Loan Insurance

Valid as of 01.10.2023

The loan insurance terms and conditions (hereinafter Terms and Conditions) describe the extent of insurance cover over the obligations arising from a consumer loan or hire purchase agreement, action to be taken in the case of an insured event and the principles of indemnification.

AS LHV Finance (hereinafter Policyholder), registry code 12417231, address Tartu mnt 2, 10145 Tallinn, email finance@lhv.ee, has entered into an insurance agreement with the insurer AS LHV Kindlustus (hereinafter LHV) 14973611, address Tartu mnt 2, 10145 Tallinn, email kindlustus@lhv.ee, in which the insured person is a person (hereinafter Borrower) who has entered into a hire-purchase contract or a consumer loan agreement with insurance cover (hereinafter Loan agreement).

The Terms and Conditions are an annex to the Borrower’s Loan Agreement and apply separately to every loan agreement.

Table of indemnities

Definitions

Insured event is an event set forth in the Terms and Conditions, upon the occurrence of which LHV must indemnify damages in the cases and to the extent specified in the Terms and Conditions.
Insured object is the Borrower’s financial obligations to the insurer arising from the Loan Agreement.
Monthly payment compensation is compensation in an amount corresponding to the amount of the instalment stipulated in the payment schedule of the Loan Agreement, including repayment of the credit amount, interest, contract fee and paper invoice fee, including VAT and monthly fee. The compensation does not include late interest and contractual penalties.
One-time compensation is compensation in an amount corresponding to the total amount of obligations arising from the Loan Agreement, including the balance of the outstanding credit amount, accrued interest, contract fee and paper invoice fee, including VAT and monthly fee. The compensation does not include late interest and contractual penalties.
Employment relationship is the employment of the Borrower under an employment contract, a contract of a member of management board or a public service contract, which prescribes a working week of at least 20 hours.

Validity and waiting period of insurance coverage

1. Validity of insurance coverage

   1. The insurance cover starts on the day on which the Loan Agreement is concluded.
   2. If the loan insurance is added for the respective Borrower during the term of the Loan Agreement, the insurance cover starts on the day when the loan insurance was added to the Loan Agreement.
   3. The insurance cover expires at the end of the Loan Agreement or earlier on the basis of a corresponding application by the Borrower during the term of the Loan Agreement, if the Borrower notifies the Policyholder thereof.
   4. The Policyholder has the right to terminate the insurance cover earlier by notifying LHV and the Borrower thereof two months in advance.
   5. LHV does not pay indemnity for an insured event that occurred before the start of the insurance cover or after the end of the insurance cover.

2. Waiting period
   In the case of job loss insurance cover, the waiting period is 60 days from the conclusion of the Loan Agreement, if the Loan Agreement was concluded with loan insurance, or from the addition of loan insurance during the term of the Loan Agreement. LHV does not pay compensation if the job loss insured event occurred during the waiting period or if the Borrower learned of the termination of the employment relationship during the waiting period.

   Insured event

3. Insured events are the following.

   1. The Borrower’s job loss for the following reason:
      1. the employment relationship was terminated for a reason beyond the Borrower’s control;
      2. the employment relationship was terminated due to the Borrower’s state of health;
      3. the Borrower terminated the employment relationship after the employer's bankruptcy decision took effect.
   2. Borrower's temporary incapacity for work
      The Borrower’s illness or bodily injury due to which the Borrower has been temporarily incapable of working for more than 30 days.
   3. Borrower's incapacity for work
      The Borrower’s illness or bodily injury due to which the Borrower has been officially declared incapable of working.
   4. Borrower’s death

   Exclusions

4. LHV does not pay compensation which is indirectly or directly caused by the following events, causes or consequences:

   1. Job loss is not an insured event if:
      1. the Borrower's employment relationship ended during a probationary period;
      2. the Borrower learned of the termination of the employment relationship before the commencement of the insurance cover or during the waiting period;
      3. the Borrower’s fixed-term employment relationship ended at the agreed term or the Borrower terminated a fixed-term relationship at his/her own initiative;
      4. the Borrower was furloughed or workload was reduced, but the employment relationship was not terminated;
      5. the employment relationship ended for a reason other than a job loss insured event, including termination of the employment relationship at the Borrower’s initiative (including in the cases specified in subsection 4.1.4) or by agreement of the parties, violations by the employee or a failure to perform work duties;
      6. the Borrower was released from public service for a reason other than a job loss insured event, including failure of cooperation, change of citizenship, disciplinary offence, insufficient work skills or the Borrower’s own initiative;
      7. the economic activities of a sole proprietor were suspended or terminated;
      8. the employment relationship was terminated at the employer’s initiative, if the Borrower was a member of the employer’s supervisory board or management board or his/her close relative (including life partner, parent, child, sibling), except in cases of bankruptcy of the company.
   2. Temporary incapacity for work, permanent incapacity for work and death are not insured events if caused by:
      1. an illness, medical condition or injury that began or occurred before the conclusion of the Loan Agreement, which becomes evident in the first year of the insurance cover and causes temporary incapacity for work, permanent incapacity for work or results in death;
      2. pregnancy or childbirth;
      3. injury intentionally caused by the Borrower or intentional self-endangerment, suicide, participating in or abetting the commission of a crime;
      4. ignoring a treatment plan established by a medical specialist;
      5. cosmetic surgery or tattooing;
      6. use of alcohol, narcotics or toxic substances;
      7. HIV or AIDS.
   3. Foreseeable insured event:
      1. the occurrence of the insured event is or was foreseeable at the time of conclusion of the Loan Agreement;
      2. an insured event is considered foreseeable if it occurred due to the Borrower’s state of health if the state of health underlying the insured event was known (diagnosis, presumed diagnosis) or a medical consultation or an out-patient examination for determining it was agreed before the conclusion of the Loan Agreement with insurance cover;
      3. job loss is considered foreseeable if the Borrower knows at the time of conclusion of the Loan Agreement that his/her employment relationship will be terminated during the term of the insurance cover, including if the Borrower has already received a corresponding notice from the employer.
   4. General exclusions
      LHV does not pay compensation in the case of an insured event caused by the use of nuclear energy for any purpose or where such energy gets out of control, or radioactivity, terrorism, war, civil war, invasion, any armed conflict, mass riot, unrest, revolution, coup, strike, confiscation, seizure or lockout.

   General principles for indemnification

5. In the case of an insured event, LHV indemnifies the financial loss incurred due to the borrower being unable to perform the obligations to the Policyholder arising from the Loan Agreement due to the insured event. LHV’s general principles of indemnification are the following:

   1. LHV pays the compensation either as a monthly compensation payment or as a one-time compensation.
   2. In determining the indemnity, LHV proceeds from the payment schedule of the Loan Agreement at the time of the insured event, without taking into account subsequent changes.
   3. The amount of compensation per the Borrower’s one loan agreement is limited to an amount equal to the credit amount of one loan agreement or the balance thereof, plus accrued interest, contract fee and paper invoice fee, including VAT and monthly fee. The compensation does not include late interest and contractual penalties.
   4. If several insured events occur at the same time, the amount of compensation per the Borrower’s one loan agreement is limited to the amount of the monthly payment compensation or the one-time compensation.
   5. In the case of an insured event, the insurer shall pay compensation as of the occurrence of the insured event. If the day of payment of instalments arising from the loan agreement payment schedule falls within the period between the occurrence and reporting of the insured event and the decision on indemnity, LHV shall indemnify the instalments until the circumstances underlying the insured event cease, but not past the expiry of the insurance cover.
   6. The date of occurrence of an insured event is:
      1. in the case of job loss, the day of registration as unemployed with the Estonian Unemployment Insurance Fund;
      2. in the case of temporary incapacity for work, the starting date indicated on the certificate of incapacity for work;
      3. in the case of permanent incapacity for work, the date of beginning of the period of permanent incapacity for work stated in the decision on the assessment of capacity for work issued by the Estonian Unemployment Insurance Fund;
      4. in the case of death, the date of death.
   7. In the event of insured events related to job loss and temporary incapacity for work, the deductible is 30 days from the registration of the Borrower as unemployed or from the date of beginning indicated on the certificate of incapacity for work. LHV does not pay compensation for this period.
   8. In the case of an insured event related to job loss, temporary incapacity for work and permanent incapacity for work, LHV pays a monthly payment compensation.
   9. LHV pays the monthly payment compensation to the Borrower. After a respective application is submitted to LHV, the Policyholder may be the recipient of the compensation.
   10. In the case of an insured event of the Borrower’s death, LHV pays a one-time compensation, including late interest and contractual penalties.
   11. LHV pays the one-time compensation to the Policyholder.
   12. LHV has the right to replace the monthly payment compensation with a one-time compensation.
   13. LHV pays the compensation within two working days after the decision has been made or pursuant to an agreement with the recipient of the compensation.
   14. LHV has the right to refuse to pay the compensation if it becomes apparent that the Borrower has intentionally provided false or misleading information to LHV or has failed to provide important information concerning the material circumstances of the insured event.
   15. If LHV delays in the payment of the compensation, it is obliged to pay late interest at the rate provided in the Law of Obligations Act.

   Action to be taken in case of an insured event

6. Upon the occurrence of an insured event, the Borrower must:

   1. inform the policyholder of the insured event at the first opportunity after its occurrence or upon becoming aware of it at the e-mail address finance@lhv.ee;
   2. comply with the instructions of conduct given by LHV and the Policyholder;
   3. give LHV correct and complete information on the circumstances of the insured event;
   4. take into account that LHV may request documents and written and oral explanations from the Borrower in order to establish the circumstances of the insured event;
   5. register as unemployed with the Estonian Unemployment Insurance Fund after becoming unemployed and notify LHV thereof;
   6. notify LHV of the expiry of the registration as unemployed, as well as of the end of the period of incapacity for work or commencement of work;
   7. prove temporary incapacity for work with a certificate of incapacity for work issued by a doctor;
   8. prove permanent incapacity for work with a decision on the assessment of the capacity for work issued by the Estonian Unemployment Insurance Fund.

7. The Borrower is obligated to do everything in his/her power to prevent an insured event and reduce possible damage and to avoid a possible increase in insurance risk.

8. After receiving a loss notice, LHV must:

   1. immediately start claim adjustment of the insured event;
   2. inform the Borrower which documents he/she must submit to LHV for determining the cause of the insured event;
   3. make a decision on indemnifying the loss or refusing to do so within ten working days at the latest after the receipt of all the required documents and the determination of the circumstances necessary for making a decision. With good reason, LHV may extend the term for making a decision on indemnification.

9. All the notices necessary for the fulfilment of the Terms and Conditions shall be submitted in a written reproducible format.

   Supervision and resolution of complaints

10. The activities of LHV are supervised by the Financial Supervision and Resolution Authority. The insured person has the right to file a complaint against LHV with the Financial Supervision and Resolution Authority, Sakala 4, 15030 Tallinn (phone 668 0500, e-mail info@fi.ee, webpage www.fi.ee). The Financial Supervision and Resolution Authority does not resolve contractual disputes between LHV and the insured person.

11. All the disputes are settled by agreement of the parties on the basis of the Terms and Conditions and the legal acts of the Republic of Estonia.

12. The extrajudicial bodies for resolving disputes are the conciliation body of the Association of Estonian Insurance Companies, Mustamäe tee 46, 10621 Tallinn (phone 667 1800, e-mail lepitus@eksl.ee), and the Consumer Protection and Technical Regulatory Authority, Endla 10a, 10122 Tallinn (phone 667 2000, e-mail info@ttja.ee).

    Law applicable to the Terms and Conditions and limitation of claims arising from the Terms and Conditions

13. The law of the Republic of Estonia applies to the Terms and Conditions.

14. The limitation period for claims arising from the Terms and Conditions is three years. The limitation period shall be calculated from the end of the calendar year in which the claim becomes collectible.