Minimum Requirements for Property Insurance Contracts

2.1. The Property shall be insured against all risks that arise when transferring, managing and using the Property as set out in the insurance policy terms and conditions for the respective Property type approved by the Insurer, including:

2.1.1. water,
2.1.2. fire,
2.1.3. forces of nature,
2.1.4. theft (burglary, robbery),
2.1.5. intentional acts of third parties (including vandalism),
2.1.6. traffic accident (applicable if the Property is a vehicle).

2.2. If the Property is dismantled, transported, installed, tested or tried (including temporary storage, loading, unloading of the dismantled Property), the insurance cover shall also apply to the additional risks related to these actions (subject to the insurance policy terms and conditions for all risks of installation works).

2.3. Self-propelled work equipment, machinery or parts thereof shall be covered by insurance when they are used as a work tool or device.

2.4. The Property other than vehicles must be insured at new replacement value. Used equipment shall be insured at market value, inventories – at acquisition or market value.

2.5. Vehicles shall be insured at an amount not less than the purchase price of the Property (for a new Property) or an amount not less than the market value of the Property (for a used Property). If the Property is to be used abroad, it is necessary to conclude an insurance contract effective outside of the Republic of Lithuania.

2.6. When leasing a vehicle, the Client shall at his/her own expense conclude a mandatory insurance against civil liability in respect of the use of motor vehicle covering civil liability of each person managing the Property.

2.7. Deduction requirements (movable property):

3.1. The Property shall be insured against all risks that arise when delivering, managing and using the Property as set out in the insurance policy terms and conditions for the respective Property type approved by the Insurer, including:

3.1.1. water, with the exception under paragraph 3.3,
3.1.2. fire,
3.1.3. forces of nature, with the exception under paragraph 3.3,
3.1.4. theft (burglary, robbery), with the exception under paragraph 3.3.
3.1.5. intentional acts of third parties (including vandalism), with the exception under paragraph 3.3.

3.2. The Property shall be insured at new replacement value. Immovable property that was built or reconstructed more than 40 years ago (more than 30 years ago in case of a wooden building), is permanently out of use/out of operation/vacant immovable property, auxiliary 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.

3.3. As long as immovable property is under construction or renovation, it may be covered by insurance against all risks of construction and installation works. Before immovable property is completed, used for its intended purpose, reconstructed, where it is impossible to insure it against all the risks specified in paragraph 3.1, the property shall be insured against the following risks:

3.3.1. fire,
3.3.2. forces of nature, provided that the building/structure has properly installed main structures, roof, sealed windows, doors and other openings.

3.4. As soon as the immovable property that has been insured as construction in progress is put into operation as intended, it must be insured against the risks listed in paragraph 3.1.

3.5. Deduction requirements (immovable property):

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

4.1.1. increasing or reducing the insurance premium,
4.1.2. increasing the sum insured,
4.1.3. extending insured risks,
4.1.4. adjusting risk factors (fire alarms, alarms for the protection of property and other risk factors) as the risk changes,
4.1.5. reducing the unconditional deductible,
4.1.6. increasing the number of insured items.

4.2. The Client is required to present the insurance contract to the Bank before concluding the pledge transaction or accepting the Property from the seller if a leasing agreement is concluded. When extending (concluding a new/additional) insurance contract, the extended/supplemented/new insurance contract shall meet these publicly available Minimum Terms and Conditions of Property Insurance Contracts and shall be presented to the Bank not later than ten (10) days before the end of the existing Insurance Policy. As the Client extends, concludes a new or additional insurance contract, the Bank shall have the right to demand that insurance contract be concluded with another Insurer.

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

4.4. Having received the insurance certificate or insurance policy, the Client, regardless of whether the Client or the Bank is the Policyholder, shall read the information provided by the Bank and/or Insurance Broker about the Property insurance, terms and conditions of the insurance, including but not limited to the information on insured and non-insured events, and shall fulfil all obligations of the Policyholder under the terms and conditions of the insurance and ensure proper fulfilment thereof by lawful users of the Property (the Client).

4.5. At the request of the Bank, the Insurer or Aon Baltic UADBB, the Client shall, within the terms specified by them, provide to the Bank, the Insurer or Aon Baltic UADBB all information related to the Property insurance and documents evidencing the conclusion and proper performance of the insurance contract.

4.6. The Client shall promptly, but not later than within two (2) working days, inform Aon Baltic UADBB in writing about the insured event, which resulted in the damage or destruction of the property pledged to the Bank or owned by the Bank and transferred to the Client for management and use under the Financing Agreement, submit documents substantiating the insured event (the Insurer’s written record of the insured event, documents of law enforcement authorities, expert findings, other documents with legal effect). If the Property has been damaged, the Client shall ensure protection of the remaining Property and may not dispose of the remaining parts of the Property. In the event of violation of the above requirement, the Client shall reimburse the Bank for all resulting losses.

4.7. Once the Insurer has paid to the Bank the insurance benefit/compensation, the Bank shall use it to cover the insurance premium (part thereof) required by the Insurer under the insurance contract (if required by the Insurer); then, the Client’s debt accrued until the date of payment of the insurance benefit observing the order of priority of covering the debt provided for in the Financing Agreement (if any), also the losses incurred by the Bank (if any), and only then is the insurance benefit (or part thereof) transferred to the beneficiary, unless the Bank and the Client agree otherwise.

4.8. As a party to the insurance contract and lawful user of the Property responsible to the Bank for the Property, the Client shall participate in negotiations with the Insurer regarding the payment of the insurance benefit and/or in legal disputes with the Insurer concerning the payment of these benefits, unless otherwise specified by the Bank in writing. The Client’s refusal to agree with the Insurer’s decision not to treat the loss, destruction of or damage to the Property as an insured event and the related disputes shall not release the Client from subsequent fulfilment of the terms and conditions of the Financing Agreement.

4.9. Should the Client breach these Minimum Terms and Conditions related to Property insurance (including the cases where the Property is insured with an insurance company other than that recommended by the Bank), it shall be deemed that the Property has not been insured and the Bank shall have the right to immediately insure the Property in its own name with an insurance company acceptable to the Bank. In such event, the Client shall be required to reimburse the Bank for the costs of insuring the Property. If an authorised authority supervising the Insurers under the applicable legislation imposes on the Insurer with whom the insurance contract has been concluded sanctions provided for in the legislation or there are reasons to believe that such sanctions may be imposed, or bankruptcy or restructuring proceedings are instituted against such Insurer, or other procedures related to failure to pay the creditors are initiated against the Insurer, or a decision is passed to liquidate the Insurer, or other circumstances arise that could make the fulfilment of obligations of such Insurer difficult or impossible, the Client shall immediately, at his/her own expense, conclude the appropriate insurance contracts with other Insurers acceptable to the Bank on the terms and conditions acceptable to the Bank.