Should apartment insurance be mandatory?

Baku/29.05.23/Turan: Citizens in Azerbaijan are being warned about the impending requirement of mandatory insurance for real estate, as notices are being sent to their apartments. The new rule, which has long been a part of the legislation but remained unenforced, will now be implemented through a new electronic system. The system aims to simplify the property insurance process and enable better monitoring of whether real estate is insured or not. Failure to insure housing will result in automatic fines, with individuals facing a fine of 30 manats, officials 80 manats, and legal entities 200 manats.

The implementation of this mandatory insurance system is set to commence on June 1. However, concerns arise regarding the feasibility of insuring all apartments within such a short timeframe.

In an interview with the "Difficult Question" program, lawyer Ekrem Hasanov expressed his viewpoint on whether apartment insurance should be mandatory. He argued that, in accordance with the law, common sense, and international experience, the responsibility for the risk of loss or damage to any property lies with its owner. Therefore, property insurance should be voluntary, as compulsory insurance typically applies to situations involving potential harm to third parties, such as compulsory vehicle insurance and civil liability insurance for drivers. Hasanov pointed out that even in these cases, there is also voluntary insurance (casco) available to protect the vehicle owner's interests in the event of damage.

Hasanov further argued that mandatory insurance for immovable property lacks any justification, is unconstitutional, and contradicts principles of property law. He suggested that mandatory liability insurance for real estate owners, covering the consequences of insurance cases resulting from harm to third parties' life, health, or property, could be more reasonable. However, he noted that such cases are extremely rare and typically resolved among apartment owners themselves in apartment buildings.

The lawyer also highlighted that the law on real estate insurance has been in place for 13 years but has largely remained inactive, with the government itself acknowledging its lack of enforcement. Hasanov emphasized that it is the insurance companies, rather than the state, that have been promoting this issue. Similar campaigns were conducted in late 2019, with citizens receiving notices and warnings about fines. However, the power to impose penalties for uninsured real estate lies with the executive branch, which, as of January 2020, stated that they lacked the appropriate mechanism for enforcement. Since then, no significant changes have been made.

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