Section I General Provisions

Under an insurance contract an insurer shall be bound to undertake a certain risk in return for payment of a premium, and where an insurance event occurs - to pay to the assured or to a third party beneficiary an insurance indemnity or an amount of money.

(1)

An insurance contract is concluded in writing as an insurance policy or another instrument in writing.

(2)

An insurance policy must contain:

1.

the names and addresses of the parties;

2.

the subject matter of the insurance;

3.

the risks covered;

4.

the term of the contract, as well as the commencement and the end of the insurance coverage;

5.

the sum insured or the manner of its calculation;

6.

the insurance premium or the manner of its calculation, as well as the term for payment thereof;

7.

date and place of issue;

8.

signatures of the parties.

(3)

An insurance policy to the benefit of a third party must also contain the name or the capacity of the beneficiary.

The contract shall come into force upon payment of the first premium, unless otherwise agreed.

(1)

Upon conclusion of the contract the assured shall be obliged to declare the material circumstances of his knowledge and of importance to the risk.

(2)

Material circumstances under paragraph 1 shall be considered to be those for which the insurer has put questions in writing.

(3)

A failure to answer a question, without concealing material circumstances to the risk, shall not be reason for invalidity or for modification of the contract.

(1)

If the assured has intentionally incorrectly declared or held back circumstances under which the insurer would not have concluded the contract had he been of knowledge thereof, the insurer may terminate the contract. He may exercise that right within one month after coming of knowledge of such circumstance.

(2)

In cases under paragraph 1 the insurer shall retain the premiums paid and shall be entitled to claim payment thereof for the period to the termination of the contract.

(3)

Where the intentionally incorrectly declared or held back circumstance is of such a nature that the insurer would have concluded the contract, but under different conditions, he may request modification of the contract. This right may be exercised within one month after coming of knowledge of such circumstance. If the assured does not accept the proposal for modification of the contract within two weeks following the receipt of such proposal, the contract shall be terminated with the consequences pursuant to paragraph 2.

(4)

Where in the cases under paragraph 1 an insurance event occurs, the insurer may refuse to pay insurance indemnity or the sum insured, only provided the incorrectly declared or held back circumstance has affected the occurrence of the event.

(5)

Where the assured has concluded the contract through proxy or on account of a third party, it shall be sufficient that the concealed circumstance was known by the assured or his proxy, or the third party, respectively.

(1)

Where upon conclusion of the contract the parties have not been of knowledge of the circumstance under Article 383, paragraph 1, each of them may, within two weeks after coming of knowledge of such circumstance, propose amendment to the contract.

(2)

If the other party does not accept the proposal under paragraph 1 within two weeks following its receipt, the proposing party may terminate the contract and notify the other party in writing thereof.

(3)

Should the contract be terminated, the insurer shall reimburse a portion of the premium corresponding to that part of the contract term which has not expired.

(4)

In case of occurrence of an insurance event before the amendment or termination of the contract, the insurer may not refuse to pay insurance indemnity or the sum insured, but may reduce them according to the ratio between the amount of premiums paid and the premiums to be paid in compliance with the actual risk.

(1)

Throughout the duration of the contract the assured shall be obliged to declare before the insurer any newly occurred circumstances, for which the insurer has put questions in writing at the time of conclusion of the contract. The declaration of circumstances should be effected forthwith after coming of knowledge thereof.

(2)

Articles 384 and 385 shall apply mutatis mutandis in the case of default of the obligation under paragraph 1.

(1)

The first premium, as well as the lump premium, shall be paid upon delivery of the policy, unless otherwise agreed.

(2)

Current premiums shall be paid within the agreed terms. In the case of default of payment the insurer may reduce the sum insured, modify the contract, or terminate the contract.

(3)

(Amended, SG No. 58/1997) The insurer may exercise the rights under paragraph 2 not earlier than fifteen days from the date on which the assured has received notice in writing.

(4)

Where it was agreed that the insurance coverage shall commence without the first premium being paid, the insurer shall be entitled to request payment thereof with interest for delay.

(1)

The assured shall be obliged to take measures to protect the property insured from damages.

(2)

The assured shall be obliged to comply with the instructions of the insurer and the competent authorities for elimination of sources of hazards of damages, and to allow access of the insurer for inspections.

(1)

In the case of occurrence of an insurance event the assured shall be bound to notify the insurer within seven days after coming of knowledge thereof, unless the general conditions provide another appropriate term.

(2)

The assured shall be obliged to make efforts to restrict the damages.

(3)

The assured shall be obliged to allow the insurer to make visual inspection, and to provide the requested documents relevant to the ascertainment of the event and the amount of damages.

(1)

In the case of occurrence of an insurance event the insurer shall be obliged to pay the indemnity or the sum insured.

(2)

The insurer shall indemnify separately the assured for expenses he has made to restrict the damages, provided he has acted with the appropriate care, even where his efforts have been without success.

(3)

The insured shall not owe compensation for loss of profit, unless otherwise agreed.

(4)

The insurer shall be relieved from his obligations under paragraphs 1 and 2, if the insurance event has been deliberately caused by the assured or by a third party beneficiary.

(5)

The insurer shall not be liable for amounts exceeding the sum insured.

(1)

An insurance contract where there is no interest in the insurance shall be invalid.

(2)

The contract shall be terminated if the interest ceases to exist in the course of the duration of the contract.

(3)

The assured shall be entitled to claim reimbursement of premiums paid, except where he has been or should have been of knowledge of the lack of interest.

Rights under an insurance contract shall expire by limitation after three years, and under "liability" insurance after five years from the date of occurrence of the insurance event.

Compulsory execution for the sum insured under "life" and "accident" insurances shall not be allowed, as well as for the indemnity under "liability" insurance. Compulsory execution for insurance indemnity under property insurances shall be allowed in cases where it may be directed against the property insured.

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