You are about to sign a lease and the contract mentions, sometimes in the same clause, three things that sound alike: fire insurance, a surety bond and a guarantee. Mixing them up is normal, because all three reassure the owner. But they protect very different things: fire insurance covers physical damage to the property, while a surety bond and a guarantor back the owner getting paid if the tenant breaches the lease. Knowing the difference saves you two costly mistakes: thinking the surety bond already covers you against fire, or thinking fire insurance works as a payment guarantee for the owner. This article explains what each one is, who buys it, who it favours and how to sort each one out.
Fire insurance: it covers damage, not debts
Fire insurance is property damage insurance: it responds when fire, lightning or an explosion damages the property. Insurance Law 17,418 requires the insurer to pay for damage caused directly or indirectly by fire, and also by the measures taken to put it out, demolish or evacuate (art. 85), and it treats lightning and explosion damage as fire (art. 86). In a rental, the tenant usually buys it and is the policyholder, with the building fire clause in favour of the owner: the building cover belongs to the owner, because the property is theirs. The same policy can include contents, meaning your belongings, and liability towards neighbours, which responds if the fire spreads. What fire insurance does not do is guarantee rent payments: if the tenant stops paying, this policy has nothing to do with it.
The rental surety bond: it guarantees the owner gets paid
A surety bond works the other way round. It does not cover physical damage but the fulfilment of an obligation: the insurer guarantees the owner, who is the insured party, that they will be paid if the tenant does not pay the rent or other debts the policy covers. The tenant is the policyholder, who buys and pays for it, but the policy is not in their favour: it is in favour of the owner. That is why it is used to replace a property-owning guarantor, especially when the tenant has nobody to ask. The key point: a surety bond does not cover a fire, a water leak or any damage to the apartment. It is a payment guarantee, not property cover.
The guarantor: the traditional guarantee, backed by a person
The guarantor is a person who signs the lease and commits to answer with their assets if the tenant defaults. It serves the same purpose as the surety bond, but a person stands behind it instead of an insurer, usually with a property in their name. A common misunderstanding is worth clearing up: the guarantor is not the policyholder of the fire policy and does not have to buy it. Their role is to back the payment obligations of the lease; the tenant buys the fire insurance. Until December 2023, Rental Law 27,551 required tenants to offer at least two guarantees from a list (property title, bank guarantee, surety bond, personal guarantor or proof of income) and owners to accept one of them. That law was repealed by Decree 70/2023, and guarantees are now freely agreed in the lease.
What about the security deposit?
The deposit is yet another thing, even though it is called a guarantee deposit in Spanish. It is money the tenant hands over at signing and gets back when the lease ends. Since Decree 70/2023, the Civil and Commercial Code lets the parties freely set the amount and currency of the deposit and how it is returned (art. 1196). The deposit does not replace the guarantee or the fire insurance: a fire can cause damage far larger than any deposit, which is why leases ask for the policy separately.
Why the lease asks for more than one
Because each one covers a different risk, leases commonly ask for two: a guarantee (guarantor, surety bond or another form the parties agree) and fire insurance. It is not a duplicate requirement. The guarantee protects the owner against non-payment; fire insurance protects the property against a loss. Also, under the Civil and Commercial Code the tenant is liable for the destruction of the property by a fire not caused by an act of God (art. 1206), so the insurance protects you too: if there is a fire, the insurer pays and it does not become your debt to the owner. None of these is required by law: the lease requires them, and what you signed is what you must comply with.
How to sort out each one
You can quote fire insurance online at Ayling: enter the square metres, contents and neighbour cover and see the price instantly, before leaving your details. Cover is provided by Victoria Seguros and the policy includes the building fire clause in favour of the owner that leases require. For the surety bond, if you have no guarantor, our rental surety bond page explains how it works. And if you are an agency, you can handle both in one process: we explain how on our page for agencies. In any case, before buying, check that the insurer is authorised by the national insurance regulator (SSN).
Conclusion
Fire insurance, surety bonds and guarantors do not compete with each other: each covers a different part of the risk in a rental. Fire insurance protects the property and your belongings; the surety bond and the guarantor protect the owner's income; the deposit is money set aside and returned at the end. Knowing what each one is lets you read the lease without surprises, avoid paying twice for the same thing and stay covered where you need it. If fire insurance is the last thing you need to sign, quote it online and see the price instantly.
Related reading
Rental fire insurance, all in one guide
Whether it is mandatory, who pays, what it covers, what amount the lease asks for and how to present it.
Go to the fire insurance guide for tenantsFrequently asked questions
Does a surety bond replace fire insurance?
No. The surety bond guarantees the owner gets paid if the tenant does not pay; it does not cover damage to the property. Fire insurance covers damage from fire, lightning or explosion. That is why many leases ask for both.
Does the guarantor have to buy the fire insurance?
No. The guarantor is not the policyholder of the fire policy: their role is to back the payment obligations of the lease. The tenant buys the fire insurance, with the building fire clause in favour of the owner.
Who pays for the surety bond and who pays for the fire insurance?
Usually the tenant pays for both, as policyholder of each policy. But no law imposes it: it depends on what the lease says.
Is a guarantee mandatory to rent?
Not by law. Since Decree 70/2023 repealed Rental Law 27,551, the guarantee is freely agreed in the lease: it can be a guarantor, a surety bond or another form the parties agree.
Is the security deposit the same as the guarantee?
No. The deposit is money handed over at signing and returned when the lease ends; the guarantee, whether a guarantor or a surety bond, backs the payment obligations throughout the rental.
Is fire insurance the last thing you need to sign?
Quote it online and see the price instantly, with the clause in favour of the owner that leases require.
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