Insurance contract and features of its application in martial law
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The war launched by the Russian Federation against Ukraine has affected all spheres of relations and has made its own adjustments to the legal regulation we are accustomed to.
By Decree of the President of Ukraine "On the introduction of martial law" No. 64/2022 dated February 24, 2022, martial law was introduced in Ukraine, which, as a result of its extension, is still in effect.
New living conditions, of course, influenced the insurance market.
Today we will consider contractual relations in the field of insurance and the features of their regulation under martial law.
According to Art. 1 ZU 85/96-VR as amended on May 26, 2022 “On insurance”, insurance is a type of civil law relationship to protect the property interests of individuals and legal entities in the event of the occurrence of certain events (insurance events) determined by the insurance contract or the current legislation, at the expense of monetary funds formed by paying insurance payments (insurance contributions, insurance premiums) by individuals and legal entities and income from the placement of funds from these funds.
The concept and subject of an insurance contract.
The Law of Ukraine "On Insurance" (Article 5) provides for forms of insurance, namely: voluntary and compulsory insurance.
The subject of an insurance contract may be property interests that do not contradict the law and are related to:
- with life, health, ability to work and pensions (personal insurance);
- with possession, use and disposal of property (property insurance);
- with compensation by the insurant for the harm caused by him to a person or his property, as well as for the harm caused to a legal entity (liability insurance) - Art. 4 of the Law of Ukraine "On Insurance".
In connection with military aggression, unfortunately, many citizens have caused damage to their lives, health or property interests.
It was in such cases, in the conditions of the pre-war period, that the insured person applied to the insurer for compensation.
As for wartime, it is necessary to proceed from the terms of the insurance contract concluded with the insurance company and consider each case separately.
However, according to the general trend of concluding contracts on the territory of Ukraine, insurance contracts indicate that damage caused as a result of military aggression is not the subject of insurance of these contracts.
Also, insurance coverage does not apply to cases of confiscation, seizure, revision of property by decision of the authorities or damage to property due to a bomb, shell or other means of warfare.
It is important to understand that this does not mean the cancellation of your insurance contract and the cancellation of the opportunity to receive compensation for damage during martial law if you are covered by an insured event.
The key factor is precisely the causal relationship between losses and the event that formed them.
If the damage was caused as a result of military aggression, then this event will not be the basis for compensation, because it is not specified in the contract as an insured event.
However, if the damage was caused by another event not related to the war, then the insurance contract continues to be valid for these cases, and you have the full right to receive compensation in accordance with the contract.
For example, if a natural disaster or natural cataclysm occurred, and your property was damaged, then your contract, as it was before the war, will continue to be valid now.
The mere fact of the introduction of martial law cannot be a basis for refusing compensation under your insurance contract.
Martial law as a force majeure in the insurance contract.
The insurance company (insurer) may refuse to perform its obligations to indemnify, justifying it by military action only in the case of the application of force majeure, to which these actions relate.
Force majeure circumstances (force majeure circumstances) are extraordinary and unavoidable circumstances that objectively make it impossible to fulfill the obligations under the terms of the agreement (contract, agreement, etc.), obligations under legislative and other regulations (paragraph 2 of Art. 14-1 of the Law "On Chambers of Commerce and Industry in Ukraine").
There is a whole list of events and phenomena that may be force majeure, and the fact of their occurrence is evidenced by the Chamber of Commerce and Industry of Ukraine (hereinafter - CCI of Ukraine) in accordance with the laws of Ukraine.
It will be recalled that by the Notification № 2024 / 02.0-7.1 of 28.02.2022, the CCI of Ukraine testified to the military aggression of the Russian Federation against Ukraine, which became the basis for the imposition of martial law from 05:30 on February 24, 2022 by force majeure (force majeure) .
However, it should be understood that in the event of the insurer's refusal of compensation due to force majeure, the latter must also justify the causal link between the hostilities and the consequences that make it impossible to pay compensation. For example, if as a result of military aggression the central office of the insurer was destroyed and together with it all physical carriers of information on clients and the concluded contracts were damaged, such case can be recognized as force majeure.
The occurrence of force majeure does not automatically release from performance, but can only be grounds for release from liability for non-performance or improper performance of obligations (eg, exemption from fines, penalties).
That is, if the insurer in the manner prescribed by the contract notified you of the occurrence of force majeure, you can agree with them, or deny and demand fulfillment of obligations. In this case, you can go to court, and already during the proceedings, the insurer must prove the causal link between the events and the consequences.
This rule is common to all force majeure circumstances, and it is valid in peacetime. Similarly, the insured may be released from liability, for example, for non-payment of payments under the contract, if he proves that he fell under the force of force majeure, and there is a causal link between the event and the reasons for non-payment.
Whether to release a person from liability and whether there really is a causal link will be decided by the court during the trial.
The validity of the insurance contract in the territory of warfare and the occupied territories.
If we are talking about insured events stipulated by your insurance contract and which occurred in the territories of hostilities or the occupied territories of Ukraine after February 24, 2022, then in these cases the insurer cannot refuse to pay you compensation either.
This also applies to property damaged in the territories of hostilities or occupied territories. Of course, there will be difficulties with the departure and inspection of damaged property by representatives of the insurer, however, there are no legal grounds to refuse compensation.
After the events of 2014, when concluding contracts, most insurers added provisions on the invalidity of contracts in the territory of ORDLO and the Autonomous Republic of Crimea in order to avoid disputes.
Unfortunately, rare cases of such disputes and denials of reimbursement are already known in current practice. Some insurers of their cars under OSAGO agreements have already faced refusal or delay in the reimbursement procedure.
You can also use the advanced functionality of the system in terms of maintaining a register of counterparties, generate a complaint filled with data, and sign with a qualified digital signature.
Changes and simplification of the procedure for obtaining compensation during martial law.
To simplify the procedure for confirming an insured event, the National Bank of Ukraine gave an explanation dated February 27, 2022, in which it recommends insurers to simplify the procedure for settling cases that have signs of insurance. In particular, maximum use of electronic documents, copies of necessary documents in case of impossibility or complication of the possibility of obtaining original documents, other means of remote settlement of insured events. This will provide insurance protection for consumers under a simplified procedure for the settlement of events by insurers in cases that have signs of insurance, for all types of insurance and all types of counterparties.
In addition, the NBU promised to additionally communicate with the State Fiscal Service regarding the non-application of penalties to insurers for the period of martial law in Ukraine when using copies of documents (in paper or electronic form) confirming the occurrence of an insured event (clause 4 of the NBU clarification) dated February 27 .2022
Actions of citizens of Ukraine in case of damage caused as a result of hostilities.
As we found out earlier, in most cases it is provided that the damage caused as a result of hostilities is not subject to compensation under insurance contracts. But there are instructions from the state for such cases, and they apply to any citizen of Ukraine who caused damage as a result of military aggression.
It is this instruction that was approved by the Resolution of the Cabinet of Ministers of Ukraine No. 380 of March 26, 2022 "On the collection, processing and accounting of information on damaged and destroyed real estate as a result of hostilities, terrorist acts, sabotage caused by the military aggression of the Russian Federation."
According to this document, an individual or legal entity whose property has been destroyed or damaged as a result of hostilities, terrorist acts, sabotage caused by the military aggression of the Russian Federation can submit an information message to a special Register indicating detailed information about such objects.
This resolution regulates only cases of damage to a person's real estate, destruction of a house, premises of enterprises, institutions, organizations, and the very fact of providing information to the Register does not guarantee instant compensation.
Submission of information to the Register is only the first stage of certification of the damage received by a person, the same procedure for state compensation is still at the stage of development and coordination.
The information message is carried out regardless of the place of residence or stay of an individual or the location of a legal entity (clause 4 of the Resolution of the Cabinet of Ministers No. 380 of 03/26/2022).
In addition, you can submit such appeals in the personal account of the Diia web portal, where you need to upload confirmation (photo or video) of damage to your property.
This can also be done on the dokaz.gov.ua website in the “material damage” section or offline by personally submitting an application to any Center for the provision of administrative services (TSNAP).
Summarizing the above, we can conclude that if a person has a concluded life, health or private property insurance contract, then the fact of the introduction of martial law on the territory of Ukraine in no way affects the exercise of his rights under this contract.
Also, it does not matter whether a person was harmed in the occupied territory or the territory of hostilities. If an insured event occurs within the borders of Ukraine, and it is not related to military operations, then the insured has the full right to compensation for damage under the contract.
It should be understood that in conditions of war and constant danger, the focus of our attention deviates from the usual direction. But one should not forget about the safety of one's life and health in everyday life and the preservation of one's property in integrity and security. During the war, there were no fewer diseases, accidents, natural disasters, fires and accidents.
That is why insurance companies must continue to work and supply citizens with insurance products. At the moment, many companies have simplified the procedure for concluding contracts, submitting applications for changes to them, etc., and allow customers to do this remotely.
Date of publication: 29.06.2022