Minimum requirements for property insurance contracts

These Minimum Requirements for Property Insurance Contracts define the Client’s general rights and obligations when insuring for the benefit of Šiaulių bankas (hereinafter referred to as the Bank) the movable and immovable property, which the Client pledges to the Bank, or which is acquired by the Bank, upon the Client's request, on the right of ownership under the Financing Contract (hereinafter referred to as Property).

The Financing Contract is the lending, leasing or other types of financing agreements between the Bank and the Client on the basis of which the Client has the obligation to insure the Property.

When insuring the Property, the Client must observe these Minimum Requirements for Property Insurance Contracts and conditions specified in the Financing Contract. If the requirements, conditions in the Financing Contracts for property insurance are different from the publicly published Minimum Requirements for Property Insurance Contracts, the Client must observe the publicly published Minimum Requirements for Property Insurance Contracts, unless the Financing Contract in its Special Conditions provides other exceptions or requirements.

1. INSURANCE BROKER AND INSURANCE COMPANIES

Insurance broker for the Property insured for the Bank’s benefit is:

UADBB Balto Link, company code 225259240
Kęstučio 59/27, LT-08124 Vilnius, Lithuania
Tel. +370 5 233 0000
E-mail: sb@draudimas.lt, www.baltolink.com, www.draudimas.lt

The insurance broker according to the law is Bank-authorized Property Insurance Contract administrator, the contract data processor and carries out all Property insurance related actions on behalf of the Bank.

With the help of insurance broker, Client may choose the insurance solutions most tailored to his/her expectations, consult on Insurance Contracts making, their execution issues, and in the case of an accident Insurance broker shall ensure that all losses would be recovered as soon as possible.

For Property insurance, the Bank recommends the Client to use services of the following insurance companies (hereinafter referred to as Insurer):

2. MINIMUM REQUIREMENTS FOR MOVABLE PROPERTY INSURANCE CONTRACTS

2.1. The property must be insured from all the risks provided for in the Insurer-approved respective type property insurance rules when transferring, managing and using of the property, including:

  • Water
  • Fire
  • Natural forces
  • Theft (theft by trespassing, robbery)
  • Intentional acts of third persons (including vandalism)
  • Traffic incident (applicable if the property is a vehicle)

2.2. If the assets have to be dismantled, transported, assembled, tested, or tried (including the temporary storage, loading, unloading of dismantled Property), the insurance coverage shall be valid also for additional risks related to such actions (according to installation work all risks insurance conditions).

2.3. In the case of self-propelled machinery, machines and equipment or part thereof the insurance coverage must be valid when they are used as a work tool or device.

2.4. Bank must be indicated as beneficiary in the Insurance Contract (for insurance benefit).

2.5. New equipment and production facilities must be covered by the new replacement value (the amount needed to purchase, manufacture a new property of the same specifications, type and quality, including the design, installation costs and mandatory fees). Not new equipment is insured at the market value, stocks at their purchase cost or market value.

2.6. Vehicles, agricultural and construction mobile equipment, must be insured:

  • When a new Insurance Contract is entered into: at no lower amount than the Property purchase price or the amount no less than the Property market value, whichever (cost or market) is higher;
  • When Insurance Contract is extended or new Insurance Contract is entered into, at the end of the term of previous contract: for the amount no less than the Property residual value referred to in the Financing Contract or at the Bank's choice and direction: (i) at the amount specified by the Bank; or (ii) at the amount no less than the Property market value, whichever (net book value or market value) is higher. In case of disputes on the market valuation, Property market value is determined on the Client’s funds by one of the Bank's recommended asset evaluators;
  • If the property is expected to operate abroad, Insurance Contract valid outside the Republic of Lithuania shall be entered into;
  • When vehicle is leased, the Client shall at his/her own expense conclude motor third party liability Insurance contract, which would cover civil liability of every person managing the Property.

2.7. Bank must be specified in the Insurance Contract as beneficiary (for insurance benefits).

2.8. The Insurance Contract shall set no higher Property deductible than in the table below: 

Property

Deductible in the case of losses

Private cars, their trailers

no more than EUR 150 and 10 per cent in the case of theft or full destruction;

Heavy vehicles:

 

if Client’s vehicle fleet is up to 5 pcs

no more than EUR 580

if Client’s vehicle fleet is up to 10 pcs

no more than EUR 1700

if Client’s vehicle fleet is over 10 pcs

no more than EUR 2900

Agricultural and special machines

no more than EUR 1450 EUR and 10 per cent in the case of theft or full destruction;

Wood industry equipment

up to 10 per cent from insurance amount but no more than EUR 14 500

Equipment, installations and other property:

 

if Property insurance amount is up to EUR 30 000

up to EUR 300

if Property insurance amount is over EUR 30 000

up to 5 per cent from insurance amount but no more than EUR 10 000

 

3. MINIMUM REQUIREMENTS FOR IMMOVABLE PROPERTY (excluding land) INSURANCE CONTRACTS

3.1. The property must be insured from all the risks approved by the Insurer in the respective type property insurance rules during delivery, management and use of the Property, including:

  • Water
  • Fire
  • Natural forces
  • Theft (does not apply if the Property construction is in progress)
  • Third parties intentional acts, including vandalism (does not apply if the Property construction is in progress).

3.2. Bank must be specified in the Insurance Contract as beneficiary (for insurance benefits).

3.3. The Property must be insured for new replacement value (the amount needed to build a new same purpose, structure and quality building/structure, including the design, construction and installation costs and mandatory fees). Real estate, after construction or renovation of which more than 40 years has passed, not always in operation (idle for operation)/unoccupied real estate, auxiliary buildings in the residential property/structures and low-value assets may be insured at residual value, if the Insurer refuses to insure such property at replacement cost.

3.4. While real estate is not finished to build, is not used for its intended purpose, is reconstructed, it must be covered from the following risks:

  • Fire
  • Natural forces, if main building construction is properly installed in the building/structure, roof is mounted, windows are sealed as well as doors and other openings.

3.5. When the real estate, which has been insured as unfinished, is put into service for its intended purpose, it must be insured against the risks listed in paragraph 3.1.

3.6. The Insurance Contract shall set no higher Property deductible than in the table below ::

Property

Deductible in the case of losses

Residential objects when Policyholder is physical person

up to EUR 300

Residential objects when Policyholder is legal entity

up to EUR 300

Wood industry constructions

up to 10 per cent of insurance amount but no more than EUR 14 500

All the rest real estate objects

up to 5 per cent of insurance amount but no more than EUR 10 000

 

4. GENERAL REQUIREMENTS FOR PROPERTY INSURANCE CONTRACTS

4.1. The Insurance Contract must take effect no later than on Property pledging day, or the day of signing the Property transfer report under the Financing Contract, but no later than the accidental property damage, destruction or loss risk passes on to the Client.

4.2. The Insurance Contract (and any possible changes and supplements) must meet these publicly available Minimum Requirements for Property Insurance Contracts and must be submitted to the Bank before conclusion of Property pledge transaction or withdrawal of the Property from the seller, in the case of leasing contract. In the case of renewal, supplement of the Insurance Contract, such renewal, supplement of the Insurance Contract must be submitted to the Bank at least 3 (three) business days before the current Insurance Contract expires.

4.3. The insurance coverage shall be valid till the day of execution of all Client’s commitments specified in the Financing Contract, but no shorter than the Property will be released from a pledge or transferred to the Client’s, the Bank’s or a third person’s ownership or returned to the Bank through procedure set in the Financing Agreement or legislative acts. The Insurance Contract may be concluded for a period of one year or less, but it must be periodically extended for the property insurance protection was efficient continuously.

4.4. If the Client extends, enters into a new or additional Insurance Contract, the Bank has the right to demand that the Insurance Contract is concluded with another Insurer from the Bank-recommended lists of Insurers.

4.5. The Insurance Contract conditions, including beneficiary (insurance benefits) can be changed only with the prior written consent of the Bank, except for a change of the following conditions in the Insurance Contract:

  • Insurance premium increase or decrease;
  • Increasing the amount of insurance;
  • Extension of certain risks;
  • Changes in risk, risk factor adjustment (fire, property security alarms, and other risk factors);
  • Unconditional deductible reduction;
  • Increase in the amount of insured objects.

4.6. The Client, after receipt of an insurance certificate or insurance policy, undertakes both when he/she is the policyholder and when the Bank is the policyholder, to familiarize with the information disclosed by the Bank and/or the Insurer and/or insurance broker about property insurance, insurance terms and conditions, including, but not limited to, insurable and non-insured events, as well as to fulfil of all the obligations set in the insurance conditions/ insurance rules for and to ensure that other legal Property managers complied with them.

4.7. Upon the request of Bank, Insurer or insurance broker, the Client must submit the Bank, Insurer or insurance broker, within the time limits specified, all the information relating to Property as well as the documents supporting the Insurance Contract entering and proper execution.

4.8. In the event of an insured event, the Client must immediately, but no later than within 2 (two) business days by written notice inform the insurance broker and to provide documents in support of the insured event (the insurer-drawn up insurance event act, law enforcement bodies documents, expert conclusions and other legally valid documents). If the event is not covered by insurance, the Client must inform the Bank no later than within one (1) business day. In the case of Property injury (damage), the Client must take care of protection of the remaining Property and has no right to dispose of the surviving parts of the Property. In the case of violation of this condition, the Client shall reimburse the Bank for all the related losses.

4.9. All insurance-related costs, including the obligation to pay insurance premiums (if the Policyholder is the Client) rest with the Client.

4.10. After the Insurer pays the Bank the insurance benefit (compensation), the Bank, from the amount received, covers the Insurer required premium (its part) according to the Insurance Contract (if the Insurer requires), then the Client’s debt formed before the insurance benefit receipt day, in accordance with the debt covering sequence provided for in the Financing Contract (if such exists), also the Bank losses are indemnified (if the Bank experiences such) and only then transfers the insurance benefit amount (or part thereof) to the Client or another beneficiary specified in the Insurance Contract (insurance benefit), if the Bank and the Client agree nothing otherwise .

4.11. The Client commits, as a party to the Insurance Contract and the legitimate Property manager, responsible for the property to the Bank, to engage in negotiations with Insurers on insurance benefit payment and/or litigation matters with the Insurer for payment of such benefits, unless the Bank specifies otherwise in writing. Client's disagreement with the Insurer's decision not to recognize the Property loss, destruction or damage as an insured event and the related disputes do not relieve the Client from further execution of financing contract conditions.

4.12. If Client breached these Minimum Requirements for Property Insurance Contracts and conditions of the financing agreement, related to property insurance (including, if the property is insured in the insurance company other than the Bank had recommended), it is assumed that the Property is not insured and the Bank has the right to immediately insure the Property on its own behalf with the acceptable Insurer. In this case, the Client must compensate the Bank for Property insurance costs incurred.

4.13. If Insurer supervision conducting authorized body in accordance with the applicable law applies the Insurer who entered into Insurance Contract some statutory sanctions or there is a reason to believe that such sanctions could be applied, or such Insurer is instituted bankruptcy or restructuring proceedings, other procedures against it are launched in relation with its inability to settle with the creditors, or a decision on the liquidation of the Insurer is adopted, or due to other circumstances that may complicate or make impossible execution of the Insurer's obligations, the Client immediately at his/her own expense undertakes to make appropriate Insurance Contracts with other Bank-acceptable Insurers on the Bank-acceptable terms.