Minimum Requirements for Property Insurance Contracts

These Minimum Requirements for Property Insurance Contracts set forth the general rights and obligations of the Client in insurance of movable and immovable property pledged to Šiaulių bankas (the Bank) by the Client or acquired by the Bank at Client’s request under the Financing Agreement (the Property).

Financing Agreement: the credit, leasing or other financing agreement concluded between the Bank and the Client, on the basis of which the Client is obliged to insure the Property.

When insuring the Property, the Client shall comply with these Minimum Requirements for Property Insurance Contracts and the terms and conditions specified in the Financing Agreement. If the terms or requirements set forth in the Financing Agreement for Property insurance differ from these publicly available Minimum Requirements for Property Insurance Contracts, the Client shall comply with these publicly available Minimum Requirements for PropertyInsurance Contracts, unless special terms of the Financing Agreement give other terms or requirements.

Insurance

Insurance broker of the movable and immovable property (the Property) insured in favour of Šiaulių bankas AB (the Bank) is Aon Baltic UADBB. It will help you choose the insurance solution that best meets your expectations, "translate" the language of your insurance contract into a more understandable one, and in the event of an accident, arrange for all damages to be reimbursed as soon as possible.

For more information on the services provided by UADBB Aon Baltic:
Kęstučio 59, LT-08124 Vilnius, Lithuania
Tel. +370 5 233 0000
E-mail sb@draudimas.lt 
www.aon.ltwww.draudimas.lt

All insurance companies (INSURERS) listed in the list of insurance companies of the Bank of Lithuania are acceptable to the Bank: https://www.lb.lt/en/sfi-financial-market-participants

Insurance contract requirements

The following are the minimum terms and conditions for insurance contracts for Property that is pledged / will be pledged for the benefit of the Bank or which the Bank will acquire / acquired under the leasing contracts. Crediting, leasing or other financing agreements concluded between the Bank and the Client (the Financing Agreement) may also specify the requirements and conditions for the Property insurance. In the event that the terms and conditions of the Financing Agreements for Property insurance differ from these publicly available Minimum Requirements for PropertyInsurance Contracts, these publicly available Minimum Requirements for PropertyInsurance Contracts set forth by the Bank shall apply.

1. MINIMUM CONDITIONS FOR MOVABLE PROPERTY INSURANCE CONTRACTS

1.1. The insurance cover shall be valid until the date of fulfilment of all obligations of the Client specified in the Financing Agreement, but no shorter than the Property is released from the pledge or transferred into the ownership of the Client, Bank or third person or returned to the Bank according to the procedure provided for in the Financing Agreement or legal acts. Insurance contracts may be concluded for a period of one year or less, but must be renewed periodically in order for Property insurance coverage to remain in force uninterrupted.

1.2. The Insurance Contract shall enter into force no later than on the day of pledge of the Property or on the day when the Property Transfer Act is signed under the leasing contract, but no later than the risk of accidental damage, destruction or loss of the Property is transferred to the Client.

1.3. The Property must be insured against all risks covered by the Property insurance rules approved by the Insurer for the respective class of Property during the transfer, management and use of the Assets, including:

1.3.1. water.
1.3.2. fire.
1.3.3. natural forces.
1.3.4. theft (burglary, robbery).
1.3.5. intentional acts (including vandalism) of third parties.
1.3.6. traffic accident (applies if the Property is a vehicle).

1.4. If the Property is dismantled, transported, installed, tested or tried (including temporary storage, loading, unloading of the dismantled Property), the insurance coverage shall also apply to the additional risks associated with these actions (subject to the insurance terms for all risks of installation works).

1.5. Self-propelled equipment, mechanisms and machinery or parts thereof must be covered by insurance while using them as a work tool or device.

1.6. Property, except vehicles, must be insured with new replacement value. This is the amount required to purchase, to produce new property of the same specification, type and quality, including design, installation costs and mandatory fees. Non-new equipment is insured at market value, inventories at cost or at market value.

1.7. Vehicles must be insured:

1.7.1  in the case of conclusion of a new Insurance Contract at no less than the Property acquisition price or an amount no less than the market value of the Property, whichever is the greater (acquisition or the market).

1.7.2  in the event of renewal or conclusion of another Insurance Contract, upon expiry of the previous Insurance Contract at the amount no less than the residual value of the Property specified in the Financing Agreement or, at the Bank's choice and instruction: (i) at the amount specified by the Bank; or (ii) at the amount not less than the market value of the Property, whichever is the greater (the residual value or the market value). In the event of any dispute over the determination of the market value, the market value of the Property shall be determined at the Client's expense by one of the property assessors recommended by the Bank.

1.7.3. if the Property is intended to be used abroad, an Insurance Contract valid outside the Republic of Lithuania shall be concluded.

1.7.4. When leasing a vehicle, the Client shall at his own expense conclude a motor third party liability insurance contract to insure the civil liability of each person managing the Property.

1.8. Property, deduction requirements:

Property

Deduction in the case of losses is

Cars and their trailers

no more than EUR 160 and 10 % in the case of theft or full destruction;

Heavy transport:

 

if the Client's vehicle fleet is up to 5 units

no more than EUR 580 

if the Client's vehicle fleet is up to 10 units

no more than EUR 1700

if the Client's vehicle fleet of exceeds 10 units

no more than EUR 2900

Agricultural and specialized machinery

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

Wood industry equipment

up to 10 % from insurance amount, but no more than EUR 14 500 

Equipment, plant and other assets:

 

if the Property insurance amount is up to EUR 30,000

up to EUR 300 

if the Property insurance amount exceeds EUR 30,000

up to 5 % from insurance amount, but no more than EUR 10 000 EUR

2. MINIMUM CONDITIONS FOR IMMOVABLE PROPERTY INSURANCE CONTRACTS

2.1. The insurance cover shall be valid until the date of fulfilment of all obligations of the Client specified in the Financing Agreement, but no shorter than the Property is released from the pledge or transferred to the Client, Bank or third person or returned to the Bank according to the Financing Agreement or legal acts. Insurance contracts may be concluded for a period of one year or less, but must be renewed periodically in order for Property insurance coverage to remain in force uninterrupted.

2.2. The Insurance Contract shall enter into force no later than on the day of pledge of the Property or on the day when the Property transfer act is signed under the Leasing Contract, but no later than the risk of accidental damage, destruction or loss of the Property is transferred to the Client.

2.3. The Property must be insured against all risks covered by the insurance policy approved by the Insurer for the relevant class of property during delivery, management and use of the Property, including:

2.3.1. water.
2.3.2. fire.
2.3.3. natural forces.
2.3.4. theft (not applicable if the Property is not completed to build).
2.3.5. Intentional acts of third parties, including vandalism (not applicable if the Property is not completed to build).
2.3.6. Property must be insured with new replacement value. This is the amount required to construct a new building / structure of the same purpose, construction and quality, including design, erection or installation costs and mandatory fees. Real estate that is more than 40 years old after construction or recent renovation, permanently unused (non-operating) / non-residential real estate, ancillary buildings / structures on residential land and low value property may be insured at residual value if the Insurer refuses to insure such property at replacement value.

2.4. The following risks must be insured before the immovable property is completed and is not used for its intended purpose:

2.4.1. fire.
2.4.2. natural forces, provided that the building / structure has properly installed building's basic structures, roof, sealed windows, doors and other openings.

As soon as the immovable property which has been insured as unfinished is put into operation for its intended purpose, it must be insured against the risks listed in par. 2.3.

2.5. Immovable property deduction requirements:

Property

Deduction in the case of losses is

Residential objects for which the policyholder is natural person 

up to EUR 300 

Residential objects for which the policyholder is legal entity

up to EUR 300

Wood industry buildings

up to 10 % from insurance amount, but no more than EUR 14 500 

For all other real estate properties

up to 5 % from insurance amount, but no more than EUR 10 000 

The Bank Beneficiary (insurance benefit) shall be specified in the Insurance Contract as the Beneficiary (of insurance benefit).

The terms and conditions of the insurance contract, including the beneficiary (of insurance benefit), may be changed only with the prior written consent of the Bank, unless the following conditions of the insurance contract are changed:

  1. increase or decrease of the insurance premium;
  2. increase of the sum insured;
  3. extending insured risks;
  4. adjustment of risk factors (fire, property security alarms, and other risk factors) as the risk changes;
  5. reduction of unconditional deduction;
  6. increasing the number of insured items.

The Client shall submit the Insurance Contract to the Bank prior to entering into the pledge transaction or withdrawing the Property from the seller, if a leasing contract is concluded. When renewing (entering into a new, supplementary) Insurance Contract, renewal of the Insurance Contract, the new Insurance Contract shall comply with these publicly disclosed Minimum Terms for Property Insurance Contracts and shall be submitted to the Bank at least 3 (three) business days prior to the day of expiration of the existing Insurance Contract. If the Client extends, concludes a new or additional Insurance Contract, the Bank shall have the right to request that the Insurance Contract be concluded with another Insurer.

All costs related to insurance, including the obligation to pay insurance premiums (if the Policyholder is the Client) shall be borne by the Client.

Upon receipt of the insurance certificate or insurance policy, the Client, both when Client is Policyholder and when the Bank is Policyholder, undertakes to become acquainted with the information on the Property insurance, insurance terms and conditions provided by the Bank and / or the Insurance Broker, including but not limited to the insured and non-insured events, as well as fulfil all obligations set forth in the insurance terms / insurance rules for the Policyholder and ensure that other legal Property managers (the Client) comply with them.

At the request of the Bank, the Insurer or Baltolink UAB, the Client shall submit to the Bank, the Insurer or Baltolink UAB all the information related to the Property Insurance and documents confirming the conclusion and proper execution of the Insurance Contract within the terms specified by them.

The Client shall promptly, but no later than within 2 (two) business days, inform Baltolink UAB in writing about the insured event, which resulted in the damage or destruction of property pledged to the Bank or owned by the Bank and transferred to the Client for management and use under Financing Agreement, submit documents substantiating the insured event (the Insurer's written record of the insured event, documents of law enforcement agencies, conclusions of experts, other documents having legal effect). In the event of property injury (damage), the Client must take care of the protection of the remaining Property and shall not be entitled to dispose of the remaining parts of the Property. In case of violation of this clause the Client shall indemnify the Bank for all losses incurred as a result.

After the Insurer pays to the Bank the insurance indemnity (compensation), the Bank shall cover the insurance premium (part thereof) demanded by the Insurer according to the Insurance Contract (if the Insurer requests), then the Client's indebtedness until the day of receiving the insurance benefit observing the debt covering hierarchy specified in  the Financing Agreement (if any), the Bank shall also be indemnified (if the Bank incurs such losses) before transferring the insurance indemnity (or part thereof) to the Client or other beneficiary (insurance indemnity) specified in the insurance contract, unless otherwise agreed between the Bank and the Client .

The Client undertakes, as a party to the Insurance Contract and the legal Property manager responsible for the Property to the Bank, to participate in negotiations with the Insurer regarding payment of the insurance indemnity and / or legal disputes with the Insurer regarding payment of these claims, unless otherwise stated in writing. The Client's disagreement with the Insurer's decision not to recognize the disappearance, destruction or damage of the Property as an insured event and related disputes shall not release the Client from further performance of the terms and conditions of the Financing Agreement.

If the Client violates these Minimum Terms relating to Property insurance (including if the Property is insured in an insurance company other than the one recommended by the Bank), the Property shall be deemed uninsured and the Bank shall be entitled to immediately insure the Property in its name with an insurance company acceptable to it. In such case the Client shall reimburse the Bank for the expenses incurred for Property insurance. If the authorized supervisor of Insurers applies statutory remedies to the Insurer who has concluded the insurance contract, or has reason to believe that such remedies may be applied, or commences bankruptcy or restructuring proceedings or other procedures are instituted against such Insurer in the case it fails to settle with the creditors' procedures or a decision is made on the liquidation of the Insurer, or upon other circumstances that may render the fulfilment of the obligations of such Insurer difficult or impossible, the Client shall immediately, on his own account, enter into respective insurance contracts with other insurers acceptable to the Bank under the conditions acceptable to the Bank.