A person may purchase a Green Card policy in Azerbaijan for his vehicle and travel to ALL Green Card member countries with one policy - Executive director of CIB of Azerbaijan (VIDEO)
“SPECIAL INTERVIEW” of NEWS.AZ
U.Z. Hello. This is News.az reporting. I am Ulviyya Zulfikar. Chief-editor. Today we have a special guest in our special interview. Mr. Rashad Ahmadov. Executive director of Compulsory Insurance Bureau. We will touch upon various points. You will know that Azerbaijan also has a Green Card. However, this Green Card is related to insurance. We will also talk about the types of compulsory insurance, have a wide discussion about how you can insure your property and vehicle, and how you can protect yourself and others around you. So we get started.
U.Z. Hello Mr. Ahmadov, how are you? There are many points of interest for us and our followers regarding insurance. I hope that we will not bother you too much with these questions.
R.A. Hello, I am good, thank you very much.
U.Z. I would like to start with the simplest notes. For example, many citizens, including me, are interested in knowing what types of property is the Compulsory Insurance applied. For example, let's start with the residential property. Why do we have to insure our homes?
R.A. Compulsory property insurance product is mandatory for individuals and legal entities in Azerbaijan. This type of insurance coverage protects from fire, flood, third-party illegal acts and natural disasters, and other risks clearly mentioned in the legislation. The regulation applies to both residential and non-residential areas. Let me explain to you how the coverage for the residential areas works. The coverage areas are divided into 3 zones based on the sum insured.
The sum insured for individuals is 25,000 AZN for Baku
20,000 AZN for Sumgait, Ganja and Nakhchivan
15,000 AZN for the remaining cities
The insurance premium is 0.2% of the sum insured
What I just mentioned applies to individuals by the way. Let’s say you live in Baku and you are looking to purchase compulsory property insurance for your house. Regardless of whether you live in a multi-story villa or a one-bedroom apartment, your sum insured is going to be 25,000 AZN. In the event of an insurance claim, your maximum insurance payout is going to be 25,000 AZN.
U.Z. If the damage exceeds these figures, for example, if the damage to your property in Baku is 40,000 AZN, will the insured party have to pay the rest? Is there another way to increase the sum insured?
R.A. The amounts of the sum insured for the compulsory property insurance are fixed by the law. However, any individual may decide to purchase comprehensive coverage for their property up to the real value of their property. If the value of your property is 100,000 AZN, you will receive 25,000 AZN insurance coverage via compulsory property insurance for 50 AZN, and you may purchase comprehensive coverage for the remaining 75,000 AZN and the approximate insurance premium here is going to be around 150 AZN.
U.Z. I understood that this case applies to individuals. But how is this situation regulated for legal entities?
R.A. The application of compulsory property insurance for individuals and legal entities is completely different. The sum insured for properties owned by the legal entities depends on the market value of the subject matter. The sum insured is equal to the market value of the property.
U.Z. For example, when there is fire in the house, the damage is not only to the walls. Household items can also get damaged. How to insure personal property, ie household items in this case?
R.A. Fortunately, personal property such as personal belongings and furniture that is located inside the property can be insured through comprehensive coverage. However, all the items that are being insured must be mentioned in detail along with their value in the policy.
U.Z. When it comes to non-residential space, if the type of property in question is a workplace, then is it possible to insure the employees along with the inventory?
R.A. When it comes to the employees, however, there is a compulsory product that is designed to protect both the employees and the employers, called the employer’s liability insurance. This compulsory insurance product provides the payment of insurance indemnity in case of an accident that may occur at the workplace. This type of insurance also applies if the employees are performing their employment duties outside of the workplace during work hours.
U.Z. We also witness cases of fire or flood in a home or any non-residential area and it spreads to a neighbor or to a residential or non-residential area in the neighborhood. Which insurance type is applied in this case?
R.A. In cases where fire, flood, or any type of accident in property causes damages to other properties around it, the property owners’ third-party liability coverage comes into play. It is important to note, however, that this type of coverage only applies to legal entities. This type of compulsory insurance concerns the damage that legal entities may cause to individuals. It is also possible for individuals to purchase comprehensive property owners’ third-party liability coverage to protect them from liability in case of damage that is caused from their property to that of others. All non-life insurance companies in Azerbaijan offer comprehensive insurance products for individual property owners who are looking to purchase third-party liability coverage. The sum insured in that instance is going to depend on your preference. You might purchase liability coverage for 100,000 AZN, 200,000 AZN, 1,000,000 AZN, or any amount that you feel is necessary. The premium here will vary depending on the insurance company and its underwriters. A person looking to purchase such coverage must fill all necessary applications and the premium will be determined based on their needs and particular circumstances.
U.Z. If the damage is not only material but also to human health and life, what happens then?
R.A. The damage to health and the damage as a result of the loss of life will be calculated based on the related insurance laws of the Azerbaijan Republic. In our country, the damage amount as a result of the loss of life will be calculated based on the income and the dependants of the deceased person.
U.Z. Mr. Ahmadov, we need a vehicle to get out of our insured house and go somewhere. Needless to say, traveling in vehicles may involve some dangers for ourselves and others. In which cases can the vehicle insurance protect us?
R.A. Taking into account the risks associated with traveling by vehicles, whether it is on the ground, water, air, or railroad, there are compulsory insurance types that are enforced. Firstly, there is the motor owner’s third-party liability insurance. Any vehicle that is on the road today, must have MTPL. The motor owner’s third-party liability insurance ensures compensation for damage to the health and property of individuals and legal entities. This insurance type actually protects the parties that are traveling on the road and are hit by another vehicle while not being at any fault. The insurance policy of the party who has caused the damage will compensate for the damages to the third party. Then there is the passenger’s compulsory personal accident insurance that is applied for the purpose of providing insurance coverage for the life and health of passengers in the air, water, rail, and road vehicles carrying out passenger transportation services between cities and international routes. For both of these compulsory coverages, the sum insured is 5,000 AZN per person and 50,000 AZN per accident.
U.Z. As far as I know, the validity scope of the insurance cases you mentioned is within in the country. But what protects us if I have traveled to a neighboring country with my own car?
R.A. This is a great question. Since 2016, Azerbaijan is part of the international Green Card Insurance System. This system is governed by the Council of Bureaux (COB) that is headquartered in Belgium. The Compulsory Insurance Bureau, being a member of the Council of Bureaux, represents Azerbaijan in the International Green Card System and operates as the National Green Card Bureau, as required by law. All 14 non-life insurance companies in Azerbaijan are allowed issuing of Green Card insurance policies. Policyholders can travel to the countries within the system. In case of an accident abroad, the host country covers all expenses, and the National Green Card Bureau of Azerbaijan is responsible for the reimbursement of these expenses. In case of an accident by a vehicle registered abroad that takes place in Azerbaijan, the National Green Card Bureau covers the victim’s expenses and approaches the home country in order to receive a reimbursement for the paid indemnity. It is important to note that a person may purchase a Green Card policy in Azerbaijan for the vehicles registered in Azerbaijan and travel to ALL Green Card member countries with one policy, instead of having to purchase frontier insurance in each country they travel to. Therefore, a Green Card would save a great amount of money.
U.Z. Mr. Ahmadov We have information that Azerbaijan became a full member of the Council of Bureaux. What can you tell us about this?
R.A. Yes we are really proud of this. In 2014 we applied COB first time. Since 2016 we were operating as a National Green card bureau and member of COB but not permanent. Transitional member. Last month in Belgrade we had next general assembly and we became full member.
I would also like to inform you of a great achievement that our bureau has recently accomplished regarding the Green Card system. According to the internal rules of the COB, a new member holds a temporary status for the first 10 years of becoming a member of the Green Card System. Transitional members must deposit 5,000,000 EUR in a foreign bank determined by the Council of Bureaux as a financial guarantee requirement and make timely and complete Green Card insurance payments received from other Bureaus. However, on a very few occasions, exceptions have been made to make a temporary member a full member before the completion of the 10-year period. Thanks to its flawless work, the Compulsory Insurance Bureau has completed the transition period in 5 years, and as decided at the 56th General Assembly in Belgrade two weeks ago, we have now become a full member. This means that half of the guarantee amount, around 5,000,000 AZN will be returned to the Compulsory Insurance Bureau. The return of this amount will result in the generation of additional income in accordance with the Bureau's Investment Policy, and the payment of certain administrative expenses.
U.Z. Thank You very much for the interview Mr. Ahmadov
R.A. You are very welcome