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LAW OF THE AZERBAIJAN REPUBLIC

of June 24, 2011 No. 165-IVQ

About compulsory insurances

(as amended on 06-07-2023)

This Law, governing the legal and economic relations between insurers, insurers, insured and beneficiaries in the sphere of compulsory insurance of real estate, obligatory civil liability insurance of owners of vehicles, obligatory civil liability insurance in connection with operation of real estate and obligatory personal passengers insurance from accident, for the purpose of protection of their rights and interests establishes general bases of implementation of noted types of compulsory insurance, and also the rule and condition of their implementation in the Azerbaijan Republic.

I. General Section

Chapter 1. Introduction provisions

Article 1. General provisions

1.1. The general Section of this Law establishes the basic principles and provisions which shall be applied in the relations by types of compulsory insurance, except as specified, for which excellent provisions are provided in other laws relating to separate types of compulsory insurance.

1.2. Provisions of the Special Section of this Law extend only to that type of compulsory insurance which is established by the corresponding Chapters of this Section.

1.3. If this Law does not provide other, interpretation of the used concepts is established by the Civil code of the Azerbaijan Republic and the Law of the Azerbaijan Republic "About insurance activity".

1.4. If this Law does not establish other, the relations following from implementation of the types of compulsory insurance provided by this Law are regulated by the Civil code of the Azerbaijan Republic and the Law of the Azerbaijan Republic "About insurance activity".

Article 2. Legislation on compulsory insurances

2.1. The legislation of the Azerbaijan Republic on compulsory insurances consists of the Constitution of the Azerbaijan Republic, the Civil code of the Azerbaijan Republic, the Law of the Azerbaijan Republic "About insurance activity", the Law of the Azerbaijan Republic "About the Central Bank of the Azerbaijan Republic", this Law, interstate international treaties and other regulatory legal acts of the Azerbaijan Republic.

2.2. The relations in the sphere of compulsory insurance in the Alyatsky free economic zone are governed according to requirements of the Law of the Azerbaijan Republic "About the Alyatsky free economic zone".

Article 3. Principles of compulsory insurance

3.1. The basic principles of the compulsory insurances provided by this Law:

3.1.1. obligation and distribution of compulsory insurances concerning any person having insurance interest on the corresponding type of insurance;

3.1.2. providing in the amount established by this Law and procedure for protection of persons, to health and (or) property of which the damage as a result of insured events is caused;

3.1.3. stimulation of prevention of the circumstances which are the reason of insured events;

3.1.4. ensuring elimination of consequences of insured events, and also uses of insurance indemnities for these purposes;

3.1.5. ensuring financial stability in insurance transactions by means of the multi-level mechanism of financial provision;

3.1.6. ensuring single methodological approach to making of transactions by the types of compulsory insurance provided by this Law.

Article 4. Purpose, carrying out and territory of application of compulsory insurance

4.1. The types of compulsory insurance provided by this Law are applied for the purpose of ensuring compensation of damage to which physical persons and legal entities in connection with valuable interests are exposed.

4.2. Losses of persons as a result of insured events do not join in providing on compulsory insurance.

4.3. For the purpose of this Law insurance of valuable interests in connection with any property (the building, construction, the vehicle, the device, the device, the equipment and so forth) which is in condition, emergency or unsuitable to operation, is forbidden.

4.4. Carrying out the any kind of compulsory insurance provided by this Law is performed based on the corresponding permission issued to the insurer by the Central bank of the Azerbaijan Republic (further - the Central bank).

4.5. Additional requirements for issue of permission to carrying out types of compulsory insurance are established by the Central bank.

4.6. If the Special Section of this Law does not provide other, insurance coverage for agreements of compulsory insurance acts on the territory of the Azerbaijan Republic.

Article 4-1. Calculations

Payments by the calculations established by this Law are performed only in non-cash form.

Article 5. Insurer and insurer

5.1. The legal entity having the license for implementation of insurance activity in the Azerbaijan Republic and who got the corresponding permission to carrying out certain type of the compulsory insurance provided by the Special Section of this Law is considered the insurer.

5.2. According to the corresponding Chapter of the Special part of this Law, the physical person or legal entity which shall insure without fail the corresponding valuable interests and is the party of the agreement of compulsory insurance signed with the insurer is considered the insurer.

5.3. Insurers are free in the choice of any insurer having the license for carrying out the corresponding type of compulsory insurance for the conclusion of the insurance contract.

Article 6. Insured, beneficiary and victim

6.1. Person whose valuable interests are insured under the agreement of compulsory insurance is considered insured: in the agreement of compulsory personal insurance from accident - person for benefit of whom the agreement of compulsory insurance is signed (it is included in category of insured), on proprietary insurance - person who has property in property or actual possession, on civil responsibility insurance - person who is identified on the basis, the stipulated in Article 6.2 presents of the Law.

6.2. Any person operating on legal causes the property specified in the agreement of obligatory civil liability insurance and also the insurer at the time of operation of this property from its party are considered as insured.

6.3. Relevant provisions of the Special Section of this Law establish specific category of insurers or insured by each type of compulsory insurance.

6.4. Person to whom the insurance indemnity according to the Civil code of the Azerbaijan Republic, this Law and (or) terms of the contract of insurance shall be issued is considered the beneficiary. The beneficiary on personal insurance upon accident is considered insured, in case of his death - members of his family, and in the absence of those - other heirs, stipulated in Article 1159 Civil codes of the Azerbaijan Republic, and on civil responsibility insurance - the third party, in case of his death - members of his family (if the third party is legal person, his legal successor).

6.5. The members of the family of the insured or third party acting as the beneficiary, the stipulated in Article 6.4 presents of the Law, have rights to equal shares in case of receipt of insurance indemnity.

6.6. On personal insurance upon accident it is considered the victim insured to which health harm is done, and on civil responsibility insurance - the third party, to property and (or) health of which harm is done.

6.7. Any person having insurance interest in connection with property to which the damage as a result of insured event on property insurance is caused is recognized to the victims irrespective of whether it is owner of this property.

6.8. As a result of insured event on personal insurance by the victim person to whose health harm is done, and in case of his death - members of his family is recognized.

6.9. For the purpose of this Law "family members" are implied as children of person (the adopted children), the children who were born after his death, his spouse (spouse), parents (adoptive parents).

Article 7. Third parties

Except for the insurer and (or) family members insured, under this Law the insurance which is not the agreement party on obligatory civil liability insurance, injured actions or failure to act insured, and at the same time the physical persons having the right to insurance indemnity, and in case of the death of the physical person - members of his family, either legal entities or their legal successors is considered as the third parties.

Article 8. Agreement of compulsory insurance

8.1. The agreement of compulsory insurance - the agreement signed between the insurer and the insurer on rendering compulsory insurance taking into account requirements of articles 8.1-1 and 8.1-2 of this Law, by issue to the insurer (in appropriate cases to insurers) the appropriate certificate about compulsory insurance, drawn up in electronic form and approved by means of the strengthened digital signature.

8.1-1. The agreement of compulsory insurance is valid only in case of the conclusion by means of the information system provided by this Law and its availability in information resource of this system.

8.1-2. The insurance contract, the stipulated in Article 50-1.0.3 presents of the Law, consists the insurer by issue to the insurer or insured the appropriate insurance certificate.

8.2. If the Special Section of this Law does not establish other, the agreement of compulsory insurance is signed for 1 year.

8.3. If in connection with the corresponding property the agreement of compulsory insurance on receipt of ensuring the compulsory insurance provided by this Law is signed, and the Special Section of this Law does not provide other, then when changing the owner of property during the term of this agreement, including in case of cession of property on legal causes in use of other person in lease or other procedure, taking into account article 8.4 of this Law, the conclusion of the new agreement of compulsory insurance before the expiration of the agreement is not required. In this case all rights and obligations carried to the insurer by this Law extend to the new owner or the user of property.

8.4. The insurer is not exempted from obligation to sign the relevant agreement of compulsory insurance if insurance coverage for any type of compulsory insurance noted in the Special Section of this Law fully or partially is provided in the agreement of voluntary insurance.

8.5. If the Special Section of this Law does not provide other, the agreement of compulsory insurance stops in the appropriate cases and procedure provided by Articles 919-921 of the Civil code of the Azerbaijan Republic. In case of early termination of the agreement of compulsory insurance, the insurer shall sign the new agreement of compulsory insurance on the corresponding type of insurance.

8.6. If this Law does not provide other, the franchize in the agreement of compulsory insurance is not established.

Article 9. Certificate of compulsory insurance

9.1. The certificate of compulsory insurance - the document certifying the fact of the conclusion of the agreement of compulsory insurance. Except for article 50-1.0.3 of this Law the insurance certificate by the types of compulsory insurance provided by this Law is drawn up in electronic form according to the Law of the Azerbaijan Republic "About the digital signature and the electronic document.

9.2. Ceased to be valid.

9.3. Content and form of the certificate of compulsory insurance are determined by the Central bank separately by each type of compulsory insurance taking into account provisions of the Civil code of the Azerbaijan Republic.

9.4. The insurance certificate is granted in day of introduction of insurance premium, and in case of group insurance - within 3 working days from the moment of introduction of insurance premium.

9.5. No. 649-IVQD is excluded according to the Law of the Azerbaijan Republic of 14.05.2013

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