Approval of Insurance Rules for Full Automobile Insurance for Individuals

COLLEGIUM OF THE MINISTRY OF FINANCE OF THE REPUBLIC OF AZERBAIJAN DECISION No. Q-20 Baku city, September 23, 2014

On the approval of the "Insurance Rules for Full Automobile Insurance for Individuals"

In order to ensure the implementation of Part 1 of Decree No. 398 of the President of the Republic of Azerbaijan dated April 22, 2014 "On Unified Insurance Rules for Certain Types of Voluntary Insurance Provided to Individuals", the Collegium of the Ministry of Finance of the Republic of Azerbaijan

DECIDES:

1. The "Insurance Rules for Full Automobile Insurance for Individuals" are approved (attached).
2. Paragraph 1.9 of Decision No. Q-11 of the Collegium of the Ministry of Finance of the Republic of Azerbaijan dated December 21, 2012 "On the approval of certain normative legal acts related to the application of the Law of the Republic of Azerbaijan 'On Insurance Activity'" is repealed.
3. Paragraph 14.7 of the "Insurance Rules for Full Automobile Insurance for Individuals" enters into force from January 1, 2015. Until that date, insurance tariffs applied for the calculation of insurance premiums and their economic justification are carried out in accordance with the existing rules of insurers for automobile insurance.
4. The Department of Financial and Insurance Market Regulation of the Ministry and the State Insurance Supervision Service are tasked to ensure that this Decision is submitted to the Ministry of Justice of the Republic of Azerbaijan for inclusion in the State Register of Legal Acts of the Republic of Azerbaijan within 3 days and to resolve other issues arising from this Decision.
5. I retain control over the implementation of this Decision.

Chairman of the Collegium,
Minister of Finance of the Republic of Azerbaijan Samir Sharifov

Insurance Rules for Full Automobile Insurance for Individuals

GENERAL PART

SECTION I.
General Conditions for Full Automobile Insurance Provided to Individuals

1. General Provisions
   1.1. The "Insurance Rules for Full Automobile Insurance for Individuals" (hereinafter referred to as "these Rules") are prepared to ensure the implementation of Part 1 of Decree No. 398 of the President of the Republic of Azerbaijan dated April 22, 2014 "On Unified Insurance Rules for Certain Types of Voluntary Insurance Provided to Individuals" and, in accordance with Article 16.5 of the Law of the Republic of Azerbaijan "On Insurance Activity", establish the rules and conditions mandatory for all insurers for the provision of voluntary insurance of full automobile insurance for individuals.
   1.2. Circumstances arising from the insurance contract and not provided for in these Rules are regulated by the Civil Code of the Republic of Azerbaijan.
   1.3. These Rules, as well as the application for insurance filled out by the insured (Appendix), are considered an integral part of the insurance contract.

2. Key Concepts
   2.0. The following key concepts are used in these Rules:
   2.0.1. automobile - a motor vehicle used for the transportation of people or goods on roads, or for towing vehicles carrying people or goods;
   2.0.2. insurer - an insurance company that is a party to the insurance contract, holds the appropriate license to carry out insurance activities in accordance with the Law of the Republic of Azerbaijan "On Insurance Activity", and bears the obligation to pay the insurance benefit in the event of the occurrence of the insured event provided for in the insurance contract;
   2.0.3. insured - a party to the insurance contract who insures the automobile by paying the insurance premium;
   2.0.4. insured person - an individual whose property interests related to the automobile, including risks associated with driving the automobile, are insured under the insurance contract;

Approved by Decision No. Q-20 of the Collegium of the Ministry of Finance of the Republic of Azerbaijan dated September 23, 2014.

2.0.5. owner of the automobile - the owner of the insured automobile, or a person who owns the automobile on other legal grounds (by right of lease, by power of attorney for the right to drive the vehicle, etc.);
2.0.6. beneficiary - a person to whom the insurance benefit must be paid in accordance with the insurance contract;
2.0.7. driver - an individual to whom insurance coverage is provided for insured events occurring in the event of driving the insured automobile; in the case provided for in paragraph 5.3 of these Rules, an individual included in the list of persons indicated as the insured in the insurance contract;
2.0.8. insurance risk - the probability of the occurrence of an event or situation causing losses or damage to the insured object;
2.0.9. insured event - an event or situation occurring during the validity of the insurance contract, which serves as the basis for the payment of the insurance benefit to the insured, the insured person, or other beneficiaries under the insurance contract;
2.0.10. insurance benefit - financial compensation paid by the insurer in accordance with the insurance contract in the event of an insured event;
2.0.11. insurance contract - a written agreement establishing the conditions under which the insurer undertakes to compensate for losses, damage, or pay an agreed amount of money arising from risks to which the automobile may be exposed, in exchange for the payment of the corresponding insurance premium by the insured;
2.0.12. insurance certificate - a document issued by the insurer to the insured and/or the insured person confirming the conclusion of the insurance contract;
2.0.13. insured object - lawful property interests related to the ownership of the automobile by the insured or the insured person;
2.0.14. subject of insurance - in relation to Section II of these Rules, the insured automobile; in relation to Section III, the case of arising of civil liability of the owner of that automobile; in relation to Section IV, the driver and passengers of that automobile;
2.0.15. insurance period - the period during which the insurance contract is valid;
2.0.16. insurance premium - the amount of money to be paid by the insured to the insurer in the manner specified in the insurance contract in exchange for the acceptance or distribution of risks related to the insured automobile;
2.0.17. insurance amount - the final limit of the insurer's liability under the insurance contract expressed by the amount specified in the insurance contract for the insured risks;
2.0.18. insurance tariff - a rate expressed in percentage applied to the insurance amount for the calculation of the insurance premium;
2.0.19. deductible amount - the part of losses or damage arising as a result of an insured event that is not covered by the insurance contract and remains with the insured;
2.0.20. use of the automobile - implies operation of the automobile on roads, as well as in yards adjacent to roads, residential areas, parking lots intended for vehicles, gas stations, territories of enterprises and organizations, and other areas intended for the operation of vehicles. The operation of devices installed in the automobile but not directly related to its participation in road traffic is not considered the use of the vehicle;
2.0.21. market value of the automobile - the price of the automobile determined by market conditions;
2.0.22. insurance claim - an appeal addressed by the insured, the insured person, or the beneficiary to the insurer for the purpose of receiving the insurance benefit in the event of an insured event;

3. Classes of Insurance
   3.1. These Rules cover the following classes of insurance for full insurance of automobiles owned by individuals:
   3.1.1. insurance of motor vehicles;
   3.1.2. insurance of civil liability of owners of motor vehicles;
   3.1.3. personal accident insurance.
   3.2. At the choice of the insured, insurance coverage is provided for one or more of the insurance classes specified in paragraph 3.1 of these Rules, subject to the conditions specified in the relevant sections of the Special Part of these Rules, as indicated in the insurance contract.

4. Subject of Insurance and Insurance Risks
   4.1. The subject of insurance and insurance risks are determined separately for each section in the Special Part of these Rules.
   4.2. With the agreement of the parties, insurance coverage may be provided for risks not provided for in the Special Part of these Rules, including risks belonging to other insurance classes.

5. Parties to the Insurance Contract and Other Persons Involved
   5.1. The insurer is the insurance company that is a party to the insurance contract.
   5.2. Any legally competent individual may conclude an insurance contract with the insurer as the insured and insure risks related to their owned automobiles in accordance with these Rules.
   5.3. If the insurance contract specifies that insurance coverage is provided only in cases where the automobile is driven by persons indicated in the contract as the insured (drivers), then risks related to the driving of the automobile by other persons are not considered insured, except in the case provided for in paragraph 5.4 of these Rules.
   5.4. The recognition of the insured, who is an individual, as the insured person in any case, including limited by contract terms, cannot be denied even if they are not listed in the list of insured drivers in the insurance contract.
   5.5. If no other person is specified as the beneficiary in the insurance contract under Section II of these Rules, the insured is considered the beneficiary. Under Section III of these Rules, the injured third party and/or another person who has compensated for the damage but is not at fault for the damage, as well as the family members of the injured third party, are considered beneficiaries. Under Section IV of these Rules, drivers and/or passengers whose health has been harmed, as well as their family members, are considered beneficiaries.

6. Conclusion of the Insurance Contract
   6.1. The insurance contract is concluded based on the insured's application for insurance. The application for insurance is prepared by filling out the application form provided in the Appendix to these Rules.
   6.2. The insurance contract is concluded in writing in any of the following forms:
   6.2.1. by mutual signing of a document called the insurance contract by the parties based on these Rules;
   6.2.2. by the insurer issuing the insurance certificate to the insured, provided that the insured confirms in writing their acquaintance with these Rules and agreement with their terms.
   6.3. In the case provided for in paragraph 6.2.2 of these Rules, the risks for which the subject of insurance is covered must be specifically listed in the insurance certificate.
   6.4. The forms of the insurance contract provided for in paragraph 6.2 of these Rules may also be concluded in the form of an electronic document.
   6.5. When concluding the insurance contract, the insurer must provide the insured with a memory sheet drafted in a style easily understandable by everyone and reflecting the following:
   6.5.1. how to act in the event of a circumstance that can be considered an insured event;
   6.5.2. the legal grounds for the insurer's refusal to pay the insurance benefit.

7. Additions and Amendments to the Insurance Contract
   7.1. Additions and amendments that do not worsen the position of the insured compared to the conditions of these Rules may be made to the insurance contract during its validity with the agreement of the parties. Additions and amendments that do not comply with this requirement are invalid.
   7.2. If the insurer receives information about changes that lead to an increase in the insurance risk during the validity of the insurance contract, it may demand changes to the terms of the insurance contract, including an increase in the insurance premium. If the insured does not agree to these demands, the insurer may demand early termination of the insurance contract.

8. Insurance Period and Insurance Territory
   8.1. The period of insurance is determined by the insurance contract.
   8.2. If the insurance contract is concluded for a period of more than one year, the insurance amount and insurance premium for each year of insurance are specified separately in the insurance contract.
   8.3. The obligations of the insurer under the insurance contract arise from the date of the start of the insurance period specified in the insurance contract, provided that the insurance premium or its first part specified in the insurance contract is paid no later than 1 month from that date.
   8.4. If the next part of the insurance premium specified in the insurance contract is not paid within 15 days after the date specified in the insurance contract as the payment date for that part, the insurance contract is considered terminated upon the expiration of that period.
   8.5. Unless otherwise specified in the insurance contract, the insurance contract is valid on the territory of the Republic of Azerbaijan.
   8.6. The territory of validity of the insurance contract may be changed by written agreement of the parties.

9. Rights and Duties of the Parties to the Insurance Contract
   9.1. Rights of the Insured:
   9.1.1. at the time of concluding the insurance contract, the insured has the right to familiarize themselves with the annual balance sheet certified by an independent auditor and the annual financial results of the insurer's activities;
   9.1.2. in case of loss of the insurance certificate, the insured has the right to obtain a duplicate from the insurer;
   9.1.3. the insured has the right to receive explanations from the insurer regarding the terms of the insurance contract and these Rules;
   9.1.4. the insured has the right to propose changes to the terms of the insurance contract;
   9.1.5. the insured has the right to use other rights provided for by law and these Rules;
   9.2. Duties of the Insured:
   9.2.1. to provide correct answers to the questions posed in the application for insurance;
   9.2.2. to pay the insurance premium in the amount and within the period specified in the insurance contract;
   9.2.3. to notify the insurer in writing about the insured event. This duty is considered fulfilled if performed by the beneficiary;
   9.2.4. to inform the insurer at the time of concluding the insurance contract about all circumstances known to them and indicated in the application for insurance that could influence the insurer's decision to refuse the contract or to conclude it with modified content;
   9.2.5. to inform the insurer in writing within 5 working days from the date they became aware or should have become aware of the following circumstances that could affect the change of insurance risk during the validity of the insurance contract:
   9.2.5.1. alienation of the automobile, its lease, or loss or restriction of ownership rights to it in another form;
   9.2.5.2. replacement of numbered assemblies - engine, chassis, and body;
   9.2.5.3. loss, theft, or replacement of documents regarding the state registration of the automobile;
   9.2.5.4. loss or theft of the automobile keys and electronic activation card;
   9.2.6. to inform the insurer in writing about the inclusion of insurance coverage for the aforementioned circumstances in the insurance contract before granting the right to drive the automobile to persons not indicated in the insurance contract as the insured in the case provided for in paragraph 5.3 of these Rules during the validity of the insurance contract;
   9.2.6. to perform other duties provided for by law and these Rules;

9.3. Rights of the Insurer:
9.3.1. to verify the correctness of the information provided by the insured;
9.3.2. if it is discovered after the date the insurance contract enters into force that the insured intentionally provided answers to the questions in the application for insurance that do not correspond to the truth, the insurer may demand early termination of that contract;
9.3.5. to use other rights provided for by law and these Rules;
9.4. Duties of the Insurer:
9.4.1. to issue the insurance certificate attached with these Rules to the insured;
9.4.2. to send a written request to the competent state authority to obtain a document confirming the fact and/or cause, as well as the consequences of events that can be considered insured events and require investigation or registration;
9.4.3. to perform other duties provided for by law and these Rules.
9.5. The insurer's obligations to the insured are considered fully fulfilled in the following cases:
9.5.1. when the total amount of insurance benefits paid under the insurance contract equals the total insurance amount;
9.5.2. when an insurance benefit is paid in accordance with the insurance contract for the theft, abduction, or total destruction of the automobile;
9.5.3. when an insurance benefit is paid for the first insured event in cases where the insurance amount under the insurance contract is provided for the first insured event.

10. Provision on the Designation of a Repair Shop
    The right to choose a repair shop (service center, etc.) for the repair of a damaged automobile under Sections II and III of the Special Part of these Rules is determined in the insurance contract and belongs to either the insurer or the insured person.

11. Early Termination of the Insurance Contract
    11.1. Early termination of the insurance contract occurs in the following cases:
    11.1.1. when the subject of insurance no longer exists;
    11.1.2. when the insured individual dies, except in the cases provided for in paragraph 11.3 of these Rules;
    11.1.3. when the insurer objects to the insured's proposal to replace the insured person (who is not the insured) under the insurance contract with another person in the event of the death of the insured person;
    11.1.4. when there is no probability of the occurrence of an insured event and the existence of the insurance risk ends due to circumstances that are not an insured event;
    11.1.5. when the insurer has fully fulfilled its obligations to the insured;
    11.1.6. when the insured fails to pay the insurance premium in the manner specified in the insurance contract;
    11.1.7. when the insured no longer has an insurable interest in the automobile;
    11.1.8. when the insured or the insurer demands early termination of the insurance contract.

11.2. If during the validity of the insurance contract the insured is recognized by a court decision as legally incompetent or their legal capacity is restricted by a court decision, the following apply depending on the circumstances:
11.2.1. A contract for insurance of civil liability of automobile owners (or the section of the insurance contract related to the insurance of civil liability of automobile owners) is considered terminated from the moment the court decision enters into legal force. In cases where, before the date the relevant court decision enters into legal force, the driving of the insured automobile was legally entrusted to another person and the insurer agreed to this, the rights and duties of the insured under the insurance contract (or the section of the insurance contract related to the insurance of civil liability of automobile owners) pass to that person;
11.2.2. The rights and duties of the insured under the insurance of automobiles, as well as under personal accident insurance of drivers and passengers of automobiles, are exercised by their guardian or curator, with the consent of the insurer.
11.3. Early termination of the insurance contract does not occur in the following cases when the insured individual dies:
11.3.1. If the insured, when concluding the insurance contract, appointed any person to accept the insured automobile, and/or changed that person with the consent of the insurer before the occurrence of the insured event, then upon the death of the insured individual, their rights and duties under that contract pass to the person who accepts the insured property in accordance with the inheritance rules established by the Civil Code of the Republic of Azerbaijan;
11.3.2. If no other conditions are specified in the insurance contract, the rights and duties of the insured pass to the new owner, owner, or user of the inherited property that is the subject of insurance, both by their own will and with the formalized agreement of the insurer in the contract.

12. Notification Regarding Early Termination of the Insurance Contract
    12.1. When circumstances arise that are the basis for terminating the insurance contract, taking into account paragraph 12.2 of these Rules, the party interested in the termination of the contract must immediately notify the other party thereof.
    12.2. When early termination of the insurance contract occurs upon the demand of the insured or the insurer in accordance with paragraph 11.1.8 of these Rules, one party must send a written notice to the other party at least 30 days in advance (or 5 working days in advance if the insurance contract is concluded for a period of less than 3 months).
    12.3. Early termination of the insurance contract for an automobile subject to mortgage upon the demand of the insured is carried out only with the consent of the mortgagee.

13. Consequences of Early Termination of the Insurance Contract
    13.1. Relations regarding the return of the corresponding part of the insurance premium in the event of early termination of the insurance contract are resolved as follows.
    13.1.1. If early termination of the insurance contract (and in the case of group insurance, the contract in relation to any automobile) occurs upon the demand of the insured, the insurer returns the insurance premiums for the unexpired period of the contract (and in the case of group insurance, the insurance premiums paid for any automobile under the contract) to them. In this case, the insurer deducts from the returned part of the insurance premium the proportionate part of the costs of conducting work related to the insurance contract (and in the case of group insurance, proportionate to the insurance premiums paid for any automobile under the contract) for the unexpired period of that contract. If the insured's demand for termination of the insurance contract is related to the insurer's failure to fulfill its obligations under the insurance contract, the insurer returns the insurance premiums (and in the case of group insurance, the insurance premiums paid for any automobile under the contract) in full to the insured.
    13.1.2. If early termination of the insurance contract (and in the case of group insurance, the contract in relation to any automobile) occurs upon the demand of the insurer, it returns the insurance premiums (and in the case of group insurance, the insurance premiums paid for any automobile under the contract) in full to the insured. If this demand is related to the insured's failure to fulfill their obligations under the insurance contract, the insurer returns the insurance premiums for the unexpired period of the contract (and in the case of group insurance, the insurance premiums paid for any automobile under the contract). In this case, the insurer deducts from the returned part of the insurance premium the proportionate part of the costs of conducting work related to the insurance contract (and in the case of group insurance, proportionate to the insurance premiums paid for any automobile under the contract) for the unexpired period of the contract.
    13.1.3. In the event of early termination of the insurance contract (and in the case of group insurance, in relation to any automobile under the contract), if an insurance benefit equal to or greater than the insurance premium (and in the case of group insurance, the insurance premiums paid for any automobile under the contract) paid by the insurer to the insured up to the moment of termination has been paid, the insurance premium (and in the case of group insurance, the insurance premiums paid for any automobile under the contract) is not returned.

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