Compulsory Ecological Insurance

Law of the Azerbaijan Republic “On Mandatory Environmental Insurance” took effect in April 2002.

The Law applies to enterprises involved in processing, utilization, storage and land disposal of radioactive substances; oil and gas production, as well as drilling companies, companies that produce chemical substances and products, thermoelectric power stations, main gas and oil pipelines, enterprises specializing in transportation of oil and products of petroleum refinery and liquid chemical products, as well as radioactive and other harmful substances; filling stations.

Pursuant to this law, all natural and legal persons, whose activities are related to extraction, production, processing, transportation, land disposal, removal and utilization of substances hazardous for the environment are obliged to insure their legal commitment for inflicting harm to life and the health of third persons and/or damage their property as a result of environmental pollution.

In the framework of this law, costs for compensating material damage connected with inflicting harm to life and the health of third persons and/or damage to their property are covered by insurance, as well as damage caused to animals and plants as a result of pollution resulting from an accident or manmade disaster.

The insurance coverage includes also costs incurred to cleanse land and the atmosphere. The insurance terms, fees and rates are set in accordance with the law “On Mandatory Environmental Insurance” depending on the specifics of the work of an organization or an enterprise.