The Romanian law on mandatory dwelling insurance for earthquakes, landslides and floods was recently amended and supplemented. The new law was published in the Official Gazette on 6 July as Law no. 191/2015 and amends Law no. 260/2008 which regulates the mandatory dwellings insurance against earthquakes, landslides and floods.
Some of the significant changes brought by the new law include:
- Individuals and legal entities may take out voluntary insurance against natural disasters only after having obtained mandatory dwelling insurance;
- An insurance policy against natural disasters (“PAD”) is the sole proof of mandatory dwelling insurance. This is a change from the prior law where proof of conclusion of the insurance by the insurance certificate was accepted as proof;
- PADs are valid for a period of 12 months starting at midnight of the fifth calendar day following the date the premium was paid and the insurance contract was issued and signed. Under the prior law, PADs were valid for 12 months starting at midnight of the day following payment of the premium;
- A PAD can be concluded directly with the Pool of Insurance against Natural Disasters (“PAID”) or with the insurance-reinsurance undertakings authorised to write disaster risks;
- PAID may perform on-site risk inspections at their own expense. Such inspections can be carried out only on cases which are well-determined and regulated by the Financial Supervisory Authority’s (“FSA”) norms;
- If the policies are issued directly by PAID then the claims must be addressed directly to PAID, however the assessment of damages and damages liquidation may be carried out also by another insurance undertaking, expressly designated by PAID;
- If the insurance undertaking which wrote a PAD notifies PAID about its impossibility of managing the claims within the legally set timeframe, PAID can appoint another company to manage the claims, in accordance with the FSA’s norms.
PAID is a privately-owned insurance-reinsurance undertaking, formed by the association of 12 Romanian insurance undertakings for the conclusion of mandatory dwelling insurance policies.
Under Law no. 260/2008, all individuals and legal entities are obliged to insure their dwellings against earthquakes, floods and landslides, irrespective of whether those dwellings are located in urban or rural areas. Goods placed inside the dwellings are excluded from mandatory coverage. PADs will only cover damages due to natural disasters up to either EUR 20,000 or EUR 10,000, depending on the type of property.