Civil liability insurance of owners of hazardous facilities.

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The file is given in the version current at the time it was posted on the site. The law has been amended, so before applying its provisions check against the current version in the "Adilet" information and legal system (adilet.zan.kz).

Purpose of the law

The Law of the Republic of Kazakhstan "On Compulsory Civil Liability Insurance of Owners of Facilities Whose Activity Involves a Risk of Causing Harm to Third Parties" (dated 07.07.2004 No. 580-II) is aimed at protecting the property interests of people who may suffer in an accident at a hazardous facility. Its task is to guarantee that harm caused to the life, health and property of third parties will be compensated from an insurance payment, even if the facility owner does not have sufficient funds of its own.

At the same time, the law protects the owner as well: a major accident may give rise to claims from a large number of victims, and insurance makes it possible to transfer a significant part of these costs to the insurer.

Who the law affects

The obligation to insure liability is placed on owners of facilities whose activity involves a risk of causing harm to third parties. As a rule, these are hazardous production facilities where hazardous substances are used, stored or processed, pressure equipment is operated, mining operations are conducted and other activities classified by legislation as hazardous are carried out. Whether a specific facility belongs to the hazardous category is determined by legislation on industrial and civil safety, so it is best to check this for each facility separately.

The law also affects other participants: insurance companies, which are obliged to conclude such contracts under the established rules, and victims — third parties entitled to a payment.

Main elements of compulsory insurance

  • Object of insurance – the property interest of the facility owner connected with its obligation to compensate harm caused to third parties.
  • Insured event – an accident at the facility that has caused harm to the life, health and (or) property of third parties.
  • Sum insured – set by law in monthly calculation indices (MCI) and depends on the maximum possible number of victims in an accident at the facility.
  • Insurance premium – calculated at rates within the limits provided for by legislation, taking into account the characteristics of the facility.
  • Insurance payment – for harm to property it is determined by the amount of damage caused; for harm to life and health, within the limits established by law depending on the severity of the harm.

You can make a preliminary estimate of the policy cost using the hazardous facilities insurance calculator.

Obligations of the facility owner

  1. Conclude a compulsory insurance contract before the facility begins operation and keep it in force throughout the period of activity.
  2. Renew the contract in good time, avoiding gaps in cover.
  3. Provide the insurer with accurate information about the facility and report changes that affect the degree of risk.
  4. In an accident, take measures to reduce the harm and notify the insurer within the established deadlines.
  5. Assist in investigating the causes of the accident and provide the documents needed for payment.

Operating a facility without a valid compulsory insurance contract entails liability provided for by legislation on administrative offences. In addition, in that case harm to third parties will have to be compensated in full at the owner's own expense.

Rights of victims

Third parties injured by an accident have the right to claim payment directly from the insurer. To confirm the amount of harm, the accident investigation report, medical documents, an assessment of damage to property, court decisions and other materials are used.

Recourse and cases of exemption from payment

The law lists the circumstances in which the insurer is released from payment, as well as cases in which, after paying the victims, it has the right to bring a recourse claim (regress) against the policyholder. These provisions should be studied carefully in the current version of the law and in the contract in order to understand which violations by the facility owner may lead to financial consequences.

What matters in practice

  • determine the facility category correctly by the maximum possible number of victims – the sum insured depends on it;
  • if the activity corresponds to several categories, use the maximum sum insured as the benchmark;
  • bear in mind that the compulsory limit may not cover all possible losses – for significant risks it makes sense to consider voluntary liability insurance in excess of the compulsory cover;
  • agree in advance with the insurer on the notification procedure and the list of documents in the event of an accident.

If you need to determine the facility category, choose an insurer or check the terms of the contract, you can get a consultation.