Russian Federation: Overview of Russian Insurance Contract Law

Russian insurance law contains all the key features one might expect, including rules relating to disclosure, contract formation, liability, indemnity and subrogation. Most of the relevant rules are to be found in article 48 of the Civil Code. We summarise here some of its basic features.

Only Licensed Insurers

Only licensed insurers may insure risks situated within the Russian Federation. The effect of this rule is to prevent the direct insurance of risk with foreign domiciled insurers. Foreign domiciled insurers therefore participate in Russian risks by way of reinsurance. There is a limited exception in that foreign insurers may directly insure vessels registered on the Russian International Ship Register.

Several foreign insurers have become controlling shareholders of Russian domiciled and licensed insurers and therefore participate in the market in that way.

General Rules of the Civil Code

Insurance contracts must contain certain essential terms that define:

  • the subject matter of the insurance;
  • the peril to which the insurance responds;
  • the insured amount; and
  • the duration of the contract.

Choice of Law, Jurisdiction, Arbitration

The Civil Code does not prescribe rules as to choice of law and jurisdiction. Given that only Russian insurers can write direct insurance of Russian risks, the natural choice is for Russian law to govern such insurance. In cases of reinsurance with overseas insurers, the parties are free to select the applicable law and jurisdiction.

Private arbitration can be selected for insurance disputes. Provision can be made for arbitration to be in a foreign language and foreign citizens can sit as arbitrators in Russia. International reinsurers would be well advised to use an arbitration clause, not a non- Russian court jurisdiction clause. This is because Russian courts are under no automatic obligation to enforce foreign court judgments (except those of some former Soviet bloc states); on the other hand Russian courts are obliged to enforce foreign arbitral awards, since Russia is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Non-Disclosure / Misrepresentation

It is the responsibility of the insured to provide the insurer with all the material information necessary for an assessment of the probability and value of a potential loss. The circumstances specified by the insurer in its policy or questionnaire shall be considered material in any event. If the insured does not provide the insurer with the answers to the questions asked, but the contract is concluded anyway, the insurer cannot seek termination or invalidation of the contract in the future on the grounds that such circumstances were not communicated by the insured. If the information communicated by the insured was deliberately false however, the insurer has a right to demand invalidation of the contract. The insurer may not demand the invalidation of a contract of insurance if the circumstances concealed / not-disclosed no longer exist.


The insurer is entitled to inspect property for appraisal purposes. If the insurer has chosen not to inspect the property and was deliberately misled with regard to the insured value of the property, such value may be disputed in the future. Otherwise (including where the insurer chooses to inspect the property), the insured value of the property set out in the contract may not be disputed in the future.

The parties may agree on an insured amount, but this must not exceed the actual value of the insured property. If the property is insured for an amount less than its actual value, in case of loss, the insurer will be liable for the proportion of the actual value insured under the contract.

  • If the property was initially insured for an amount less than its actual value, the insured may enter into a contract for additional insurance of the same property. Such contract may be entered into with a different insurer, but in any event, the total amount insured must not exceed the actual value of the insured property.
  • If the property is insured in excess of its actual value, the insurance contract will be void in respect of the amount that exceeds the actual value of the insured property.

Material Changes That Increase the Insured Risk

The insured is responsible for informing the insurer of any material changes in circumstances that may increase the insured risk. In such cases the insurer has the right either to amend the terms of the insurance contract, or to demand payment of an additional premium by the insured. If the insured refuses to amend the contact or to pay an additional premium, the insurer may demand termination of the contract. Non-compliance by the insured with the obligation to notify the insurer of material changes in circumstances may also give the insurer the right to demand termination of the contract.

Subscription Market

An insurance contract may be entered into with a number of subscribing insurers.

Insurance Premium

As a general rule, an insurance contract becomes effective from the first insurance premium payment and covers the risks that may occur after the contract becomes effective; although the law allows the parties to agree otherwise in the insurance contract.

On Occurrence of an Insured Event

The insured must notify the insurer immediately if an insured event occurs. The insured must also take reasonable and available measures to reduce the potential loss. The insurer may deny payment of a loss that occurred as a result of the insured intentionally not taking such measures. If such measures are requested by the insurer the insured must follow these instructions.

Excluded Perils

Unless otherwise provided in the insurance contact, the insurer shall not be liable for the payment of insurance indemnification if the insured event occurred as a result of:

  • Nuclear explosion; radiation; or radioactive contamination;
  • Acts of war, military exercise and other military actions;
  • Civil war, social unrest of any kind and strikes.

The Code confirms that the insurer shall not be liable for payment of insurance indemnification if the insured event was caused intentionally by the insured. Losses from gambling, betting and lotteries are not to be insured. Insurance against hostage ransom is prohibited.

Limitation Period

The limitation period in which a claim may be made in respect of property insurance is two years; otherwise the general limitation period is three years. The prevailing view is that the limitation period starts to run from the date the insured event occurred.

In the case of reinsurance, the general position is that the limitation period starts to run from the date of indemnification under the original policy.

In cases of misrepresentation or non-disclosure, an insurer may ask a court to render the contract invalid; however a one year limitation period applies in respect of this. The limitation period runs from the date upon which the insurer has learned, or should have learned, about the circumstances that provide the grounds for rendering the transaction invalid.


The Civil Code recognises an insurer's right, following indemnification, to be subrogated to the insured's rights against a party that causes the loss. It provides that the insured must assign its rights of recovery to the insurer and provide all such documents and evidence as may be necessary.


Reinsurance is expressly recognised and permitted, although the Code has little further to say on the topic. Russia has a very active internal reinsurance market and a good deal of Russian risk is reinsured facultatively and/or by treaty into the international market.

Clyde & Co - Russia

'Clyde & Co has been present in Russia for 15 years through an associated office in St. Petersburg and we opened a full-service office in Moscow in 2005. Our varied and robust practice in Russia is an essential link in the international Clyde & Co network. We work for major global insurance companies as well as local insurers and our knowledge of the local market is unbeatable.'

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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