According to the current Russian legislation (Russian Civil Code, Art. 947, par. 2), in any insurance agreement, the sum insured may not exceed the market value of the
property as of the date of the insurance agreement. If the sum insured exceeds the market value of the property, the insurance agreement is deemed null and void
and the extra insurance premium is not refundable. Thus, when concluding an insurance agreement and determining the insurance value, the parties must proceed exclusively
from the fair market value of the property.
That is why it is important to accurately estimate the value of insured property prior to signing an insurance agreement. It is a common practice in Russia to engage a professional
valuer when entering in an insurance agreement for any significant property, such as real estate or expensive industrial assets.
It is necessary to emphasize that in Russia a valuation report for the insured property is also very important because an independent valuation divests the insurer of any right
to contest the contractual sum insured afterwards, since the Russian Federation Civil Code, Art. 948 explicitly prohibits such contestation:
"The insured value of the property stated in the insurance agreement may not be subsequently contested, except the circumstances when the insurer, who did not exercise the
right to assess the insurance risk before concluding the agreement, has been deliberately misled with regard to this value”.
An independent valuer can also help in occurrence of an insured event – he can assess the damage caused to the insured property, determine its residual value and issue a
complete package of valuation documents for the insurance claim.
We have extensive experience in valuation for insurance purposes in Russia and should you require any assistance with this matter, please contact us.