement between the parties. If there is no consensus on who should be appointed, the appointment may be entrusted to the College of Insurance Experts or Appraisers, or ultimately to the judge of first instance in the place where the loss occurred.

The third expert reviews the reports from both parties, may conduct additional inspections, and issues a final, binding report. Unless there is a serious procedural defect, neither party may challenge it in court on substantive grounds.

Phase 6: Payment of compensation

Once the amount has been determined through the expert appraisal procedure, the insurer is obligated to pay the resulting compensation within the legally established timeframes. Failure to meet this deadline may result in late payment interest as stipulated in Article 20 of the same law.

In practice, most expert procedures under Article 38 conclude at this stage with the collection of compensation significantly higher than the company's initial offer, especially when the insured has had a technical and experienced expert.

When is it advisable to invoke Article 38

Not every disagreement with the insurance company justifies initiating an expert assessment. There are situations where this approach is particularly useful and others where it might be advisable to explore other options beforehand.

Claims with clearly insufficient valuations

When the difference between the compensation offered and the actual damage is significant, the procedure under Article 38 is fully justified. This frequently occurs in cases of structural damage, fires, floods, or serious damage to facilities, where accurate quantification requires specialized technical knowledge.

In the Balearic context, where properties have high values ​​and losses due to extreme weather conditions —especially in Mallorca and Menorca— are not uncommon, the difference between the insurer's appraisal and the actual cost of repair can be very considerable.

Partial rejections of coverage linked to valuation

Sometimes, the insurer partially accepts the claim but excludes certain damages from its assessment, arguing that they are not covered or are not causally linked to the loss. In these cases, a causal analysis report prepared by an independent expert can technically demonstrate the relationship between the loss and the claimed damages.

If that technical evidence does not convince the company, Article 38 allows the debate to be taken to the expert field, where technical arguments carry more weight than the company's contractual interpretations.

Damage to technical installations or specialized elements

Claims involving electrical installations, air conditioning systems, industrial machinery, or civil engineering structures require experts with specific technical knowledge. The expert's technical competence is essential for their report to be sound and credible.

In these cases, the insurer may try to justify a low valuation by claiming the equipment is obsolete or that there were pre-existing defects. A specialized technical expert can refute these arguments with objective data and verifiable measurements.

Accidents involving noise or vibrations

In densely populated urban environments such as the center of Ibiza or the tourist areas of Mallorca, damages resulting from construction, industrial activities, or nearby infrastructure can include noise and vibration disturbances. In these cases, noise and vibration measurements carried out by an accredited expert are the most effective technical evidence to support a claim.

If the insurer questions the existence or magnitude of these damages, the procedure in Article 38 allows an independent expert to verify the objective data obtained through measurement.

How to prepare an expert report for Article 38

The quality of the expert report is the determining factor in the success of the proceedings. A rigorous technical report must meet certain substantive and procedural requirements to be effective in negotiations or, if applicable, before a third-party expert.

Essential elements of a technical valuation report

A complete expert report for the procedure under Article 38 must contain, at a minimum, the following elements:

• Identification of the expert: qualifications, professional registration and accredited experience in the type of claim.
• Description of the incident: date, place, circumstances and causal mechanism.
• Detailed inventory of damages: with photographs, measurements and references to current market prices.
• Valuation methodology: technical criteria used to quantify each item of damage.
• Quantitative conclusion: total amount of compensation requested, broken down by concepts.
• Supporting documentation: repair estimates, invoices, third-party reports and any other relevant supporting documentation.

Each of these sections serves a specific technical and legal function. The absence or deficiency of any of them can weaken the insured's position in the expert assessment negotiation.

If you want to better understand what this type of technical work involves, you can consult general information about what expert services are and what they are for, a useful guide for those facing this process for the first time.

Damage assessment as the core of the report

The technical assessment of the damages is the central element of any expert report within the framework of article 38. It is not enough to list the affected elements; it is necessary to quantify them with objective and verifiable criteria.

There are different valuation methods depending on the type of asset affected: replacement cost, market value, repair cost, or reconstruction value. Choosing the correct method depends on both the type of loss and the policy terms, and can significantly influence the final amount.

An expert with experience in insurance claims knows which method is most favorable for the insured in each circumstance and how to technically argue it before the company's expert.

The importance of causal analysis in the report

In many claims, the insurer not only disagrees about the amount of damages, but also about the origin of the damage. If it can prove that the cause of the loss is excluded from coverage, it can deny compensation or drastically reduce it.

Therefore, accurately determining the cause of the damage—and documenting it technically—is just as important as quantifying it. A rigorous causal analysis strengthens the expert report against the company's arguments and gives the insured a much stronger negotiating position.

Differences between an insurance company expert and an independent expert

Understanding the difference between these two professional profiles is essential to understanding why Article 38 exists and why it is relevant to practice it.

The company's expert: profile and limitations

The expert appointed by the insurer typically works within the criteria and scales established internally by the company. Although technically competent, they operate under guidelines that may lead them to apply aggressive depreciation, exclude damage items, or use reference prices lower than those of the actual market.

This does not necessarily imply bad faith, but it does reflect an institutional logic of containing claims expenses. As a result, their valuations tend to be conservative from the insured's perspective.

The independent expert: objectivity and technical defense of the insured

The expert hired by the insured has a different function: to prepare an objective technical report that accurately reflects the actual damage suffered and quantifies it correctly according to market criteria and the conditions of the policy.

Their independence is their greatest asset. They have no financial incentive to undervalue claims or exclude items: their job is to technically defend the insured's interests within the bounds of professional rigor.

Optima Pericial operates precisely from this position of independence and objectivity. The team's knowledge of insurance companies' internal protocols allows them to anticipate their arguments and build reports that effectively counter them.

Counter-expert reports and their strategic role in the proceedings

Sometimes, the insured party does not initiate the procedure under Article 38 in the first instance, but instead receives the insurer's expert report first and needs to challenge it technically. In this context, a counter-expert report is the appropriate instrument.

A technical counter-expert report analyzes the company expert's report point by point, identifies its methodological errors, omissions and questionable valuation criteria, and proposes a well-founded alternative valuation.

This tool can be used before activating article 38 —as an argumentative basis for direct negotiation with the insurer— or as a supporting document during the bilateral expert process.

When is a counter-expert opinion most useful?

The counter-expert report is especially valuable when the company's expert report contains obvious technical errors, omissions of relevant items, or valuation criteria that are clearly unfavorable to the insured.

It is also useful in cases where the insurer has acted quickly and the insured receives a settlement proposal far below their expectations, without having had time to carefully analyze the actual extent of the damages.

In Ibiza, Mallorca, Menorca and Formentera, Optima Pericial has prepared numerous counter-expert reports that have allowed its clients to obtain compensation significantly higher than those initially offered by the companies.

Article 38 in practice: real cases in the Balearic Islands

The application of this precept in the Balearic archipelago presents some particularities derived from the climatic conditions, the type of construction and the high density of holiday homes and tourist establishments on islands such as Ibiza, Mallorca and Formentera.

Water damage to homes and tourist establishments

Water leaks, burst pipes, and damage from heavy rain are some of the most frequent problems in the archipelago. Older buildings, abundant in the historic centers of Ibiza and Palma de Mallorca, are especially vulnerable.

In these cases, insurance companies often try to reduce compensation by arguing pre-existing dampness or lack of maintenance. A technical expert can demonstrate through inspection and photographic documentation that the damage is a direct consequence of the reported incident and not of pre-existing causes.

Accidents in hospitality and tourism facilities

The tourism sector is the backbone of the Balearic economy. Hotels and holiday apartments have comprehensive insurance coverage that includes property damage, business interruption, and civil liability.

When an incident occurs in this type of property—a fire, machinery breakdown, or flood—quantifying the damages is particularly complex because it must include both physical damage and lost income during the repair period. A specialist in large-scale claims is essential to ensure that none of these items are left out of the valuation.

Structural damage to second home buildings

Mallorca, Menorca, and Ibiza have a very high concentration of second homes owned by both Spanish and foreign nationals. These properties, sometimes unoccupied for months at a time, can suffer damage that is detected late and results in more serious losses.

Insurers may try to reduce coverage by arguing continuous lack of habitability or failure to meet maintenance obligations. The independent expert must be familiar with these arguments and prepared to refute them with solid technical documentation.

Legal aspects complementary to article 38

The expert procedure of article 38 does not exist in isolation, but in the context of a broader legal framework that should be understood in order to exercise the rights of the insured with full guarantees.

Article 20: late payment interest

If the insurer fails to pay the compensation within the legal timeframes following the conclusion of the expert assessment, the insured party is entitled to claim default interest in accordance with Article 20 of the Insurance Contract Law. This interest can be substantial if the delay is prolonged.

An independent expert who is familiar with the legal framework can advise the insured on the advisability of initiating a claim for late payment interest, which reinforces the pressure on the company to meet its obligations on time.

The relationship between Article 38 and the judicial process

The opinion derived from the procedure of article 38 has binding value, but that does not prevent the insured from subsequently resorting to the judicial route if he considers that there are defects in the expert procedure or if the discrepancy affects the coverage and not only the amount.

In legal proceedings, the report prepared by the insured's expert can be submitted as expert evidence and has full probative value. For this reason, the technical quality and methodological rigor of the report are important not only for the expert phase of Article 38, but also for any subsequent legal dispute.

Time limits and expiry in the procedure

The law does not establish a specific deadline for appointing your own expert once the procedure has been initiated, but insurance policies typically include contractual deadlines. Failure to meet these deadlines may result in the loss of the right to appoint your own expert.

Therefore, it is crucial to act quickly from the moment you receive an insurance company's valuation that you disagree with. Consulting with a specialized expert firm from the outset saves time and avoids costly procedural errors.

How to choose the most suitable expert for article 38

Choosing the expert is probably the most important decision in the entire process. An error in this choice can jeopardize the final outcome of the claim.

Technical selection criteria

When choosing an expert for the procedure under Article 38, you must verify the following aspects:

1. Qualifications and specialization: the expert must have specific technical training in the field of the claim (engineering, architecture, insurance appraisal, etc.).
2. Experience in insurance claimsUnderstanding company criteria and protocols is as important as knowing how to technically assess them

   damages. Experience in negotiating with insurance company experts is a key differentiator.

3. Knowledge of the type of property affected: a residential property, an industrial facility, and a hotel require different valuation methodologies. Verify that the expert has specific experience with the particular type of claim.
4. Documentation capacity: The report must be technically sound and supported by verifiable documentation. Ask the expert how they work and what supporting documentation they typically provide.
5. Availability in your area: In the Balearic Islands, travel logistics are important. A local expert can quickly inspect the damage, which is especially crucial in the immediate aftermath.

Why experience in the insurance sector makes the difference

An expert who understands the inner workings of insurance companies not only knows how to appraise, but also how to anticipate. They know what arguments the company's expert will use, what items they will try to exclude, and what depreciation criteria they will apply.

This anticipation allows for the creation of a report that addresses these objections before they are raised, which considerably strengthens the insured's position in the negotiation between experts.

At Optima Pericial, the team's extensive experience in the insurance sector is a cornerstone of its value proposition. This in-house knowledge translates into stronger reports, more effective arguments, and more favorable outcomes for policyholders throughout the Balearic Islands.

Common mistakes when choosing an expert for article 38

It is also important to know the most common mistakes policyholders make when choosing their expert, in order to avoid them:

• Choosing the cheapest expert: the expert's fee is irrelevant if the report isn't strong enough to support the claimed valuation. Investing wisely in the right expert can significantly increase the compensation obtained.
• Hiring a professional without insurance experience: an excellent technician in their specialty may lack experience in the dynamics of insurance claims, which limits their effectiveness in expert negotiation.
• Acting late: delaying the appointment of the expert can compromise contractual deadlines or allow the insurer to consolidate its position with arguments that are difficult to reverse.
• Not reviewing the policy conditions before acting: knowing the coverage contracted is essential to know what can be claimed and what arguments the company has to restrict the compensation.

The importance of acting quickly after the accident

Time is a critical factor in the procedures of Article 38. The sooner action is taken, the better the evidence of the damage is preserved and the more robust the resulting expert report.

After an accident, damage may worsen or be temporarily repaired before an expert can inspect it. Immediate photographic and video documentation—photographs, videos, measurements—is essential to preserve evidence.

In the Balearic Islands, where many incidents affect seasonal properties that may remain unoccupied for months, delayed detection of damage can complicate proving its origin. For this reason, contacting an independent expert as soon as the incident is confirmed is the most prudent course of action.

Conclusion: Is it worth invoking Article 38 of the Insurance Law in Spain?

The answer is, in most cases, yes. The expert appraisal procedure provided for in Article 38 of Law 50/1980 on Insurance Contracts is an effective and accessible legal tool with the real potential to significantly improve the compensation that an insurance company is willing to offer in the first instance.

For this mechanism to function correctly, the insured needs two fundamental things: to act within the appropriate timeframes and to have a technically competent expert who understands the dynamics of the insurance sector. Neither element is dispensable: the best technical methodology loses its effectiveness without procedural timeliness, and procedural timeliness is useless without a solid report to support it.

If you disagree with your insurer's assessment, don't delay. Every week that passes can be crucial for preserving evidence, meeting contractual deadlines, or strengthening your negotiating position with the company.

Contact Optima Pericial, experts in Article 38 in the Balearic Islands

Optima Pericial is an expert witness firm located in Ibiza, operating throughout the Balearic Islands—Mallorca, Menorca, Formentera, and Ibiza—specializing in the preparation of expert reports for both judicial and extrajudicial proceedings. They focus on damage assessment, issuing technical reports for legal proceedings, and providing technical assistance in insurance claims, with a value proposition based on the rigorous and objective analysis of technical and insurance disputes. Their team has in-depth knowledge of insurance companies' internal protocols, enabling them to anticipate their arguments and construct reports that effectively counter them.

If you need an independent expert to initiate the procedure under Article 38, prepare a counter-expert report, or defend your interests against an insurance company in the Balearic Islands, contact Optima Pericial. We will analyze your case free of charge and explain your options and the most appropriate strategy to obtain the compensation you are truly entitled to.