Bulgarian Insurance Law Provisions
- Bulgarian insurance policy
- Bulgarian insurable interest
- How does a Bulgarian insurance policy protect me
- Bulgarian Insurance government agencies
- What are ‘exclusions’ and ‘limitations’ and how do they affect my coverage
- What coverage do I get from a homeowners policy
- If I own a house in Bulgaria, am I required to buy homeowners insurance
- If I do not own property in Bulgaria, but only rent a house or apartment, do I still have a need for Bulgarian insurance
- What happens if I injured myself at my friend’s house
- Should I have insurance on the building (house, apartment, villa)
- What kinds of insurance should I buy for my commercial building
- Are there legal limitations on Bulgarian insurance company business practices
- Can I cancel my policy at any time and will there be a penalty
A Bulgarian insurance policy is a legally binding contract between an insurance company and the person who buys the policy, commonly called the “policyholder”, who also is often the person insured.
In exchange for payment of a specified sum of money, called the “premium”, the Bulgarian insurance company agrees to pay for certain types of loss or damage as specified by the contract. When a loss occurs which meets all of the requirements described by the terms of a Bulgarian insurance policy, the loss is said to be “covered” by that policy.
Bulgarian “insurable interest”
A person has an “insurable interest” in something when loss or damage to it would cause that person to suffer a financial loss or certain other kinds of losses. For example, if the house you own is damaged by fire, the value of your house has been reduced, and whether you pay to have the house rebuilt or sell it at a reduced price, you have suffered a financial loss resulting from the fire. By contrast, if your neighbor’s house, which you do not own, is damaged by fire, you may feel sympathy for your neighbor and you may be emotionally upset, but you have not suffered a financial loss from the fire. You have an insurable interest in your own house in Bulgaria, but in this example you do not have a Bulgarian insurable interest in your neighbor’s house.
A basic requirement for all types of Bulgarian insurance is the person who buys a policy must have an insurable interest in the subject of the insurance. You have an insurable interest in any Bulgarian property (house, apartment, villa) you own or which is in your possession.
For purposes of life insurance in Bulgaria, everyone is considered to have an insurable interest in their own lives as well as the lives of their spouses and dependents. For property and casualty insurance, the insurable interest must exist both at the time the insurance is purchased and at the time a loss occurs. For life insurance, the insurable interest only needs to exist at the time the policy is purchased.
How does a Bulgarian insurance policy “protect” me?
Insurance policies offer protection against economic loss, that is, loss or damage which can be measured in purely financial terms and compensated by money. For example, a Bulgarian insurance policy can pay for the cost to repair or replace a damaged automobile or to rebuild a house damaged by fire, for the cost of medical treatment for an injury or illness or for the lost income of a person who dies or is unable to work. The purpose is to place the injured party, as nearly as possible, in the same financial position as if the loss had not occurred.
It is important to understand this limitation of insurance, since there are many types of losses which can not be compensated by money. For example, insurance can not replace a life or take away the emotional injury or pain which often accompanies an accident or serious illness or compensate for loss of the “sentimental” value of an item of property. When you buy homeowners property insurance, for example, you are insuring only the economic value of the house, i.e., the cost to repair or rebuild it.
Bulgarian Insurance government agencies?
Insurance companies in Bulgaria are regulated primarily by the individuals. The name of the insurance regulatory agency typically is “Department of Insurance”, “Division of Insurance”, “Insurance Bureau” or something similar. This agency is headed by a state government official usually called the “Director of Insurance” or a similar title.
A primary function of a Department of Insurance is to assure that insurance companies operating in Bulgaria are financially sound, so that the company will have the financial ability to meet its obligations to pay claims. Bulgarian Insurance companies are required to meet certain financial requirements and are required to demonstrate periodically (at least annually) to a Department of Insurance that they continue to meet them or exceed the minimum financial requirements in order to continue to conduct business in Bulgaria. The Department of Insurance can take various actions against a Bulgarian insurance company that fails to conduct its business in a financially sound manner, including action to cause the company to cease operation in the state.
Bulgaria has laws regulating the conduct of insurance business to ensure fairness in the way companies deal with applicants for insurance and policyholders. One of the functions of a Department of Insurance is to enforce these so-called “unfair trade practices” and “unfair claims practices” laws by investigating complaints by consumers and taking action, when appropriate, to get companies to stop conducting actions that violate the laws and impose penalties for violations. Other duties of a Department of Insurance include reviewing and approving the policy forms used by Bulgarian insurance companies and approving rates charged for various types of insurance to assure compliance with state laws that regulate insurance rates.
What are “exclusions” and “limitations” and how do they affect my coverage?
An “exclusion” is a statement in an insurance policy which describes a condition or type of loss that is not covered by the policy. An “exclusion” is an exception to the general statement of coverage contained in the policy. For example, an auto liability policy typically states that it will pay damages for bodily injury or house damage for which an insured becomes legally responsible because of an auto accident. The same policy typically would have “exclusions” that provide, for example, that there is no coverage if the injury is caused intentionally or if the injury is caused by a person who uses an insured vehicle without permission.
A provision found in some policies which is similar to an “exclusion” is called a “limitation”. A limitation also is an exception to the general statement of coverage but is applicable only under certain circumstances or for a specified period of time. For example, a health insurance policy often contains a “preexisting conditions” limitation, which states that the coverage does not apply to an illness or other medical conditions that have been treated or diagnosed within a certain period of time (e.g. six months) prior to the beginning of the policy. However, after the policy has been in effect for a specified period of time (often six months to one year), the limitation will no longer apply and subsequent treatment for the preexisting illness or condition will be covered.
Since exclusions and limitations “take away” some of the coverage of the policy, the law requires that they are clearly written and very specific. In the event of a reasonable difference of opinion over how to interpret the meaning of an “exclusion” or “limitation”, a court generally will resolve the dispute in favor of the policyholder by adopting the narrowest or most restrictive interpretation.
What coverage do I get from a homeowners policy?
Homeowner’s insurance includes a broad package of both property (house, apartment, villa) and liability coverage, many of which cover activities away from and not in any way connected with your home. Homeowner’s insurance pays for the repair or rebuilding of a house which is damaged by fire or numerous other causes, such as wind damage, freezing and vandalism, just to name a few. However, earthquake and flood, among other things, are not covered unless specifically provided and paid for. This type of policy also pays for replacement of the personal items inside your home if they are damaged by the same causes that damage the house or if they are stolen.
A Homeowner’s policy also covers your legal liability which could arise if someone is injured on your property (house, apartment, villa) and also for certain types of actions which occur away from your property that could result in your being legally liable for damages (Homeowner’s insurance will not cover liability that is normally covered by other types of policies, such as auto, professional liability or business insurance). Your Homeowner’s liability insurance pays the damage for which you become liable, up to the amount of liability coverage that you purchased. Without this type of liability insurance, all of your personal assets could be at risk if you are sued and found to be responsible for causing injury to someone or damage to another person’s property.
If I own a house in Bulgaria, am I required to buy homeowners insurance?
Unlike automobile insurance, there usually is no law that requires a homeowner to have insurance. However, if you borrow money to buy a house, the bank or loan company will take a “mortgage” or “deed of trust” to protect its interest until the loan is repaid. The mortgage or deed of trust will require that you have an adequate amount of insurance to cover the repair or rebuilding of the house in the event it is damaged. Normally you will be required to name the mortgage company as a “loss payee” on your policy, which means that if the house is damaged, the insurance payment will go to the loan company, or jointly to both you and the loan company, to assure that the money is used to rebuild or repair the house or, if you choose not to rebuild, to pay off the loan.
If I do not own property in Bulgaria, but only rent a house or apartment, do I still have a need for Bulgarian insurance?
Even if you do not own the building where you live, it is likely to have valuable personal items which would be expensive to replace if they are stolen or damaged by fire or some other cause. Also, you still have potential legal liability to someone who is injured on property you occupy, even if you are not the Bulgarian property (house, apartment, villa) owner. A “Renters Policy” is essentially like a Homeowners Policy but without coverage for the buildings or structures. Because of this, Renters Policies usually cost far less than Homeowners Policies.
There usually are no legal or contractual requirements to have a Renters Policy, although it is possible that, by the terms of some leases, tenants may be required to have insurance to cover their liability exposure if someone is injured on the rented premises. Leases should be read very carefully to determine what insurance, if any, a tenant is required to have.
What happens if I injured myself at my friend’s house?
If your friends are homeowners, they probably have homeowners insurance to protect them if someone is injured on their property (house, apartment, villa). If they are renters, they may have renters insurance, or some type of umbrella coverage, for the same reason. Also, if they are renters, the land owner probably has insurance coverage for claims filed on the property.
Should I have insurance on the building (house, apartment, villa)?
The homeowner should always carry fire and liability insurance on the building, even though the construction has not been completed.
What kinds of insurance should I buy for my commercial building?
Property damage insurance will help protect your investment if your building is damaged or destroyed by fire or other causes. Public liability coverage will protect you if someone is hurt in the building and sues you. But also consider rent interruption insurance to make sure you do not lose rental income while you are repairing damage caused by a fire or rainstorm.
Are there legal limitations on Bulgarian insurance company business practices?
Bulgarian insurance laws impose many requirements and limitations on the way insurance companies conduct their marketing, underwriting (determining which policyholders or risks to accept or reject for coverage) and rate making activities. In some instances, these laws also limit an insurance company’s ability to cancel or discontinue coverage once a policy has been issued. In general, there are many restrictions and limitations applicable to personal or “consumer” insurance, such as personal auto, homeowners and individual or small group health insurance. There usually are fewer restrictions applicable to business and commercial insurance.
Can I cancel my policy at any time and will there be a penalty?
As a general rule, a policyholder may chose to cancel an insurance policy at any time by giving notice to the Bulgarian insurance company. In some cases you may be required to return the original policy or sign a “policy release”, and of course you will be responsible for any premium earned through the date of cancellation.