Order on Conditions for Compensation for Damages Covered by the Terror Insurance Scheme and on Insurance Companies' Handling of NBCR Terror Damages

Order on Conditions for Compensation for Damages Covered by the Terror Insurance Scheme on the Property Insurance Sector and on the Handling of NBCR Terror Damages by Property Insurance Companies

Pursuant to Section 1, subsection 5, Section 6, subsection 4, and Section 12, subsection 6 of Act No. 367 of 9 April 2019 on a Terror Insurance Scheme on the Property Insurance Sector, it is hereby prescribed:

Chapter 1
Scope of Application

Section 1. This Order applies to insurance companies covered by Section 5 of the Act on a Terror Insurance Scheme on the Property Insurance Sector, which have taken out insurance covering the fire risk for the objects covered by the Act.

Chapter 2
Principles for Calculating Damages to Buildings and Movable Property

Section 2. In calculating compensation for damages to buildings and movable property covered by the Act on the Terror Insurance Scheme on the Property Insurance Sector, insurance companies shall use commonly accepted principles in the insurance industry, based on compensation to new value or compensation to current value.

Subsection 2. By new value regarding building damage is meant the amount it will cost to restore the damaged part using the same construction method, standard building materials, and at the same location.

Subsection 3. By new value regarding movable property is meant the amount it will cost to replace a corresponding new item at the time of the damage.

Subsection 4. By current value is meant the new value minus the depreciation, including wear and tear, which can be observed on the relevant property, building part, or movable item immediately before the time of the damage.

Section 3. Compensation for damages to properties for year-round residence and holiday homes constitutes new value. Deductions shall be made in the compensation in accordance with the currently applicable depreciation practice, unless the property was depreciated by more than 50 percent of the new value before the damage occurred.

Subsection 2. Compensation constitutes current value if the property's value has been depreciated by more than 50 percent of the new value. The depreciation is assessed based on the condition the damaged item was in immediately before the damage as a result of normal use, weather influence, and possibly other individual circumstances, e.g., non-intact building parts, and not based on depreciation practice.

Subsection 3. Partial repair of a building part is fully compensated, unless it is assessed to be more expensive than replacement minus any possible depreciation.

Section 4. Compensation for damages to commercial properties constitutes new value minus deductions resulting from the currently applicable depreciation practice, unless the property was depreciated by more than 30 percent of the new value before the damage occurred.

Subsection 2. In case of depreciation of more than 30 percent of the new value, e.g., due to wear, age, or other circumstances, compensation is paid at current value. The depreciation is assessed based on the condition the damaged item was in immediately before the damage as a result of normal use, weather influence, and possibly other individual circumstances, e.g., non-intact building parts, and not based on depreciation practice.

Subsection 3. Partial repair of a building part is fully compensated, unless it is assessed to be more expensive than replacement minus any possible depreciation.

Section 5. Compensation for damages to private movable property constitutes new value, unless the movable property is more than two years old, in which case deductions are made in accordance with the currently applicable depreciation practice, including any reference depreciation tables.

Subsection 2. Partial repair is fully compensated, unless it is assessed to be more expensive than replacement minus any possible depreciation.

Subsection 3. If replacement of the movable property is not possible, the compensation is calculated based on the manufacturing price of a new corresponding movable item. However, the compensation may not exceed what it would cost to replace corresponding movable property.

Subsection 4. Compensation for special private household contents may not exceed DKK 150,000.

Subsection 5. Compensation for cash, currency, securities, and similar items may not exceed DKK 25,000.

Subsection 6. Compensation for special private valuables may not exceed DKK 50,000.

Danish Gazette A
2024 Issued on 29 June 2024
18 June 2024. No. 860.
Ministry of Industry, Business and Financial Supervision, Financial Supervisory Authority, file no. 21-014980 CQ002888

Section 6. Compensation for damages to commercial movable property is paid at the following values:
1) Goods, including raw materials: Current value.
2) Finished goods, including own production: The price that could be obtained immediately before the damage under normal sales conditions, minus normal costs associated with sales, etc.
3) Furniture and operating equipment: New value if there is a replacement of the individual item, otherwise current value.
4) Remanufacturing of original models or lost data: Manufacturing price.

Section 7. Compensation is paid for costs related to rehousing if a building for private residential use is uninhabitable after a damage.

Subsection 2. The compensation under subsection 1 may not exceed DKK 15,000 per month, calculated as an average over the total rehousing period.

Subsection 3. The rehousing period may not exceed 24 months. The period may be extended if special circumstances, including longer construction periods, indicate a need for a longer coverage period.

Subsection 4. Any saved housing expenses are deducted from the compensation for rehousing.

Subsection 5. Compensation is paid for reasonable expenses for packing and moving within the maximum mentioned in subsection 2 for the entire rehousing period.

Subsection 6. Coverage of expenses under subsections 1-5 presupposes that the person entitled to compensation documents the incurred expenses.

Section 8. Compensation for loss of business due to damage to buildings or movable property is determined based on the expected contribution margin in the calendar year in which the damage occurred. However, the compensation may not exceed 5 percent above the actual contribution margin in the most recently completed financial year.

Subsection 2. Compensation is paid for reasonable and necessary additional costs to limit the loss of business.

Subsection 3. Deductions may be made in the compensation for loss of business for failure to reasonably limit the loss and for saved expenses.

Subsection 4. Compensation for loss of business may be paid for a maximum period of 24 months.

Section 9. Compensation is paid for costs to legalize damaged buildings as a consequence of requirements in building legislation.

Subsection 2. The compensation under subsection 1 may not exceed:
1) DKK 1.5 million per dwelling.
2) DKK 1 million per holiday home.
3) DKK 3 million per commercial building.

Chapter 3
Compensation for Cleanup Costs and Contaminated Soil in Connection with Damages to Buildings and Movable Property

Section 10. Compensation is paid for necessary and reasonable cleanup costs, including removal of building parts and other waste found on the property as a result of a damage event covered by the Act. Compensation is also paid for costs related to disposal, etc.

Subsection 2. The compensation under subsection 1 may not exceed:
1) DKK 1 million per dwelling.
2) DKK 1 million per holiday home.
3) DKK 3 million per commercial building.

Subsection 3. The amounts mentioned in subsection 2 may be increased if special circumstances so dictate.

Section 11. Compensation is paid for contaminated ground areas that are unusable as a result of a damage event covered by the Act.

Subsection 2. Compensation is paid for costs of cleaning to the level required by the municipal authority according to environmental legislation. If the municipal authority requires disposal of soil, costs for removal, cleaning, and disposal are compensated.

Subsection 3. Removed soil is replaced with fill to terrain level.

Subsection 4. If the property cannot be used for purposes corresponding to the general land use in the area due to the damage, compensation is paid based on the square meter price in the area immediately before the damage occurred.

Subsection 5. Damage to garden installations and crops is not compensated.

Chapter 4
Use of Compensation and Payment of Cash Compensation for Damages to Buildings and Movable Property

Section 12. The insurance company shall authorize payment of compensation for damages to real estate without documentation of replacement or repair of damages when:
1) the individual calculated damage within a construction category does not exceed DKK 40,000,
2) compensation is requested to be paid for self-repair of the damage, or
3) compensation relates to the claimant's consumed time on their own work, including cleanup and cleaning, etc.

Subsection 2. Payment of compensation under subsection 1, no. 2, may in total not exceed DKK 80,000.

Subsection 3. Compensation for damages to real estate shall be used proportionally to repair the individual damages as they are calculated. The claimant may, however, choose to have a redistribution among the entitled coverage items. Unused compensation items are not paid out.

Subsection 4. Payment of compensation under subsection 1, no. 2, and subsection 2, requires acceptance from all holders of rights over the real estate if there is a risk of significant deterioration of their rights.

Subsection 5. The insurance company shall authorize payment of compensation for damages to movable property without documentation of replacement or repair of damage, subject to subsection 6.

Subsection 6. Compensation for damages other than those mentioned in subsections 1 and 5, and for damages to operating equipment belonging to commercial enterprises, is paid when there is documentation that the damage has been repaired or replacement has been made.

18 June 2024. 2 No. 860.

Section 13. Compensation for damages to real estate for year-round residence or holiday homes may be paid as total damage compensation including residual value compensation, when:
1) the damage percentage exceeds 50 percent of the building's new value,
2) repair of the calculated damages has not begun,
3) a new, corresponding building is being constructed, and
4) construction of the new building takes place at the same physical location, unless special circumstances prevent this.

Subsection 2. Total damage compensation applies only to real estate that was not intended for demolition, renovation, or modernization at the time immediately before the damage occurred.

Subsection 3. In calculating the damage, only the damaged building parts are included. The damage percentage is calculated as the calculated damage's percentage share of the total calculated expense for constructing a new, corresponding building.

Subsection 4. The value of usable materials from undamaged parts of the property, which the claimant chooses to keep, is deducted from the total damage compensation.

Section 14. If a damage is not desired to be repaired or a building is not desired to be rebuilt, the compensation may be paid as cash compensation.

Subsection 2. Payment of compensation under subsection 1 requires acceptance from all holders of rights over the real estate if there is a risk of significant deterioration of their rights.

Subsection 3. In calculating compensation under subsection 1, the property's value is assessed at current value.

Subsection 4. The total cash compensation for buildings may not exceed the market value (cash value) of the buildings on the property immediately before the damage occurred.

Chapter 5
Principles for Calculating Damages to Motor Vehicles

Section 15. If the damaged motor vehicle can be repaired, the repair costs are compensated.

Subsection 2. If the damaged motor vehicle is a total loss or unusable, compensation is paid corresponding to what it will cost to replace a corresponding motor vehicle.

Subsection 3. Compensation is paid for costs of necessary cleanup and cleaning, including disposal and destruction.

Chapter 6
Principles for Calculating Damages to Railway Vehicles

Section 16. If the damaged railway vehicle can be repaired, the repair costs are compensated.

Subsection 2. If the damaged railway vehicle is a total loss or unusable, compensation is paid corresponding to what it will cost to replace corresponding material.

Subsection 3. Compensation is paid for costs of necessary cleanup and cleaning, including disposal and destruction.

Chapter 7
Principles for Calculating Damages to Ships

Section 17. Compensation is paid according to the principles in the currently applicable insurance terms following The Nordic Marine Insurance Plan, based on an agreement between The Nordic Association of Marine Insurers (Cefor) and Danske Rederier, Suomen Varustamot, Norges Rederiforbund, and Svensk Sjöfart.

Chapter 8
Registration Database and Case Support System (Naturskadebasen)

Section 18. The Secretariat of the Terror Insurance Council shall maintain a database (Naturskadebasen) for registering information about persons and companies in connection with the handling of cases caused by terror acts covered by the Act on a Terror Insurance Scheme on the Property Insurance Sector.

Subsection 2. Naturskadebasen shall consist of a registration database and a case support system.

Subsection 3. The Secretariat of the Terror Insurance Council shall ensure that Naturskadebasen is accessible via the Financial Supervisory Authority's website.

Subsection 4. Insurance companies shall register in Naturskadebasen the information about persons and companies established in this Order, unless the information has already been entered into Naturskadebasen by the notifier, cf. Section 21, subsection 1. The insurance companies handling the cases are responsible for the processing of this information.

Section 19. Processing of information in Naturskadebasen may only take place to the extent necessary in connection with the handling of cases caused by events covered by Section 1, subsection 1, of the Act on a Terror Insurance Scheme on the Property Insurance Sector.

Subsection 2. Only the insurance companies handling the cases and the Secretariat of the Terror Insurance Council may have access to Naturskadebasen, cf. Section 18. The insurance companies' access shall be limited to information regarding cases they themselves handle.

Subsection 3. Only the insurance company handling the case may update and correct information in Naturskadebasen.

Subsection 4. The insurance company handling the case shall correct incorrect or erroneous information in Naturskadebasen as soon as possible.

Chapter 9
Opinion on an NBCR Terror Act

Section 20. The insurance company that receives a notification in Naturskadebasen, cf. Section 21, shall await the processing of the notification until the Terror Insurance Council has made a decision that the damage is covered by Section 1, subsection 1, of the Act on a Terror Insurance Scheme on the Property Insurance Sector.

18 June 2024. 3 No. 860.

Chapter 10
Notification, Case Handling, and Appeal.

Section 21. Damages covered by Section 1, subsections 2-4, of the Act on a Terror Insurance Scheme on the Property Insurance Sector, which are to be covered by the terror insurance schemes, must be notified electronically to Naturskadebasen and addressed to the insurance company where the damaged property or movable property is insured against fire.

Subsection 2. If notification cannot be made electronically in Naturskadebasen, it must be made on a notification form, which must be accessible via the Financial Supervisory Authority's website. In this case, the insurance company shall register the information from the notification form in Naturskadebasen.

Subsection 3. Notification under subsection 2 must be submitted by the policyholder, or the person who otherwise has a claim to compensation, to the insurance company that is to handle the case, cf. Section 22.

Subsection 4. The insurance company shall acknowledge receipt of the notification to the notifier. The acknowledgment must be accompanied by information about the insurance company handling the case and which information is registered about the notifier, unless otherwise provided by other legislation.

Subsection 5. The insurance company shall also register all received information relevant to the handling of the specific case.

Subsection 6. The insurance company shall reject the notification if the notified damage does not meet the conditions for payment of compensation. The same applies if the notification was made late, unless the Terror Insurance Council has dispensed with the deadline, cf. Section 18, subsection 2, of the Act on a Terror Insurance Scheme on the Property Insurance Sector.

Section 22. If there is damage to both real estate and movable property, and these are insured with different insurance companies, the damage must be notified to the insurance company where the property is insured against fire. This insurance company shall handle the case, and any other insurance companies shall provide the information necessary for case handling, including calculation of damages related to the notifier's engagement with that company.

Subsection 2. For properties containing two or more dwellings or businesses, and where the building is insured collectively, any movable property damages shall be handled by the insurance company that has taken out fire insurance for the movable property.

Subsection 3. Payment of compensation shall be made via the Naturskadebasen financial system when the insurance company has notified this to the Terror Insurance Council.

Subsection 4. The Terror Insurance Council shall enter into an agreement with F&P regarding which information insurance companies must deliver to the Terror Insurance Council in connection with the payment of compensation.

Section 23. The insurance company shall close the case when the decided compensation has been authorized and paid, or if for other reasons no further compensation will be authorized and paid. The insurance company shall notify this to the policyholder and register it in Naturskadebasen.

Section 24. Decisions made by insurance companies under this Order may be appealed to the Terror Insurance Council no later than 3 months after the decision was communicated to the relevant party.

Subsection 2. An appeal must be submitted in writing with any attachments to the Terror Insurance Council.

Subsection 3. The Terror Insurance Council shall immediately upon receipt of an appeal, cf. subsection 1, inform the insurance company that made the decision in the relevant case.

Subsection 4. The insurance company that made the decision in a case appealed under subsection 1 has 3 weeks after receiving the notification, cf. subsection 3, to submit any comments on the appeal to the Terror Insurance Council.

Subsection 5. If the insurance company does not submit comments, cf. subsection 4, the case is processed solely on the basis of the material available to the Terror Insurance Council.

Chapter 11
Entry into Force

Section 25. This Order enters into force on 1 July 2024.

Subsection 2. Order No. 941 of 10 September 2019 on conditions for compensation for damages covered by the Act on a Terror Insurance Scheme on the Property Insurance Sector and on the handling of NBCR terror damages by property insurance companies is repealed.

Subsection 3. Order No. 809 of 28 June 2010 on the Terror Insurance Pool for Property Insurance is repealed.

Ministry of Industry, Business and Financial Supervision, 18 June 2024 Morten Bødskov / Julie Sonne 18 June 2024. 4 No. 860.