What exactly is covenant insurance and why does it cause so much confusion?
The compensation for agreement insurance It is an economic benefit derived from an insurance policy that the company is obliged to contract by virtue of the Collective Agreement applicable to its sector or province. Its objective is to cover serious contingencies suffered by the employee, such as permanent disability (in its different degrees) or death.
The confusion usually lies in the fact that many companies believe that Civil Liability (CR) insurance or generic accident insurance cover this obligation. This is a serious mistake. The agreement insurance is specific and must cover the exact amounts dictated by the text of the sectoral agreement.
Who is obliged to hire them?
- Companies of all sizes: From a large corporation to an SME with a single employee.
- Self-employed with workers: If you have only one employee and their agreement (for example, Construction or Transportation) requires this insurance, you are obligated.
- High risk sectors and services: Although it is typical in industry and construction, more and more service and office agreements include these clauses.
The “No Policy” scenario
Imagine that a worker suffers an accident that causes total permanent disability. If the collective agreement in your sector stipulates a compensation of €45,000 and the company has not taken out the corresponding insurance, the following occurs:
- Full payment by the company: Social justice determines that the worker cannot go without his payment. Therefore, the judge will force the company to pay those €45,000 from its own funds.
- Seizure of goods: If the company does not have liquidity, the embargo will be directed against its assets (machinery, premises, accounts) and even, in certain cases of sole proprietorships or serious negligence, it could lead to the personal assets of the administrator.
The trap of "Outdated Amounts"
Collective agreements are periodically renegotiated. If your insurance was contracted in 2020 with coverage of €20,000, but the agreement updated in 2025 requires €35,000, the insurer will only pay the contracted €20,000. The difference of €15,000 must be assumed by the company. In Strengthen, we frequently detect this imbalance in our labour audits, avoiding unnecessary technical bankruptcies.
Legal risks and sanctions of labour inspection
Beyond the payment of compensation, the mere fact of not having contracted the policy constitutes a labour violation that can be detected in a routine inspection.
Classification of fines
According to the Law on Infringements and Sanctions in the Social Order (LISOS), failure to comply with obligations regarding complementary social security is considered a serious infraction:
- Fines of €751 to €7,500: Depending on the number of workers affected and the negligence detected.
- Benefit surcharge: In the event of a work-related accident without insurance, the company could face a surcharge of 30% to 50% on all Social Security benefits received by the worker, paid directly by the employer.
Key Differences: Accident Insurance vs. Agreement Insurance
It is vital not to confuse these terms so as not to incur duplication of expenses or, worse still, lack of coverage:
| Feature | Accident Insurance (Optional) | Agreement Insurance (Mandatory) |
|---|---|---|
| Origin | Voluntary decision of the company. | Obligation of the Collective Agreement. |
| Beneficiary | The worker or the company. | Always the worker or his heirs. |
| Amount | Freely agreed upon. | Established by law in the sectoral agreement. |
| Purpose | Improvement of social benefits. | Legal compliance and minimum protection. |
How to ensure total compliance in your business?
To avoid sanctions and property risks, we recommend you follow this legal security protocol:
- Identification of the collective agreement: It is not always obvious. An error in the framing of the agreement can invalidate any insurance contracted.
- Reading the insurance clause: locate in the text of the agreement the exact amounts for Death, Major Disability and Permanent Disability.
- Annual policy audit: verify that the insured capital coincides with the salary and compensation tables in force each year.
- Synchronization with highs and lows: Ensure that insurance covers the entire current workforce, including new hires.
In Strengthen, we not only manage your payroll; We monitor each update of the agreements applicable to your sector to notify you of changes in mandatory coverage.
