Help -
Help for Webmasters
« back to results for ""
Below is a cache of http://unpan1.un.org/intradoc/groups/public/documents/UNTC/UNPAN018394.pdf. It's a snapshot of the page taken as our search engine crawled the Web.
The web site itself may have changed. You can check the current page or check for previous versions at the Internet Archive. Yahoo! is not affiliated with the authors of this page or responsible for its content. The Insurance Contract Law - Latvia Unofficial translation
The Saeima 1 has adopted
and the President has proclaimed the following Law:
THE INSURANCE CONTRACT LAW
Chapter I GENERAL PROVISIONS
Article 1. Definitions
1) sum insured - the amount of money specified in the insurance contract and
covering material values or interests in loss and damage insurance; a persons life,
health or physical condition in personal insurance; the limit of liability in liability
insurance;
2) insurable interest the interest not to suffer loss upon the occurrence of the risk
insured;
3) insurance indemnity the sum insured, part thereof or any other amount paid for
the insured event or services to be provided in compliance with the insurance
contract;
4) insured event - an event that has a causal relationship with the risk insured, upon
the occurrence of which the insurance indemnity is due in compliance with the
insurance contract;
5) insurance contract an agreement between an insurer and a policyholder according
to which the policyholder undertakes to pay an insurance premium in the manner,
time and amount specified by the insurance contract as well as to meet other
obligations under the contract and the insurer undertakes to pay the insurance
indemnity to the person stated in the contract upon the occurrence of the insured event
in compliance with the insurance contract;
6) policyholder - a legal entity or an individual concluding the insurance contract in
favour of itself or another person;
7) insurance object:
a) in loss and damage insurance - material values or interests;
b) in liability insurance - the civil liability of a person;
1 The Parliament of the Republic of Latvia. c) in personal insurance a persons life, health or physical condition;
8) insurance proposal - a document specified by the insurer which is submitted to the
insurer by the policyholder to inform the insurer of the insurance object, facts and
conditions required for the evaluation of the insured risk;
9) insurance policy - a document that certifies the conclusion of the insurance contract
and contains the terms and conditions of the insurance contract as well as all
amendments and supplements to this contract, as agreed between the insurer and the
policyholder during the period of validity of the insurance contract;
10) loss and damage insurance - insurance that covers material values or interests and
the amount of the payable insurance indemnity is dependent on the amount of
material losses suffered by the insured;
11) insurance premium a payment for the cover as stated in the insurance policy;
12) insured - a legal entity or an individual having an insurable interest and in favour
of whom the insurance contract has been concluded.
a) in loss and damage insurance - the person stated in the insurance policy to whom
the payment of the insurance indemnity in the event of material losses or damage is
envisaged,
b) in liability insurance - the person stated in the insurance policy whose civil liability
is insured,
c) in personal insurance - the individual stated in the insurance policy whose life,
health or physical condition has been covered by the insurance contract;
13) risk insured - an event envisaged in the insurance policy, the occurrence of which
is not dependent on the will of the insured and the occurrence of which is possible in
the future;
14) [Deleted by Law of 24 October 2002]
15) liability limit - the maximum amount of money paid in liability insurance;
16) liability insurance - insurance covering a persons civil liability for the loss
incurred by the third person as a result of the persons activity or failure to act;
17) gratuities (bonuses) in life insurance: an increase in the sum insured and a
decrease in the insurance premium depending on the results of financial activities of
the insurance company;
18) beneficiary - in personal insurance: an individual to whom the insurance
indemnity is to be paid in compliance with the insurance contract;
19) coinsurance an agreement by several insurers to insure the same insurance
object under a single insurance contract;
20) personal insurance the insurance of an individuals life, health or physical
condition;
21) third person - in liability insurance: the person for whom the insurance indemnity
payment is envisaged.
22) surrender value a sum of money, the amount and calculation of which is laid
down in the life insurance contract, paid to the policyholder if the insurance contract
is terminated before its expiration date by the policyholder.
[1 June 2000; 24 October 2002]
Article 2. Scope of Application of this Law
(1) This Law shall apply to all insurance contracts unless otherwise provided by law.
This Law shall not apply to State social insurance and reinsurance.
(2) When concluding an insurance contract, parties to the contract are entitled to agree
on the application of the relevant laws of any country to the regulation of their
contractual relations arising out of the insurance contract unless otherwise provided
by this Law.
(3) The insurance contract concluded shall clearly and comprehensibly indicate the
law applicable by the parties to the regulation of their contractual relations arising out
of the insurance contract.
(4) If the insurance contract concluded does not indicate the law applicable by the
parties to the regulation of their contractual relations, this Law shall apply.
(5) If an insurance object related to an insured risk is situated in a European Union
Member State or a European Economic Area State, the insurance contract shall
comply with the provisions of international private law and the parties are entitled to
apply the following laws to the regulation of their contractual relations:
1) the law of the country in which the insurance object related to the insured risk is situated;
2) the law of the country in which the insurance object related to the insured risk is situated where the policyholder has its habitual residence or central
administration in the same country; 3) at the choice of the parties to the insurance contract the law of the country in which the insurance object related to the insured risk is situated, or the law of
the country in which the policyholder has its habitual residence or central
administration (where the policyholder has its habitual residence or central
administration in another country); 4) at the choice of the parties to the insurance contract the law of the country in which the insurance object related to the risk insured is situated, or the law of the country in which the policyholder has its habitual residence or quarters of
its professional activities (practice) [where the policyholder acts in two or
more countries, or is a self-employed person, or the insurance contract
includes two or more insured risks related to the activity or profession
(occupation) of the policyholder and the insurance objects related to the risks
insured are situated in two or more countries]; 5) the law of the country of which the policyholder is a national (where the policyholder is an individual who permanently resides abroad); 6) the law of any European Union Member State or European Economic Area State where the insurance contract covers the large risks specified by the said
law.
(6) In the case of compulsory insurance, the insurance contract shall include the
requirements prescribed for the relevant class of insurance by regulatory enactments
of the country in which this insurance is compulsory.
(7) Prior to entering into the insurance contract, the insurer is obliged to notify the
policyholder of the law applicable to the regulation of the contractual relations arising
out of the insurance contract.
Article 3. Procedures for Resolution of Disputes
(1) Disputes related to insurance contracts shall be resolved in accordance with the
procedures prescribed by laws and other regulatory enactments.
(2) Upon agreement by the parties, disputes may be resolved by arbitration court.
(3) Prior to entering into the insurance contract, the insurer is obliged to notify the
policyholder individual of the procedures for out-of-court settlement of
complaints and disputes arising out of the insurance contract.
[24 October 2002]
Chapter II
CONCLUDING THE INSURANCE CONTRACT
Article 4. Insurance Proposal and Insurers Offer
(1) For the purpose of concluding the insurance contract, the insurer is entitled to
request an insurance proposal from the policyholder.
(2) The insurance proposal shall not impose a duty either on the insurer to conclude
an insurance contract or cover losses incurred by the submitter of the insurance
proposal or on the submitter of the insurance proposal to assume any liabilities.
(3). If, within 15 days after the receipt of the insurance proposal, the insurer has
neither informed in writing the submitter of the insurance proposal of the insurance conditions upon which the insurer is prepared to conclude the insurance contract, nor
stated the necessity to perform a pre-insurance inspection, it shall be deemed that the
insurer has refused to conclude the insurance contract.
(4) If the insurer has specified a particular time limit for providing an answer to its
offer, the insurer has no right to remove its offer until the end of the specified time
limit. If such a time limit has not been specified, the insurer has the right to remove its
offer if the other party has neither accepted nor refused to accept the offer within a 30-
day period.
Article 5. Initial Information Regarding the Risk Insured
(1) Upon the conclusion of the insurance contract, the policyholder and the insured
are obliged to provide all the information requested by the insurer regarding
conditions that the insurer needs for assessing the likelihood of occurrence of the risk
insured and that is essential for concluding the insurance agreement.
(2) The policyholder and the insured are responsible for the truthfulness of the
information provided.
(3) If the policyholder or the insured has not provided the information requested by
the insurer in writing prior to the conclusion of the insurance contract and if the
insurer has concluded the insurance contract, the latter may not terminate the
insurance contract or alter its terms and conditions due to the fact that information has
not been provided, except in cases where the information has not been provided in
bad faith or due to gross negligence.
(4) The policyholder and the insured are obliged to inform the insurer of other valid
insurance contracts covering the same insurance object they have the knowledge of.
Article 6. General and Special Terms and Conditions of the Insurance Contract
(1) General and special terms and conditions of the insurance contract shall be clear
and understandable.
(2) The insurance contract shall indicate the place and date of conclusion of the
contract, the start date and expiration date of the contract, information concerning the
insurer and the insured (if the latter is not also the policyholder) and the policyholder,
the risk insured, the insurance object, the sum insured, the insurance premium,
procedures and due dates for premium payments, the recipient of the insurance
indemnity, the time limit for taking a decision regarding the insurance indemnity
payment or refusal to pay such indemnity, the conditions for termination of the
contract, duties of the parties, their responsibility for the failure to meet the terms and
conditions of the contract, the procedure for dispute resolution.
(3) The insurance contract may also include other terms and conditions that comply
with this Law and the general business conditions provided for by the Civil Law as
well as terms and conditions specific to the contract affecting the interests of the
policyholder or the insured.
(4) Throughout the duration of the insurance contract, the insurer shall, without delay,
notify the policyholder and the insured (where the insured is not also the
policyholder) of any changes in the insurers telephone number, contact address and
contact persons and similar information that is necessary for the policyholder (the
insured) to meet his/her contractual liabilities.
[1 June 2000; 24 October 2002]
Article 6 1 . Language of the Insurance Contract
(1) The insurance contract shall be drawn up and entered into in the official language.
(2) If the policyholder wishes to conclude the insurance contract in a foreign
language, such a wish of the policyholder shall be explicitly stated in the insurance
contract.
[24 October 2002]
Article 7. Conclusion of the Insurance Contract and Its Coming into Effect
(1) The insurance contract shall be deemed to be concluded only after an agreement in
writing between the insurer and the submitter of the insurance proposal regarding the
terms and conditions of the insurance contract has been reached.
(2) The insurance contract shall take effect on the day following the payment of the
insurance premium or part thereof specified by the insurance policy, in the manner,
time limit and amount specified by the insurance contract. The insurance contract may
contain other procedures for effecting the contract.
Article 8. Bad Faith or Gross Negligence
If the insurer has been misled in respect of facts necessary to assess the likelihood of
occurrence of the risk insured due to bad faith (Article 1641 of the Civil Law) or gross
negligence (Article 1645 of the Civil Law) of the policyholder or the insured, the
insurance contract shall be deemed to be null and void since the date of its conclusion.
The insurer shall not refund the insurance premium paid.
Article 9. Ordinary Negligence
(1) If the insurer has been misled in respect of facts necessary to assess the likelihood
of occurrence of the risk insured due to ordinary negligence of the policyholder or the
insured (Article 1646 of the Civil Law), the insurance contract shall stay in effect.
(2) Within a 15-day period as from the day the insurer learns about the actual
conditions of the risk insured, the insurer shall propose amendments to the terms and
conditions of the insurance contract to the policyholder in writing. Amendments to the
terms and conditions of the insurance contract shall take effect upon agreement by the
parties.
(3) If the policyholder refuses to accept the insurers offer to amend the insurance
contract or if 15 days have elapsed since the date of forwarding the insurers offer, the
insurer may unilaterally withdraw from the insurance contract. The insurer may
exercise this right within a 15-day period after the receipt of the refusal or the
expiration of the time limit for the offer. In that event, the insurer shall refund part of
the insurance premium to the policyholder. The amount to be refunded shall be
calculated by subtracting part of the insurance premium paid for the expired period of
cover as well as the insurers expenses (evidenced) arising from the conclusion of the
insurance contract, which shall not exceed twenty five per cent of the insurance
premium.
(4) If the insurer proves that, had it known about the actual conditions of the
likelihood of occurrence of the risk insured, it would not have concluded the
insurance contract, the insurer may terminate the insurance contract by notifying
thereof within a 15-day period as from the day the insurer learns about such
conditions. In case the insurance contract is terminated, the insurer shall refund part of
the insurance premium to the policyholder. The amount to be refunded shall be
calculated by subtracting part of the insurance premium paid for the expired period of
cover and the insurers expenses (evidenced) arising from the conclusion of the
insurance contract, which shall not exceed twenty five per cent of the insurance
premium.
(5) If the insurer has neither terminated the insurance contract nor proposed
amendments to the terms and conditions of the contract to the policyholder within the
time limit specified by law, the insurance contract shall stay in effect and, in the
future, the insurer may not terminate the insurance contract or amend its terms and
conditions by reason that the insurer was not notified of the actual conditions of the
likelihood of occurrence of the risk insured.
(6) If the policyholder has committed an act of ordinary negligence and the insured
event occurs before the termination of the insurance contract or amendments to the
terms and conditions thereof, the insurer is obliged to pay insurance indemnity in such
a proportion as exists between the paid insurance premium and the insurance premium
to be paid by the policyholder provided he/she had notified of the actual conditions of
the likelihood of occurrence of the risk insured.
(7) If the insurer proves that, had it known about the actual conditions of the
likelihood of occurrence of the insured risk, which have been discovered upon the
occurrence of the insured event, it would not have concluded the insurance contract,
the insurance indemnity shall not exceed the insurance premium paid.
(8) If conditions that could have affected the conclusion of the contract are discovered
after the conclusion of the insurance contract, and none of the parties have been aware
of them, Articles 15 and 16 of this Law shall apply.
Article 10. Absence of Insurable Interest
(1) If no insurable interest exists at the time of concluding the insurance contract, the insurance contract is considered to be null and void as from the date of its conclusion.
(2) If the insurance contract has been concluded in the absence of an insurable interest
due to the policyholder acting in bad faith or gross negligence, the insurer shall not
refund the insurance premium paid by the policyholder.
(3) In other cases, the insurer shall refund part of the insurance premium to the
policyholder. The amount to be refunded shall be calculated by subtracting part of the
premium for the expired period of cover and the insurers expenses (evidenced)
arising from the conclusion of the insurance contract, which shall not exceed twenty
five per cent of the insurance premium.
(4) If the insurable interest ceases to exist during the period of validity of the
insurance contract, the insurance contract shall be deemed to be null and void as from
the day the insurable interest ceases to exist. The policyholder shall inform the insurer
of the absence of the insurable interest in writing. The insurer shall refund part of the
insurance premium to the policyholder. The amount to be refunded shall be calculated
by subtracting part of the premium for the expired period of cover and insurers
expenses (evidenced) arising from the conclusion of the insurance contract, which
shall not exceed twenty five per cent of the insurance premium.
(5) If, upon occurrence of the insured event, the insurable interest does not exist, the
insurer shall refund part of the premium to the policyholder. The amount to be
refunded shall be calculated by subtracting part of the premium for the expired period
of cover and the insurers expenses (evidenced) arising from the conclusion of the
insurance contract, which shall not exceed twenty five per cent of the insurance
premium.
Article 11. Unlikelihood of the Occurrence of the Risk Insured
(1) If the likelihood of risk occurrence does not exist at the time the contract is
effected, or if the risk insured has already occurred, the insurance contract shall be
deemed to be null and void as from the date of conclusion of the contract.
(2) If, in the cases referred to in Paragraph one of this Article, the policyholder has
concluded the insurance contract in bad faith or has committed gross negligence,
when concluding the insurance contract, the insurer shall not refund the insurance
premium paid by the policyholder.
(3) In other cases, the insurer shall refund part of the insurance premium to the
policyholder. The amount to be refunded shall be calculated by subtracting insurers
expenses (evidenced) arising from the conclusion of the insurance contract, which
shall not exceed twenty five per cent of the insurance premium.
(4) If the likelihood of occurrence of the insured risk ceases to exist during the period
of cover, the insurance contract shall be deemed to be null and void as from the date
the likelihood of risk occurrence ceases to exist. The insurer shall refund part of the
insurance premium to the policyholder. The amount to be refunded shall be calculated
by subtracting part of the insurance premium for the expired period of cover and insurers expenses (evidenced) relating the conclusion of the insurance contract,
which shall not exceed twenty five per cent of the insurance premium.
Article 12. Excluded Risks
(1) The insurer shall not be liable for losses incurred due to war, riot, radioactive
contamination, radioactive pollution, natural catastrophes and similar events stated in
the insurance policy unless otherwise stated by the insurance contract.
(2) Losses incurred due to wear and tear, depreciation or similar processes shall not be
insured.
(3) Parties to the insurance contract may specify other excluded risks in the insurance
contract.
(4) The insurer is obliged to have proof of any circumstances that release him/her of
the liability stated in the insurance contract due to the occurrence of the excluded
risks.
Article 13. Insurance Policy
(1) The insurance policy shall indicate the general and special terms and conditions of
the insurance contract.
(2) The insurance policy and amendments thereof shall be signed by the insurer and
the policyholder or persons authorised by them.
Chapter III
INCREASE AND DECREASE OF THE LIKELIHOOD OF OCCURRENCE OF
THE RISK INSURED
Article 14. Changes in the Initial Information
(1) During the validity of the insurance contract, the insured or the policyholder
(except in persons life and health insurance) is obliged to in accordance with Article
5 of this Law inform the insurer in writing as soon as possible of all known facts that
may considerably increase the likelihood of risk occurrence or the amount of possible
loss.
(2) Before the conclusion of the insurance contract and during the period of validity of
the contract, the insurer is entitled to inspect the insured object, as stated in the
insurance contract, to ensure that the initial information has not changed.
[1 June 2000]
Article 15. Decrease in the Likelihood of Risk Occurrence
(1) The insurer shall introduce amendments to the terms and conditions of the
insurance contract or conclude another insurance contract if the likelihood of risk
occurrence or the amount of possible loss has decreased considerably and if required
by the insured or the policyholder in writing.
(2) If the parties to the insurance contract cannot agree upon new terms and conditions
of the insurance contract within a 15-day period after the policyholder or the insured
has submitted a written request to amend the terms and conditions of the insurance
contract due to the decrease in the likelihood of risk occurrence, the policyholder may
terminate the insurance contract. In that event, the insurer shall refund part of the
insurance premium to the policyholder. The amount to be refunded shall be calculated
by subtracting part of the premium for the expired period of cover up to the
termination of the insurance contract as well as the insurers expenses (evidenced)
arising from the conclusion of the insurance contract, which shall not exceed twenty
five per cent of the insurance premium.
Article 16. Increase in the Likelihood of Risk Occurrence
(1) If an increase in the likelihood of risk occurrence has taken place during the period
of validity of the contract and if the insurer can prove that, had it known about the
increase upon the conclusion of the contract, it would have included different terms
and conditions in the insurance contract, the insurer (except in life and health
insurance), within a 15-day period as from the day the insurer learns about the
increase in the likelihood of occurrence of the risk insured, may propose amendments
to the insurance contract to the policyholder in writing and indicate the date on which
they take effect.
(2) If an increase in the likelihood of risk occurrence has taken place during the period
of validity of the contract and if the insurer can prove that, had it known about the
increase upon the conclusion of the contract, it would not have concluded the
insurance contract, the insurer (except in life and health insurance) may terminate the
insurance contract by notifying the policyholder thereof in writing. In that event, the
insurer shall refund part of the insurance premium to the policyholder. The amount to
be refunded shall be calculated by subtracting part of the premium for the expired
period of cover and the insurers expenses (evidenced) arising from the conclusion of
the insurance contract, which shall not exceed twenty five per cent of the insurance
premium.
(3) If the policyholder refuses to accept amendments to the terms and conditions of
the insurance contract as proposed by the insurer in writing, or if the 15-day term of
the insurers offer has expired and the offer has not been accepted, the insurer may
terminate the insurance contract. The insurer may exercise this right within a 15-day
period after the date of receipt of the refusal or after expiry of the term for the offer.
In that event, the insurer shall refund part of the insurance premium to the
policyholder. The amount to be refunded shall be calculated by subtracting part of the
premium for the expired period of cover and the insurers expenses (evidenced) arising from the conclusion of the insurance contract, which shall not exceed twenty
five per cent of the insurance premium.
(4) If the insurer has neither terminated the insurance contract nor proposed
amendments to the terms and conditions of the insurance contract in writing to the
policyholder within the time limit specified by this Law, in the future, the insurer may
not terminate the contract or amend its terms and conditions by reason that the
increase in the actual likelihood of occurrence of the risk insured has not been
notified.
(5) If the insured event occurs before making amendments to the terms and conditions
of the insurance contract or before the termination of the contract and the insured or
the policyholder has met the requirements set out in Article 14 of this Law, the insurer
shall pay the insurance indemnity as stated in the contract.
(6) If the insured event occurs before making amendments to the terms and conditions
of the insurance contract or before the termination of the contract and the insured or
the policyholder has not met the requirements set out in Article 14 of this Law, the
insurer shall:
1) pay the indemnity as stated in the insurance contract, provided the insured or the
policyholder cannot be considered at fault in not notifying of the increase in the
likelihood of risk occurrence;
2) pay the indemnity as stated in the insurance contract, based on such a proportion as
exists between the paid insurance premium and the insurance premium to be paid by
the policyholder, provided he/she had notified of the actual conditions of the increase
in the likelihood of risk occurrence provided the reason for not notifying of this
increase is the policyholders ordinary negligence.
(7) If the insured or the policyholder has not complied with the requirements of
Article 14 of this Law due to bad faith or gross negligence, the insurer is entitled not
to pay the indemnity. In that event, the insurer may terminate the insurance contract
and retain the paid insurance premium.
(8) If the insured or the policyholder has acted in bad faith or with gross negligence,
which has increased the likelihood of occurrence of the risk insured, the insurer is
entitled to terminate the insurance contract and retain the paid insurance premium.
Chapter IV
DUTIES OF THE INSURED, POLICYHOLDER, BENEFICIARY AND INSURER
Article 17. Mutual Duties of the Policyholder and the Insured
(1) If the policyholder and the insured is not the same person, their mutual duties shall
be specified in compliance with this Law and the insurance contract.
(2) The policyholder is obliged to inform the insured of the fact that he/she is being insured.
(3) The insured is entitled to require information concerning the insurance contract
from the policyholder, and the policyholder is not entitled to refuse to provide such
information.
Article 18. Insurance Premium Payments
(1) The policyholder is obliged to pay insurance premiums in the manner, time and
amount as stated in the insurance contract.
(2) The insurer is entitled to terminate the insurance contract pursuant to the
procedures specified by Article 19 of this Law if the policyholder has not paid the
insurance premium in compliance with the terms and conditions of the insurance
contract.
Article 19. Incomplete Premium Payments
(1) If contrary to the terms and conditions of the insurance contract the insurance
premium payment is not paid in full, the insurer may suspend the insurance contract
until the insurance premium is paid in full. When suspending the insurance contract,
the insurer shall temporarily suspend its obligations.
(2) Prior to suspending the insurance contract, the insurer shall notify the policyholder
in writing of the incomplete premium payment and invite him/her to pay the
remaining part of the premium in compliance with the insurance contract, indicating
the time limit for its payment and the consequences of its non-payment. The insurance
contract shall be suspended on the day following the notification in writing.
(3) The time limit for its payment, as indicated in the notification by the insurer, may
not be less than 15 days as from the date of forwarding the notification.
(4) The suspension of the insurance contract shall cease at the moment the insurance
premium, as stated in the notification by the insurer, is paid.
(5) If the policyholder does not pay the insurance premium in due time and amount, as
stated in the notification by the insurer, the insurer has the right to terminate the
insurance contract and retain the paid insurance premium.
(6) The conditions of this Article, as far as the suspension of the insurance contract is
concerned, shall not apply to insurance contracts in which the payment schedule of
insurance premiums has not been defined precisely.
Article 20. Consequences Arising from the Suspension of the Insurance Contract
The suspension of the insurance contract shall not affect the insurers right to require
the insurance premium or part thereof according to the insurance contract. The period of suspension of the insurance contract may last up to 6 months as from the date of
suspending the insurance contract.
Article 21. Duties of the Insured After Occurrence of the Risk Insured
(1) The insured shall inform the insurer of the occurrence of the insured event as soon
as possible and shall act in all possible and reasonable ways to reduce the loss.
(2) The insured may not object to the insurers requirement to determine and assess
the amount of loss and circumstances causing the loss, and the insured shall submit to
the insurer all the documents possessed by him/her, describing the occurrence of the
insured risk and the loss incurred. The insured shall also provide other information
possessed by him/her which is required by the insurer and fulfil other duties, as stated
in the insurance contract.
Article 22. Consequences of Failing to Fulfil Duties of the Insured
(1) If the insured has not fulfilled any of the duties set out in Article 21 of this Law
due to bad faith or gross negligence, the insurer is entitled to refuse to pay the
insurance indemnity.
(2) The insurer may reduce the indemnity, but not more than 50%, if the insured has
not fulfilled any of the duties set out in Article 21 of this Law due to ordinary
negligence.
Article 23. Salvage Expenses
(1) The insurer shall cover all such declared and evidenced reasonable expenses
claimed by the insured as have arisen from measures for the immediate prevention
and reduction of damage taken upon the initiative of the insured or at the request of
the insurer, even if such measures have not been successful.
(2) Salvage expenses may not exceed the insurance indemnity amount unless
otherwise stated by the insurance contract.
Article 24. Insurers Duty to Pay the Indemnity
(1) Upon the occurrence of the insured event, the insurer shall pay the indemnity to
the person stated in the insurance contract.
(2) The insurer has no right to:
1) refuse or affirm a claim submitted on the basis of an insurance contract without
ensuring that the insured event has occurred;
2) refuse to pay the indemnity without checking all the available information;
3) refuse to pay the indemnity in due time as stated in the insurance contract if the
evidence certifying the occurrence of the insured event has been received;
4) pay the indemnity if the insured event has been caused by the insured,
policyholder, beneficiary or third person acting in bad faith. In that event, the insurer
shall not refund the paid premium.
(3) The insurers duty is to pay the indemnity if the insured event has been caused by
the insured, policyholder, beneficiary or third person committing ordinary negligence
and if it does not contradict the insurance contract.
(4) Following a mutual agreement between the parties, the insurer may pay part of the
indemnity before the full assessment of the loss in such an amount as accepted by all
the parties.
(5) After the occurrence of the risk insured, the insurer has the right to verify whether
the insured or the policyholder has complied with the terms and conditions of the
insurance contract.
(6) The insurer is obliged to have proof of any circumstances that release him/her of
the obligation stated in the insurance contract to pay the insurance indemnity.
(7) If the insurer takes a decision to refuse to pay the insurance indemnity, it shall
forward reasoned notification in writing to the insurance policyholder and the insured
of the refusal to pay insurance indemnity.
[24 October 2002]
Section 24
The web site itself may have changed. You can check the current page or check for previous versions at the Internet Archive. Yahoo! is not affiliated with the authors of this page or responsible for its content. The Insurance Contract Law - Latvia Unofficial translation
The Saeima 1 has adopted
and the President has proclaimed the following Law:
THE INSURANCE CONTRACT LAW
Chapter I GENERAL PROVISIONS
Article 1. Definitions
1) sum insured - the amount of money specified in the insurance contract and
covering material values or interests in loss and damage insurance; a persons life,
health or physical condition in personal insurance; the limit of liability in liability
insurance;
2) insurable interest the interest not to suffer loss upon the occurrence of the risk
insured;
3) insurance indemnity the sum insured, part thereof or any other amount paid for
the insured event or services to be provided in compliance with the insurance
contract;
4) insured event - an event that has a causal relationship with the risk insured, upon
the occurrence of which the insurance indemnity is due in compliance with the
insurance contract;
5) insurance contract an agreement between an insurer and a policyholder according
to which the policyholder undertakes to pay an insurance premium in the manner,
time and amount specified by the insurance contract as well as to meet other
obligations under the contract and the insurer undertakes to pay the insurance
indemnity to the person stated in the contract upon the occurrence of the insured event
in compliance with the insurance contract;
6) policyholder - a legal entity or an individual concluding the insurance contract in
favour of itself or another person;
7) insurance object:
a) in loss and damage insurance - material values or interests;
b) in liability insurance - the civil liability of a person;
1 The Parliament of the Republic of Latvia. c) in personal insurance a persons life, health or physical condition;
8) insurance proposal - a document specified by the insurer which is submitted to the
insurer by the policyholder to inform the insurer of the insurance object, facts and
conditions required for the evaluation of the insured risk;
9) insurance policy - a document that certifies the conclusion of the insurance contract
and contains the terms and conditions of the insurance contract as well as all
amendments and supplements to this contract, as agreed between the insurer and the
policyholder during the period of validity of the insurance contract;
10) loss and damage insurance - insurance that covers material values or interests and
the amount of the payable insurance indemnity is dependent on the amount of
material losses suffered by the insured;
11) insurance premium a payment for the cover as stated in the insurance policy;
12) insured - a legal entity or an individual having an insurable interest and in favour
of whom the insurance contract has been concluded.
a) in loss and damage insurance - the person stated in the insurance policy to whom
the payment of the insurance indemnity in the event of material losses or damage is
envisaged,
b) in liability insurance - the person stated in the insurance policy whose civil liability
is insured,
c) in personal insurance - the individual stated in the insurance policy whose life,
health or physical condition has been covered by the insurance contract;
13) risk insured - an event envisaged in the insurance policy, the occurrence of which
is not dependent on the will of the insured and the occurrence of which is possible in
the future;
14) [Deleted by Law of 24 October 2002]
15) liability limit - the maximum amount of money paid in liability insurance;
16) liability insurance - insurance covering a persons civil liability for the loss
incurred by the third person as a result of the persons activity or failure to act;
17) gratuities (bonuses) in life insurance: an increase in the sum insured and a
decrease in the insurance premium depending on the results of financial activities of
the insurance company;
18) beneficiary - in personal insurance: an individual to whom the insurance
indemnity is to be paid in compliance with the insurance contract;
19) coinsurance an agreement by several insurers to insure the same insurance
object under a single insurance contract;
20) personal insurance the insurance of an individuals life, health or physical
condition;
21) third person - in liability insurance: the person for whom the insurance indemnity
payment is envisaged.
22) surrender value a sum of money, the amount and calculation of which is laid
down in the life insurance contract, paid to the policyholder if the insurance contract
is terminated before its expiration date by the policyholder.
[1 June 2000; 24 October 2002]
Article 2. Scope of Application of this Law
(1) This Law shall apply to all insurance contracts unless otherwise provided by law.
This Law shall not apply to State social insurance and reinsurance.
(2) When concluding an insurance contract, parties to the contract are entitled to agree
on the application of the relevant laws of any country to the regulation of their
contractual relations arising out of the insurance contract unless otherwise provided
by this Law.
(3) The insurance contract concluded shall clearly and comprehensibly indicate the
law applicable by the parties to the regulation of their contractual relations arising out
of the insurance contract.
(4) If the insurance contract concluded does not indicate the law applicable by the
parties to the regulation of their contractual relations, this Law shall apply.
(5) If an insurance object related to an insured risk is situated in a European Union
Member State or a European Economic Area State, the insurance contract shall
comply with the provisions of international private law and the parties are entitled to
apply the following laws to the regulation of their contractual relations:
1) the law of the country in which the insurance object related to the insured risk is situated;
2) the law of the country in which the insurance object related to the insured risk is situated where the policyholder has its habitual residence or central
administration in the same country; 3) at the choice of the parties to the insurance contract the law of the country in which the insurance object related to the insured risk is situated, or the law of
the country in which the policyholder has its habitual residence or central
administration (where the policyholder has its habitual residence or central
administration in another country); 4) at the choice of the parties to the insurance contract the law of the country in which the insurance object related to the risk insured is situated, or the law of the country in which the policyholder has its habitual residence or quarters of
its professional activities (practice) [where the policyholder acts in two or
more countries, or is a self-employed person, or the insurance contract
includes two or more insured risks related to the activity or profession
(occupation) of the policyholder and the insurance objects related to the risks
insured are situated in two or more countries]; 5) the law of the country of which the policyholder is a national (where the policyholder is an individual who permanently resides abroad); 6) the law of any European Union Member State or European Economic Area State where the insurance contract covers the large risks specified by the said
law.
(6) In the case of compulsory insurance, the insurance contract shall include the
requirements prescribed for the relevant class of insurance by regulatory enactments
of the country in which this insurance is compulsory.
(7) Prior to entering into the insurance contract, the insurer is obliged to notify the
policyholder of the law applicable to the regulation of the contractual relations arising
out of the insurance contract.
Article 3. Procedures for Resolution of Disputes
(1) Disputes related to insurance contracts shall be resolved in accordance with the
procedures prescribed by laws and other regulatory enactments.
(2) Upon agreement by the parties, disputes may be resolved by arbitration court.
(3) Prior to entering into the insurance contract, the insurer is obliged to notify the
policyholder individual of the procedures for out-of-court settlement of
complaints and disputes arising out of the insurance contract.
[24 October 2002]
Chapter II
CONCLUDING THE INSURANCE CONTRACT
Article 4. Insurance Proposal and Insurers Offer
(1) For the purpose of concluding the insurance contract, the insurer is entitled to
request an insurance proposal from the policyholder.
(2) The insurance proposal shall not impose a duty either on the insurer to conclude
an insurance contract or cover losses incurred by the submitter of the insurance
proposal or on the submitter of the insurance proposal to assume any liabilities.
(3). If, within 15 days after the receipt of the insurance proposal, the insurer has
neither informed in writing the submitter of the insurance proposal of the insurance conditions upon which the insurer is prepared to conclude the insurance contract, nor
stated the necessity to perform a pre-insurance inspection, it shall be deemed that the
insurer has refused to conclude the insurance contract.
(4) If the insurer has specified a particular time limit for providing an answer to its
offer, the insurer has no right to remove its offer until the end of the specified time
limit. If such a time limit has not been specified, the insurer has the right to remove its
offer if the other party has neither accepted nor refused to accept the offer within a 30-
day period.
Article 5. Initial Information Regarding the Risk Insured
(1) Upon the conclusion of the insurance contract, the policyholder and the insured
are obliged to provide all the information requested by the insurer regarding
conditions that the insurer needs for assessing the likelihood of occurrence of the risk
insured and that is essential for concluding the insurance agreement.
(2) The policyholder and the insured are responsible for the truthfulness of the
information provided.
(3) If the policyholder or the insured has not provided the information requested by
the insurer in writing prior to the conclusion of the insurance contract and if the
insurer has concluded the insurance contract, the latter may not terminate the
insurance contract or alter its terms and conditions due to the fact that information has
not been provided, except in cases where the information has not been provided in
bad faith or due to gross negligence.
(4) The policyholder and the insured are obliged to inform the insurer of other valid
insurance contracts covering the same insurance object they have the knowledge of.
Article 6. General and Special Terms and Conditions of the Insurance Contract
(1) General and special terms and conditions of the insurance contract shall be clear
and understandable.
(2) The insurance contract shall indicate the place and date of conclusion of the
contract, the start date and expiration date of the contract, information concerning the
insurer and the insured (if the latter is not also the policyholder) and the policyholder,
the risk insured, the insurance object, the sum insured, the insurance premium,
procedures and due dates for premium payments, the recipient of the insurance
indemnity, the time limit for taking a decision regarding the insurance indemnity
payment or refusal to pay such indemnity, the conditions for termination of the
contract, duties of the parties, their responsibility for the failure to meet the terms and
conditions of the contract, the procedure for dispute resolution.
(3) The insurance contract may also include other terms and conditions that comply
with this Law and the general business conditions provided for by the Civil Law as
well as terms and conditions specific to the contract affecting the interests of the
policyholder or the insured.
(4) Throughout the duration of the insurance contract, the insurer shall, without delay,
notify the policyholder and the insured (where the insured is not also the
policyholder) of any changes in the insurers telephone number, contact address and
contact persons and similar information that is necessary for the policyholder (the
insured) to meet his/her contractual liabilities.
[1 June 2000; 24 October 2002]
Article 6 1 . Language of the Insurance Contract
(1) The insurance contract shall be drawn up and entered into in the official language.
(2) If the policyholder wishes to conclude the insurance contract in a foreign
language, such a wish of the policyholder shall be explicitly stated in the insurance
contract.
[24 October 2002]
Article 7. Conclusion of the Insurance Contract and Its Coming into Effect
(1) The insurance contract shall be deemed to be concluded only after an agreement in
writing between the insurer and the submitter of the insurance proposal regarding the
terms and conditions of the insurance contract has been reached.
(2) The insurance contract shall take effect on the day following the payment of the
insurance premium or part thereof specified by the insurance policy, in the manner,
time limit and amount specified by the insurance contract. The insurance contract may
contain other procedures for effecting the contract.
Article 8. Bad Faith or Gross Negligence
If the insurer has been misled in respect of facts necessary to assess the likelihood of
occurrence of the risk insured due to bad faith (Article 1641 of the Civil Law) or gross
negligence (Article 1645 of the Civil Law) of the policyholder or the insured, the
insurance contract shall be deemed to be null and void since the date of its conclusion.
The insurer shall not refund the insurance premium paid.
Article 9. Ordinary Negligence
(1) If the insurer has been misled in respect of facts necessary to assess the likelihood
of occurrence of the risk insured due to ordinary negligence of the policyholder or the
insured (Article 1646 of the Civil Law), the insurance contract shall stay in effect.
(2) Within a 15-day period as from the day the insurer learns about the actual
conditions of the risk insured, the insurer shall propose amendments to the terms and
conditions of the insurance contract to the policyholder in writing. Amendments to the
terms and conditions of the insurance contract shall take effect upon agreement by the
parties.
(3) If the policyholder refuses to accept the insurers offer to amend the insurance
contract or if 15 days have elapsed since the date of forwarding the insurers offer, the
insurer may unilaterally withdraw from the insurance contract. The insurer may
exercise this right within a 15-day period after the receipt of the refusal or the
expiration of the time limit for the offer. In that event, the insurer shall refund part of
the insurance premium to the policyholder. The amount to be refunded shall be
calculated by subtracting part of the insurance premium paid for the expired period of
cover as well as the insurers expenses (evidenced) arising from the conclusion of the
insurance contract, which shall not exceed twenty five per cent of the insurance
premium.
(4) If the insurer proves that, had it known about the actual conditions of the
likelihood of occurrence of the risk insured, it would not have concluded the
insurance contract, the insurer may terminate the insurance contract by notifying
thereof within a 15-day period as from the day the insurer learns about such
conditions. In case the insurance contract is terminated, the insurer shall refund part of
the insurance premium to the policyholder. The amount to be refunded shall be
calculated by subtracting part of the insurance premium paid for the expired period of
cover and the insurers expenses (evidenced) arising from the conclusion of the
insurance contract, which shall not exceed twenty five per cent of the insurance
premium.
(5) If the insurer has neither terminated the insurance contract nor proposed
amendments to the terms and conditions of the contract to the policyholder within the
time limit specified by law, the insurance contract shall stay in effect and, in the
future, the insurer may not terminate the insurance contract or amend its terms and
conditions by reason that the insurer was not notified of the actual conditions of the
likelihood of occurrence of the risk insured.
(6) If the policyholder has committed an act of ordinary negligence and the insured
event occurs before the termination of the insurance contract or amendments to the
terms and conditions thereof, the insurer is obliged to pay insurance indemnity in such
a proportion as exists between the paid insurance premium and the insurance premium
to be paid by the policyholder provided he/she had notified of the actual conditions of
the likelihood of occurrence of the risk insured.
(7) If the insurer proves that, had it known about the actual conditions of the
likelihood of occurrence of the insured risk, which have been discovered upon the
occurrence of the insured event, it would not have concluded the insurance contract,
the insurance indemnity shall not exceed the insurance premium paid.
(8) If conditions that could have affected the conclusion of the contract are discovered
after the conclusion of the insurance contract, and none of the parties have been aware
of them, Articles 15 and 16 of this Law shall apply.
Article 10. Absence of Insurable Interest
(1) If no insurable interest exists at the time of concluding the insurance contract, the insurance contract is considered to be null and void as from the date of its conclusion.
(2) If the insurance contract has been concluded in the absence of an insurable interest
due to the policyholder acting in bad faith or gross negligence, the insurer shall not
refund the insurance premium paid by the policyholder.
(3) In other cases, the insurer shall refund part of the insurance premium to the
policyholder. The amount to be refunded shall be calculated by subtracting part of the
premium for the expired period of cover and the insurers expenses (evidenced)
arising from the conclusion of the insurance contract, which shall not exceed twenty
five per cent of the insurance premium.
(4) If the insurable interest ceases to exist during the period of validity of the
insurance contract, the insurance contract shall be deemed to be null and void as from
the day the insurable interest ceases to exist. The policyholder shall inform the insurer
of the absence of the insurable interest in writing. The insurer shall refund part of the
insurance premium to the policyholder. The amount to be refunded shall be calculated
by subtracting part of the premium for the expired period of cover and insurers
expenses (evidenced) arising from the conclusion of the insurance contract, which
shall not exceed twenty five per cent of the insurance premium.
(5) If, upon occurrence of the insured event, the insurable interest does not exist, the
insurer shall refund part of the premium to the policyholder. The amount to be
refunded shall be calculated by subtracting part of the premium for the expired period
of cover and the insurers expenses (evidenced) arising from the conclusion of the
insurance contract, which shall not exceed twenty five per cent of the insurance
premium.
Article 11. Unlikelihood of the Occurrence of the Risk Insured
(1) If the likelihood of risk occurrence does not exist at the time the contract is
effected, or if the risk insured has already occurred, the insurance contract shall be
deemed to be null and void as from the date of conclusion of the contract.
(2) If, in the cases referred to in Paragraph one of this Article, the policyholder has
concluded the insurance contract in bad faith or has committed gross negligence,
when concluding the insurance contract, the insurer shall not refund the insurance
premium paid by the policyholder.
(3) In other cases, the insurer shall refund part of the insurance premium to the
policyholder. The amount to be refunded shall be calculated by subtracting insurers
expenses (evidenced) arising from the conclusion of the insurance contract, which
shall not exceed twenty five per cent of the insurance premium.
(4) If the likelihood of occurrence of the insured risk ceases to exist during the period
of cover, the insurance contract shall be deemed to be null and void as from the date
the likelihood of risk occurrence ceases to exist. The insurer shall refund part of the
insurance premium to the policyholder. The amount to be refunded shall be calculated
by subtracting part of the insurance premium for the expired period of cover and insurers expenses (evidenced) relating the conclusion of the insurance contract,
which shall not exceed twenty five per cent of the insurance premium.
Article 12. Excluded Risks
(1) The insurer shall not be liable for losses incurred due to war, riot, radioactive
contamination, radioactive pollution, natural catastrophes and similar events stated in
the insurance policy unless otherwise stated by the insurance contract.
(2) Losses incurred due to wear and tear, depreciation or similar processes shall not be
insured.
(3) Parties to the insurance contract may specify other excluded risks in the insurance
contract.
(4) The insurer is obliged to have proof of any circumstances that release him/her of
the liability stated in the insurance contract due to the occurrence of the excluded
risks.
Article 13. Insurance Policy
(1) The insurance policy shall indicate the general and special terms and conditions of
the insurance contract.
(2) The insurance policy and amendments thereof shall be signed by the insurer and
the policyholder or persons authorised by them.
Chapter III
INCREASE AND DECREASE OF THE LIKELIHOOD OF OCCURRENCE OF
THE RISK INSURED
Article 14. Changes in the Initial Information
(1) During the validity of the insurance contract, the insured or the policyholder
(except in persons life and health insurance) is obliged to in accordance with Article
5 of this Law inform the insurer in writing as soon as possible of all known facts that
may considerably increase the likelihood of risk occurrence or the amount of possible
loss.
(2) Before the conclusion of the insurance contract and during the period of validity of
the contract, the insurer is entitled to inspect the insured object, as stated in the
insurance contract, to ensure that the initial information has not changed.
[1 June 2000]
Article 15. Decrease in the Likelihood of Risk Occurrence
(1) The insurer shall introduce amendments to the terms and conditions of the
insurance contract or conclude another insurance contract if the likelihood of risk
occurrence or the amount of possible loss has decreased considerably and if required
by the insured or the policyholder in writing.
(2) If the parties to the insurance contract cannot agree upon new terms and conditions
of the insurance contract within a 15-day period after the policyholder or the insured
has submitted a written request to amend the terms and conditions of the insurance
contract due to the decrease in the likelihood of risk occurrence, the policyholder may
terminate the insurance contract. In that event, the insurer shall refund part of the
insurance premium to the policyholder. The amount to be refunded shall be calculated
by subtracting part of the premium for the expired period of cover up to the
termination of the insurance contract as well as the insurers expenses (evidenced)
arising from the conclusion of the insurance contract, which shall not exceed twenty
five per cent of the insurance premium.
Article 16. Increase in the Likelihood of Risk Occurrence
(1) If an increase in the likelihood of risk occurrence has taken place during the period
of validity of the contract and if the insurer can prove that, had it known about the
increase upon the conclusion of the contract, it would have included different terms
and conditions in the insurance contract, the insurer (except in life and health
insurance), within a 15-day period as from the day the insurer learns about the
increase in the likelihood of occurrence of the risk insured, may propose amendments
to the insurance contract to the policyholder in writing and indicate the date on which
they take effect.
(2) If an increase in the likelihood of risk occurrence has taken place during the period
of validity of the contract and if the insurer can prove that, had it known about the
increase upon the conclusion of the contract, it would not have concluded the
insurance contract, the insurer (except in life and health insurance) may terminate the
insurance contract by notifying the policyholder thereof in writing. In that event, the
insurer shall refund part of the insurance premium to the policyholder. The amount to
be refunded shall be calculated by subtracting part of the premium for the expired
period of cover and the insurers expenses (evidenced) arising from the conclusion of
the insurance contract, which shall not exceed twenty five per cent of the insurance
premium.
(3) If the policyholder refuses to accept amendments to the terms and conditions of
the insurance contract as proposed by the insurer in writing, or if the 15-day term of
the insurers offer has expired and the offer has not been accepted, the insurer may
terminate the insurance contract. The insurer may exercise this right within a 15-day
period after the date of receipt of the refusal or after expiry of the term for the offer.
In that event, the insurer shall refund part of the insurance premium to the
policyholder. The amount to be refunded shall be calculated by subtracting part of the
premium for the expired period of cover and the insurers expenses (evidenced) arising from the conclusion of the insurance contract, which shall not exceed twenty
five per cent of the insurance premium.
(4) If the insurer has neither terminated the insurance contract nor proposed
amendments to the terms and conditions of the insurance contract in writing to the
policyholder within the time limit specified by this Law, in the future, the insurer may
not terminate the contract or amend its terms and conditions by reason that the
increase in the actual likelihood of occurrence of the risk insured has not been
notified.
(5) If the insured event occurs before making amendments to the terms and conditions
of the insurance contract or before the termination of the contract and the insured or
the policyholder has met the requirements set out in Article 14 of this Law, the insurer
shall pay the insurance indemnity as stated in the contract.
(6) If the insured event occurs before making amendments to the terms and conditions
of the insurance contract or before the termination of the contract and the insured or
the policyholder has not met the requirements set out in Article 14 of this Law, the
insurer shall:
1) pay the indemnity as stated in the insurance contract, provided the insured or the
policyholder cannot be considered at fault in not notifying of the increase in the
likelihood of risk occurrence;
2) pay the indemnity as stated in the insurance contract, based on such a proportion as
exists between the paid insurance premium and the insurance premium to be paid by
the policyholder, provided he/she had notified of the actual conditions of the increase
in the likelihood of risk occurrence provided the reason for not notifying of this
increase is the policyholders ordinary negligence.
(7) If the insured or the policyholder has not complied with the requirements of
Article 14 of this Law due to bad faith or gross negligence, the insurer is entitled not
to pay the indemnity. In that event, the insurer may terminate the insurance contract
and retain the paid insurance premium.
(8) If the insured or the policyholder has acted in bad faith or with gross negligence,
which has increased the likelihood of occurrence of the risk insured, the insurer is
entitled to terminate the insurance contract and retain the paid insurance premium.
Chapter IV
DUTIES OF THE INSURED, POLICYHOLDER, BENEFICIARY AND INSURER
Article 17. Mutual Duties of the Policyholder and the Insured
(1) If the policyholder and the insured is not the same person, their mutual duties shall
be specified in compliance with this Law and the insurance contract.
(2) The policyholder is obliged to inform the insured of the fact that he/she is being insured.
(3) The insured is entitled to require information concerning the insurance contract
from the policyholder, and the policyholder is not entitled to refuse to provide such
information.
Article 18. Insurance Premium Payments
(1) The policyholder is obliged to pay insurance premiums in the manner, time and
amount as stated in the insurance contract.
(2) The insurer is entitled to terminate the insurance contract pursuant to the
procedures specified by Article 19 of this Law if the policyholder has not paid the
insurance premium in compliance with the terms and conditions of the insurance
contract.
Article 19. Incomplete Premium Payments
(1) If contrary to the terms and conditions of the insurance contract the insurance
premium payment is not paid in full, the insurer may suspend the insurance contract
until the insurance premium is paid in full. When suspending the insurance contract,
the insurer shall temporarily suspend its obligations.
(2) Prior to suspending the insurance contract, the insurer shall notify the policyholder
in writing of the incomplete premium payment and invite him/her to pay the
remaining part of the premium in compliance with the insurance contract, indicating
the time limit for its payment and the consequences of its non-payment. The insurance
contract shall be suspended on the day following the notification in writing.
(3) The time limit for its payment, as indicated in the notification by the insurer, may
not be less than 15 days as from the date of forwarding the notification.
(4) The suspension of the insurance contract shall cease at the moment the insurance
premium, as stated in the notification by the insurer, is paid.
(5) If the policyholder does not pay the insurance premium in due time and amount, as
stated in the notification by the insurer, the insurer has the right to terminate the
insurance contract and retain the paid insurance premium.
(6) The conditions of this Article, as far as the suspension of the insurance contract is
concerned, shall not apply to insurance contracts in which the payment schedule of
insurance premiums has not been defined precisely.
Article 20. Consequences Arising from the Suspension of the Insurance Contract
The suspension of the insurance contract shall not affect the insurers right to require
the insurance premium or part thereof according to the insurance contract. The period of suspension of the insurance contract may last up to 6 months as from the date of
suspending the insurance contract.
Article 21. Duties of the Insured After Occurrence of the Risk Insured
(1) The insured shall inform the insurer of the occurrence of the insured event as soon
as possible and shall act in all possible and reasonable ways to reduce the loss.
(2) The insured may not object to the insurers requirement to determine and assess
the amount of loss and circumstances causing the loss, and the insured shall submit to
the insurer all the documents possessed by him/her, describing the occurrence of the
insured risk and the loss incurred. The insured shall also provide other information
possessed by him/her which is required by the insurer and fulfil other duties, as stated
in the insurance contract.
Article 22. Consequences of Failing to Fulfil Duties of the Insured
(1) If the insured has not fulfilled any of the duties set out in Article 21 of this Law
due to bad faith or gross negligence, the insurer is entitled to refuse to pay the
insurance indemnity.
(2) The insurer may reduce the indemnity, but not more than 50%, if the insured has
not fulfilled any of the duties set out in Article 21 of this Law due to ordinary
negligence.
Article 23. Salvage Expenses
(1) The insurer shall cover all such declared and evidenced reasonable expenses
claimed by the insured as have arisen from measures for the immediate prevention
and reduction of damage taken upon the initiative of the insured or at the request of
the insurer, even if such measures have not been successful.
(2) Salvage expenses may not exceed the insurance indemnity amount unless
otherwise stated by the insurance contract.
Article 24. Insurers Duty to Pay the Indemnity
(1) Upon the occurrence of the insured event, the insurer shall pay the indemnity to
the person stated in the insurance contract.
(2) The insurer has no right to:
1) refuse or affirm a claim submitted on the basis of an insurance contract without
ensuring that the insured event has occurred;
2) refuse to pay the indemnity without checking all the available information;
3) refuse to pay the indemnity in due time as stated in the insurance contract if the
evidence certifying the occurrence of the insured event has been received;
4) pay the indemnity if the insured event has been caused by the insured,
policyholder, beneficiary or third person acting in bad faith. In that event, the insurer
shall not refund the paid premium.
(3) The insurers duty is to pay the indemnity if the insured event has been caused by
the insured, policyholder, beneficiary or third person committing ordinary negligence
and if it does not contradict the insurance contract.
(4) Following a mutual agreement between the parties, the insurer may pay part of the
indemnity before the full assessment of the loss in such an amount as accepted by all
the parties.
(5) After the occurrence of the risk insured, the insurer has the right to verify whether
the insured or the policyholder has complied with the terms and conditions of the
insurance contract.
(6) The insurer is obliged to have proof of any circumstances that release him/her of
the obligation stated in the insurance contract to pay the insurance indemnity.
(7) If the insurer takes a decision to refuse to pay the insurance indemnity, it shall
forward reasoned notification in writing to the insurance policyholder and the insured
of the refusal to pay insurance indemnity.
[24 October 2002]
Section 24
