Today, liability insurance is very common. Legislatively assigned to everyone related to hazardous facilities (transport, construction, etc.), responsibility for the possible harm to other persons or organizations.
Since 2014, developers of multi-apartment complexes have been obliged to insure their civil liability to buyers (that is, to equity holders). True, with some reservations: construction projects must comply with the provisions of the law FZ-214, and permission to conduct construction work was received no earlier than 2014.
Normative base
All legislative formalities on civil liability insurance of a developer are prescribed in 214-:
- Article 15.1 is devoted to securing the obligations of a construction company through a bank guarantee;
- Section 15.2 discloses the terms and conditions of liability insurance of the developer.
What is the innovation?
Due to the created conditions, developers have the right to conclude agreements with shared participation (), and apartments are sold only at registration of insurance.
Compulsory insurance of the developer exists in two forms:
- Through a bank guarantee (subject to certain conditions).
- By drawing up a civil liability insurance contract.
Moreover, the developer has the right to conclude both with the Society for Mutual Insurance of Developers (OVS), and with any insurance company. This procedure is carried out only at its own expense and (a prerequisite!) Until the signing of the first equity agreement (DDU). Each shareholder must be familiar with the rules and conditions of insurance.
The regulatory authority for the actions of construction companies in the legal field appointed Rosreestr. Thus, DDU, without the builder’s liability insurance, are simply not registered.
Basic concepts
Beneficiaries for any of the above types of insurance are equity holders. Upon the occurrence of an insured event, it is they who receive a monetary indemnity. The beneficiary may be replaced by the terms of the contract. The insurer must be notified in writing.
Insured event - the builder is declared bankrupt or he violates any of the obligations when transferring the finished object to the interest holder. Moreover, non-compliance with obligations must be confirmed in court (upon the claim of the interest holder). This may be a decision on the recovery of collateral, or a decision of an arbitration court on declaring a developer bankrupt, as well as on opening a tender for external management, an extract from the register on the return of funds: composition, amount and order of execution.
Minimum insurance payment - the amount calculated from the price of the share agreement. But it cannot be less than the product of the area of the apartment by the average cost per square meter of housing in a particular region.
The validity of the insurance contract is established based on the timing of the construction of the house. Usually indicated in project documentation and equity agreement.
Insurance contract
The insurance contract of the developer begins its effect from the moment of state registration of the agreement on equity participation and is valid until the deadline for the transfer of housing indicated in the DDU.
The insurance contract should specify the right of the beneficiary to receive insurance compensation in the event that occurred no later than two years from the date of transfer of the dwelling indicated in the share agreement.
The developer is obliged to conclude civil liability contracts for all premises in the building under construction, and before the opening of the first contract with the interest holder, and not before the start of construction work. Lawyers recommend that equity holders first familiarize themselves with the list of insurance companies for insurance developers, so as not to get into trouble.
The minimum insurance amount is calculated by multiplying the square meter of the average market price of housing by the area of the object of equity participation.
Protection enhanced
Thus, developer insurance protects the interests of equity holders, along with other provisions of 214 of the Federal Law. The emphasis is on the safety of money invested in the construction. That is, in case of failure by the developer to fulfill his obligations, the measure of providing compensation for possible harm is a monetary insurance payment, as well as a pledge of land.
Compensation is the responsibility of the insurer. This can be an insurance company, a bank or a mutual insurance company, in other words, the selected guarantor of the developer. A bank guarantee is a very expensive pleasure today, and not every credit institution provides such a service. Therefore, most often, developers turn either to an insurance company or to an OVS.
Developer Liability Insurance: Insurance Companies
The developer is obliged, prior to state registration of the first equity agreement, to conclude a developer liability insurance contract (under 214-) with SK. In addition to owning a license for this type of activity, it must meet the following requirements:
- Work in the field of insurance services for at least five years.
- Own funds in the amount of more than 400 million rubles, with a registered capital of at least 120 million rubles.
- There is no reason to conduct bankruptcy proceedings of the UK.
- Observe the financial stability conditions specified in the insurance legislation for six months.
- Do not give cause to the Central Bank to appoint an interim administration.
- Do not have pretexts for a decision by the arbitral tribunal to begin any of the procedures used in bankruptcy.
Developer liability insurance (insurance companies approved for this activity, their list, the Central Bank publishes annually on its website), as many commercial insurers believe, are associated with great risks, since this business does not have transparent items of income and expenses.
List of insurance companies entitled to civil liability insurance of the developer
A compensation fund is formed at the Central Bank of the Russian Federation at the expense of developers' contributions , from which funds will be allocated for the completion of facilities or compensation for losses to equity holders.
This year there are only 16 such companies:
- VSK Insurance Joint-Stock Company;
- LLC Regional Insurance Company;
- Joint Stock Company UralSib Insurance Group;
- Ingosstrakh Insurance Public Joint-Stock Company, and others.
The list of insurance companies for insurance of developers is inconsistent. The central bank updates it every year.
Mutual Insurance Company Requirements
Developer insurance prescribed by Article 15.2 214 of the Federal Law enables the construction company to participate in the Mutual Insurance Company. What are you talking about?
This is a non-profit organization whose main activity is the insurance of all property interests of each of the participants on the basis of mutual insurance.
The legal basis for the creation of such an organization is spelled out in the Civil Code, article 968, and the activities of the company are regulated by law No. 286-FZ "On Mutual Insurance", which entered into force on November 29, 2007.
Developer liability insurance takes place on a reciprocal basis, through the pooling of contributions. However, the legislation does not provide for the distribution of net income between the members of the community. For the purpose of the joint venture is to create an insurance reserve by accumulating funds. It will be possible to use it in case of bankruptcy or dishonest performance of the duties of one of the developers (that is, to pay their interest to equity holders).
The mechanism is not worked out
The past two and a half years from the day the law was issued showed the inconsistency of the chosen methods, their inability to guarantee the fulfillment of the obligations of the builder to interest holders. Insurance payments do not allow returning really invested funds. Therefore, amendments to the law, which entered into force in January of this year, obliged the builder to pay the specially calculated amount to the State Compensation Fund for shared construction instead of liability insurance for the builder (according to 214- in the old version). Deductions come from each newly concluded equity agreement. The Fund’s funds can be used to complete construction work for problematic facilities or to pay compensation to equity holders if the developer is declared bankrupt.
Another amendment to the law was an alternative to insurance of the developer. These are the so-called escrow accounts. Through them, the bank settles with interest holders as an intermediary.