Insurance law

Insurance law governs the regulations regarding the formation, operation and termination of insurance organizations and the relations between them and the insured.

Insurance as a process is carried out by creating a common fund by different persons, who are potentially threatened by certain events. For this purpose, a new legal entity is established - insurance organization - joint-holding company or an insurance cooperative. These funds are:

  • managed a certain way;
  • the allocation of these funds is made in favor of those who had effectively suffered damage by the insured event;
  • This fund serves as an insurance fund.

The insurance relationship arises when a contract between the insurance company and the insured person has been signed. The definition of an insurance contract is given in art. 183 of the Insurance Code and states "with the contract of insurance the insurer undertakes to cover certain risk against payment of a premium and upon occurrence of the insured event to pay to the insured or the beneficiary of an insurance indemnity or amount of money."

This contract represents a match of two opposite wills - of the insurer and the insured. Each of them has certain rights and obligations. Obligations of the insurer are - bearing the risk and if the insured event happens - the obligation to pay compensation. The insured is obliged to pay the insurance premium and to provide to the insurer the information relevant to signing the insurance contract.

The insurance contract is bilateral, consensual, formal and aleatoric. It is bilateral because each of the obligations of one party is grounds for the obligations of the other. It is consensual, because both parties must agree on it. It is a formal, because the law requires written form for its validity – it is concluded in writing as an insurance policy or other written document.

Factors that contribute to the development of modern insurance, as we know it:

  • Improvement of mathematical and statistical methods to calculate the probabilities of occurrence of various insurance risks - it is important to determine the level of premium to cover damages from the fulfillment of insurance risks; 
  • Strong development of economic and financial management methods of the insurance portfolio formed from accumulated funds from insurance premiums;
  • Improvement of the structure of insurance products, creating more attractive products for the insured, some of them even with investment purposes.

Art. 3 of the Insurance Code stipulates that insurance is the business of providing insurance covers of certain risks under the contract and raising and spending of the funds for the compensation payments if the insurance events occur. Also other activities provided in the contract or law, and directly related to: assessment of the insurance risk, determining the premium of an insurance event, determining the amount of damages, management of funds and the assets and so on.

Although the insurance contract is between equal civil subjects (insurer and insured), in the Bulgarian insurance law there is a a strong degree of government regulation – which regulate the relations between the insurer and the state.

The types of insurance can be divided into 2 groups: personal and property insurances. All types of insurances are listed in Appendix № 1 in the Insurance code.

The insurer who does personal insurance has no right to do property insurance and vice versa. The idea is to narrow the insurance fund and not to cover additional risks so that the money can only be used to cover the type of risk.

We are your lawyer for insurance matters in Bulgaria. Our legal services in this area include:

  • Advice on all aspects of insurance law;
  • File an objection against the refusal of the insurer to pay the insurance indemnity or amount;
  • Submit a written claim to the insurer in connection with the obligation to pay the insurance indemnity or amount;
  • Litigation before all instances of the Bulgarian courts regarding insurance matters