When concluding an insurance agreement, the policyholder is obliged to disclose to the insurer all circumstances, necessary for the risk assessment that were known or could not have remained unknown to the policyholder.
In case a policyholder deliberately provides false declarations or omits to disclose circumstance that could lead to an insurer to refuse conclusion of the insurance agreement, the insurer has the right to terminate the insurance agreement within three (3) months from when the insurer become aware of the false declaration or non-disclosure. If the insurance agreement is terminated for above-mentioned reason, the insurer is entitled to retain already paid premiums and request payment of the premiums for the period up to the termination.
In cases where a policyholder has provided false declaration or has omitted duly disclosure without fault, an insurer may either (i) request termination of the insurance agreement or (ii) request payment of the proportionately higher premiums, both within one (1) month from when an insurer learns about the false declaration or incomplete disclosure. The insurance agreement terminates after the lapse of 14 days from when the insurer notifies the policyholder of termination. If the insurer wants to increase premium, the insurance agreement is automatically terminated in case the policyholder does not accept the proposed increase of premiums within 14 days following notification. In case the insurance agreement is terminated for in this paragraph mentioned reason the insurer must return to the policyholder part of the premiums pertaining to the time remaining up to the end of the insurance period. If the insured event occurs before the declaration was found to be false or incomplete, or later, but before the insurance agreement was terminated or an agreement on increase of the premium was reached, the insurance benefit is proportionately reduced.
The insurer does not have the right to invoke the above-mentioned rights granted to him due to misrepresentation and/or improper disclosure by the policyholder if the insurer was aware or could not be unaware of (true and complete) circumstances relevant for the risk assessment when the insurance agreement was concluded. The same applies in the case when the insurer obtained knowledge of misrepresentation and non-disclosure after conclusion of an insurance agreement, but it failed to timely invoke its rights.
With respect to property insurance, the policyholder is obliged to notify an insurer of every change of circumstance which might be significant for the risk assessment. With respect to personal insurance, the policyholder is obliged to notify an insurer only if the risk increases due to a change in the policyholder’s work.
The policyholder must immediately notify an insurer of the risk increase, if such increase is the result of the policyholder’s action, whereas in cases where the risk increases without policyholder involvement, the notification must be made within 14 days of when the policyholders becomes aware of the risk increase.
An insurer may either (i) withdraw from the insurance agreement if the risk increase was such that the insurer would not have concluded the insurance agreement in the first place or (ii) propose a premium increase if, being aware of such circumstances, it would have concluded the insurance agreement only subject to a higher premium. The insurance agreement terminates if the policyholder does not accept the proposed premium increase within 14 days.
If the insured event arises before the insurer was notified of the risk increase or after the insurer was notified, but before the insurer withdrew from the insurance agreement or before an increase in the premium was agreed, the insurance payment is reduced proportionally.
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