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Compulsory real property insurance

Compulsory real property insurance

     The relations associated with the compulsory real property insurance are regulated by Chapter I of the Special Part of the Law of the Republic of Azerbaijan on Compulsory Insurance. Compulsory real property insurance is used for the purpose of compensating losses that may be caused by damages, destruction or any kind of loss of the real property because of fire or other similar circumstances.
   For the aforementioned purpose, the insurance of constructions, residential and non-residential premises, residential houses, buildings and apartments (flats), as well as of the state property the list of which is determined by the relevant executive authority is compulsory.
    Compulsory insurance related to residential buildings, residential houses and apartments (flats) is designated to provide compensation for damages caused to constructive elements, rooms, door and window elements, including glass, piping related to water, sewage and gas, as well as heating supply, communication, electricity and other wiring, decorative elements, including all types of external or internal plastering and cover works, walls, ceilings and floors.
      The objects of real property which were constructed at places which were not permitted by the laws of the Republic of Azerbaijan, or for which there was passed a decision of the state or local self governance authority on demolition, or real property which remains unfinished or in an emergency condition.

 Insurance amounts for the compulsory insurance of residential houses and apartments (flats)

City

Insurance amount

Deductible

Compulsory Insurance premium (AZN)

Baku

25.000

250

50

Ganja, Sumgayit and Nakhchivan cities

20.000

200

40

Other residential settlements

15.000

150

30



EXTRACTS FROM THE LAW OF THE REPUBLIC OF AZERBAIJAN ON COMPULSORY INSURANCE
RELEVANT TO THE COMPULSORY REAL PROPERTY INSURANCE

Article 5.3. A person who is the owner or an actual possessor of the real property shall be free to select any insurer who has the right to enter into a compulsory insurance agreement for such property to obtain compulsory insurance cover for such an real property.

Article 9.5. Upon the making of the insurance payment, this certificate shall be taken back by the insurer and subject to the payment of the additional insurance premium being required for the reinstatement of the insurance amount to the level required by the legislation, the insured person shall be issued with an appendix to the certificate which appendix shall be valid until the expiration date of the certificate.

Article 35.1. Compulsory insurance of the real property is provided for the purpose of the payment of the compensation for any damages that may be caused by the damaging, destruction or any kind of loss of the real property as a result of fire or other circumstances.

Article 35.4. Compulsory insurance related to residential buildings, residential houses and apartments (flats) is designated to provide compensation for damages caused to constructive elements, rooms, door and window elements, including glass, piping related to water, sewage and gas, as well as heating supply, communication, electricity and other wiring, decorative elements, including all types of external or internal plastering and cover works, walls, ceilings and floors.

 Article 36.1. Any kind of damaging of the real property by insurance risks, being fire, lightning, explosion of gas being used in the household or in industry, short circuit in electric wirings, explosion of steam containers, gas warehouses, gas pipelines, machines, apparatus, or other similar devices or equipment, accidents on water, heating, sewage and fire extinguishing systems, as well as flooding as a result of water originating from the neighboring constructions, residential or non – residential areas, residential houses and buildings, flats, apartments, rooms, the falling, throwing, collision, spillage, release or any other form of impact by any items or parts thereof, impact of above the grounds means of transportation, natural disasters – earthquakes, volcano, tornadoes, strong winds, gales, storms, hail, high waters, flooding, heavy rains, landslides, actions of third parties.
 
 Article 36.3 Damaging, destruction or any other type of loss of the real property caused by the following circumstances shall not be deemed an event of insurance:
 
Deliberate actions of the insured, beneficiary or its officials designated to cause the occurrence of an insurance event;
Any damages caused to the insured property through the impact of the production flames used for the purpose of repair, production or other industrial purposes, except where such circumstances cause the fire;
Any stealing of any part of the property during the event or following the event;
Change in the level of subsurface waters;
Release of water from pipes or a reservoir because of freezing, depreciation, wearing out, tearing, repair, relocation or expansion of pipes or reservoirs.
Article 32. Where the insurance company is not able to comply with its payments obligations arising out of the damages caused to the property covered by this certificate, the “Compulsory Insurance Bureau” upon the claim of the insured person shall make the compensation for damages.

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