Insurance Litigation in Ukraine 2021


Oleksandra Bortman

Senior Associate, Attorney-at-Law

Domestic Litigation,
International Arbitration

Oleg Kachmar

Partner, Attorney-at-Law

Domestic Litigation,
Restructuring and Insolvency,

Published: Lexology, January 2021

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1. In what fora are insurance disputes litigated?

Depending on the parties to the case, insurance disputes are usually litigated in commercial or general courts. If the insured is an individual, the case should be considered by the general court, while all other types of disputes, including disputes between legal entities, will come under the jurisdiction of the commercial court.

Also, administrative courts adjudicate the disputes between an insurer and the regulatory authority (the National Bank of Ukraine) as to the decisions on the application of measures for the violation of legislation on financial services.

Causes of action

2. When do insurance-related causes of action accrue?

Primarily, insurance-related disputes arise from the breach of obligations under the insurance contract and from the violation of the regulatory acts relating to the procedure for concluding, fulfilling or terminating these agreements.

Apart from that, disputes often arise as to the validity of the insurance contracts (eg, owing to failure of the insured to provide accurate information on the subject matter of the insurance contract or on the refunding of insurance premiums resulting from invalidation or termination of the insurance contract).

The most common breach of obligations is the refusal of an insurer to pay an insurance indemnity to the insured person fully or partially.

Sometimes disputes arise because of the belated investigation of the insured event (or belated calculation of damages) by the insurer. Although there are legislative and contractual requirements as to the period of payment of insurance indemnity, the insurer may delay its decision upon recognition of a certain event as insured, which is often interpreted by the insured as a refusal to pay insurance indemnity.

Subrogation and recourse are two other sources of insurance-related disputes.

Preliminary considerations

3. What preliminary procedural and strategic considerations should be evaluated in insurance litigation?

From a procedural standpoint, Ukrainian law provides for a preliminary dispute settlement procedure if a dispute between two legal entities arises. Although formally this procedure is not obligatory, the courts in Ukraine tend to request evidence that the claimant had recourse to the preliminary dispute settlement procedure. This procedure includes the following steps:

  • an injured party sends a written complaint to another party;
  • the party that receives the written complaint usually has one month to consider and react to it; and
  • the party that receives the written complaint notifies the injured party of the results of its consideration of the complaint.

If the preliminary dispute settlement procedure proves to be ineffective, the injured party refers the matter to the court.

Importantly, sometimes the insured (usually an individual) submit complaints on refusal to pay insurance indemnity to the regulatory authority, which may oblige the insurer to stop the breach of contract and make the prescribed payments.

As regards strategic considerations in insurance litigation, commercial courts are usually swift in consideration of the cases. It usually takes two to three weeks for the first court hearing to be held, then the court renders its decision in around two to three months on average. Depending on the complexity of the particular case, the insurance dispute may be considered by the court of first instance, the appellate court and the court of cassation within a period of 10 to 12 months.

If the case requires that a forensic examination be arranged for the court to determine the actual causes of property damage or destruction (eg, fire or crop shortfall) or disability, and the scale of damages to be awarded, the consideration of the case may be delayed for one-and-a-half to two years.

Also, the court usually orders a losing party to pay the winning party's costs, even though the percentage of the costs reimbursed to the winning party rarely exceeds 10 to 30 per cent of the actual costs. Nevertheless, the procedural laws of Ukraine provide regulatory means for courts to award the costs of the winning party in the full amount. Apart from that, the parties are obliged to submit a preliminary estimation of litigation costs while submitting the first document on the merits of the case. The court may also order the parties to deposit the funds in the amount of the preliminary estimated costs to a deposit account of the court.


4. What remedies or damages may apply?

The parties bear the civil liability for non-performance or undue performance of the terms of the contract, prescribed by contract or by law. In case of delay in paying an insurance indemnity, an insurer is required to perform its contractual obligation and pay an insurance indemnity, taking into account inflationary losses and the 3 per cent interest rate.

Apart from that, an insurer will be subject to a penalty in the form of forfeit or fine. The amount of this penalty could be envisaged by contract or by law. For example, as to the insurance of civil liability of owners of vehicles, for each day of delay in paying an insurance indemnity, the insurer must pay the forfeit that is calculated according to the relevant (doubled) discount rate set out by the National Bank of Ukraine.

As regards the breach of the insurance contract by the insured, the insurer may claim the refusal to pay an insurance indemnity payment or the termination of the insurance contract.

The parties to the insurance contract may agree in the contract on other legal effects of failure to perform the contractual obligations and grounds of liability.

If the insurer systematically violates the insurance rules, the regulator may suspend or deprive the insurer of its insurance licence.

5. Under what circumstances can extracontractual or punitive damages be awarded?

Extracontractual damages apply if either the insurer or the insured failed to perform monetary obligation (eg, payment of the insurance indemnity). In these cases, insurance indemnity should be paid, including inflationary losses and the 3 per cent interest rate.

In terms of punitive damages, the payment of forfeit or fine may be envisaged in the contract.



6. What rules govern interpretation of insurance policies?

Since insurance policies take the form of a civil contract, the rules regarding interpretation of contracts apply. Ukrainian law provides that the content of a contract may be interpreted by parties themselves or by the court which will render a decision on the issue afterwards.

Insurance agreements concluded in accordance with international insurance systems that require the use of unified insurance conditions (for instance, the international aviation insurance market) are interpreted in light of the conditions used in the contemporary international insurance system accordingly.

Also, typical conditions (typical agreements) may be taken to account even if there is no reference to typical conditions in the specific insurance agreement.

If insurance rules contradict the insurance agreement, the latter prevails. If the insurance agreement refers to the insurance rules, then these rules are obligatory for both parties. But if there is no reference in the insurance agreement, the court may not rely upon the insurance rules.


7. When is an insurance policy provision ambiguous and how are such ambiguities resolved?

Generally, an insurance policy provision is ambiguous if it is impossible to establish its content. Ambiguities are resolved through interpretation of the provisions of the insurance policy and the rules regarding the interpretation of contracts apply.

First, while interpreting a contract, the meaning of words and expressions uniform for the whole content of the contract and the meaning of terms generally accepted in the particular area shall be taken into account.

Second, if these efforts are ineffective, then the content of a contract may be established by comparing the relevant provision of a contract with the content of other provisions of this contract, its whole content and the intentions of the parties.

Finally, should the measures above prove to be of no use, then the purpose of the contract, the content of the previous agreements, the established practice of relationships between the parties, business customs, the subsequent conduct of the parties, the content of the typical policy and other relevant circumstances should be considered.


Provision of notice

8. What are the mechanics of providing notice?

While Ukrainian law obliges an insured party to provide a notice to the insurer, it does not specify the manner of doing so. Usually, the mechanics are stipulated in an insurance contract or policy, but the most common means are email, telephone and post.

As a rule, insurance contracts prescribe that the insured is required to inform the insurer of the insured event in any manner available and provide a written statement afterwards.


9. What are a policyholder's notice obligations for a claims-made policy?

Ukrainian law does not provide for specific notice obligations for a policyholder regarding a claims-made policy. The respective obligations are determined by the insurance contract in question. Words and phrases such as ‘beforehand', ‘immediately', ‘at the nearest time', ‘upon first opportunity' or ‘the reasonable time' are commonly used. Parties are also free to agree on any particular time frame, such as one day, three days or one week.


10. When is notice untimely?

As mentioned above, the laws of Ukraine do not prescribe general conditions on the notice period. If the policy does not stipulate a specific period, then it depends on the way the court interprets the wording, including words and phrases such as ‘beforehand', ‘reasonable', ‘upon first opportunity' or ‘immediate period'. In any event, the belated notice cannot create obstacles for an insurer in establishing the circumstances, character and the scale of damage.

Thus, if the notice was not made in the prescribed period and there were no objective reasons for the delay, it would be considered untimely.

11. What are the consequences of late notice?

Late notice may create obstacles for the insurer to investigate the circumstances, character and the scale of damage in relation to the insured event. Failure of the insured to fulfil its obligation to notify the insurer on time does not suffice as a ground for refusal to pay an insurance indemnity unless the insurer was not given the opportunity to obtain enough information on whether the event qualified as an insured event.



12. What is the scope of an insurer's duty to defend?

Under Ukrainian law, the insurer bears no duty to defend. However, there are different ways in which an insurer can defend against insurance-based claims.

First, the insurer may argue that the insured event did not occur. Second, if it is accepted that it did occur, the insurer may argue that the event does not qualify as an insured event within the meaning of policy or contract. Finally, the insurer may rely on legislatively prescribed grounds of refusal to pay an insurance indemnity, which include the following:

  • intentional actions undertaken by an insured aimed to bring about an insured event, except for the actions related to the fulfilment of civil or office duties committed for necessary self-defence (without exceeding its limits) or with regard to protection of the property, life, health, honour or business reputation;
  • an intentional crime committed by an insured that resulted in the insured event;
  • if an insured submits false information about the occurrence of an insured event and, as a result, the insurer is forced to ascertain whether the event was insurable;
  • making the full payment of indemnification by the person who caused the damage under the property insurance contract; and
  • a delay in notifying the insurer about the occurrence of the insured event, unless there are objective reasons for the delay and the insurer is not forced to ascertain whether the event was insurable as a result.

Failure to defend

13. What are the consequences of an insurer's failure to defend?

If the insurer fails to defend against the claim of the insured, then it will be obliged to fulfil the terms of the court decision, which can set forth the obligation of the insurer to pay an insurance indemnity and financial penalties, prescribed by the law or by the contract. The financial penalty may take the form of forfeit or a fine for breach of the contractual obligation.

Also, the insurer may be forced to cover the litigation costs of the winning party.


Bodily injury

14. What constitutes bodily injury under a standard CGL policy?

Any violation of anatomical integrity of flesh, organs and their functions that occur as a result of the effect of one or several external damaging factors (physical, chemical, biological, psychological) should be qualified as a bodily injury.

Property damage

15. What constitutes property damage under a standard CGL policy?

Property damage is understood as loss, shortage of or damage to certain property.

For example, regarding agricultural insurance, property damage may be understood as loss or shortfall of crops owing to, for instance, frosts, droughts or hailstones in a certain percentage of the expected number of crops.


16. What constitutes an occurrence under a standard CGL policy?

An occurrence is an event causing liability (obligation to pay indemnity) and is envisaged by the insurance agreement or by law. It may take the form of a bodily injury, damage to property or incurrence of liability.

17. How is the number of covered occurrences determined?

There is no generally applicable rule in this regard. The determination of the number of covered occurrences depends on the type of insurance and the specific insurance contract. In practice the number of covered occurrences is defined by the type of insurance (eg, health insurance and civil liability of the owners of the means of transport), how the insured event happened, the insured sum and the terms of agreement.

For instance, if the property that was the object of the insurance contract is destroyed, the insured will have only one indemnity payment under this policy. If the property was damaged several times, the insured may receive several indemnity payments, not exceeding the value of the type of property, agreed between parties to the contract. In addition, there are some types of insurance policies that provide for one payment only, such as life insurance.


18. What event or events trigger insurance coverage?

The occurrence of the insured event under the insurance policy triggers insurance coverage. The insured event is an event prescribed by the insurance contract or by law that has already occurred, and after its occurrence the insurer's obligation to pay an insurance indemnity arises.

The insured event varies for different types of insurance. For example, as regards health insurance, the insured event would be bodily injury or sickness. With regard to civil liability insurance, the insured event will be the occurrence of tort.

In any case, the insured event will be defined according to the type of insurance, the terms of the insurance contract and the rules of law concerning this type of insurance.

19. How is insurance coverage allocated across multiple insurance policies?

Ukrainian law provides for the notion of co-insurance when the object of the insurance contract is insured by several insurers by concluding a single insurance contract.

To this end, the insured must notify the insurer of the existence of the other insurance agreement regarding the same subject matter. If it fails to do so, the agreement with the new insurer will be null and void.

This contract must contain the terms that determine the rights and obligations of each insurer. Under the contract, if agreed by the parties, one of the co-insurers may represent all other co-insurers in the relations with the insured, albeit remaining liable within the scope of its share.

In this case, the liability of each co-insurer depends on several factors, such as the terms of the contract between the co-insurers and the insured, the terms of the contract between co-insurers, and the share of property that is insured by the co-insurer.



20. What is the general scope of first-party property coverage?

Within the scope of a property insurance agreement, the risk is insured for loss (destruction), shortage of or damage to the specific property. Usually, the definition of property includes the specific items, goods and vehicles belonging to a party, and the groups of these items. When concluding the insurance contract the parties should agree on the insured coverage, which is determined within the scope of value of the insured property and cannot exceed the property's true market value.


21. How is property valued under first-party insurance policies?

The value of the property under an insurance contract should be agreed between parties when concluding the contract according to the provisions of law and according to the rates and tariffs that are in force at the moment of conclusion of the contract. The insurer has the right to value the insured property itself or arrange an expert examination to this end.

Still, the parties to the contract may agree on other ways of calculating the value of the insured property, such as agreeing to use the market price of the property instead of the actual (contract) price.

Natural disasters

22. Is insurance available in your jurisdiction for natural disasters and, if so, how does it generally operate?

The Ukrainian laws provide for insurance for natural disasters. Relevant provisions are usually included in the property insurance policies. There are no limits on the types of natural disaster covered.



23. What is the scope of D&O coverage?

The scope of D&O coverage includes the following elements:

  • compensation for damage to other persons or their property within the course of carrying out employment duties by officers (property interests of officers); or
  • compensation for damage that have occurred owing to improper performance of the duties by officers (property interests of companies).


24. What issues are commonly litigated in the context of D&O policies?

D&O policies are uncommon in the Ukrainian market, which means there are no commonly litigated issues to mention.



25. What type of risks may be covered in cyber insurance policies?

Cyber insurance policies may cover the following risks:

  • DDOS attacks;
  • phishing (a type of e-fraud aimed at obtaining users' confidential data, such as login details and passwords);
  • cyber extortion; and
  • infection with malware.


26. What cyber insurance issues have been litigated?

Cyber insurance coverage is uncommon in the Ukrainian market, which means there are no commonly litigated issues to mention.



27. Is insurance available in your jurisdiction for injury or damage caused by acts of terrorism and, if so, how does it generally operate?

Generally, acts of terrorism are usually included in the list of events that preclude the occurrence of the insured event. However, the insurance of injury or damage caused by acts of terrorism is not prohibited by Ukrainian law. Although several purchases of political risk insurance have been reported, it does not amount to the widespread practice of purchasing this type of insurance policy in Ukraine.


Key developments of the past year

28. Are there any emerging trends or hot topics in insurance law in your jurisdiction?

In July 2020 the National Bank of Ukraine became the regulatory body in insurance market as a part of reform of non-banking financial sector. Therefore, in the nearest future the legislation and regulations regarding the insurance business will be amended.

The National Bank of Ukraine already issued the White Book on the future regulation of insurance market. In accordance with this document the regulator plans to draft the respective legislation and regulation basing on such goals:

  • strengthening of the standards of licensing, specifically, obliging the insurance companies to disclose its ownership structure, beneficiaries;
  • imposing the liability of the beneficiaries for activity of the insurance company;
  • imposing the standards of corporate management and internal control;
  • strengthening of the evaluation standards of assets and its quality; and so forth. 
Also it is planned to amend the legislation regarding insurance of agricultural products and state support of agroinsurance


29. What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

On 11 March 2020 the Cabinet of Ministers of Ukraine imposed the national quarantine as of 12 March 2020. The quarantine is now prolonged up until 31 December 2020. Further the Parliament of Ukraine adopted a number of laws (NoNo 530-IX, 533-IX, 553-IX, 540-IX) to address the pandemic and help the economy.

Business activities

Particularly, it is forbidden to the state authorities to conduct the scheduled inspections in the sphere of commercial activity during quarantine with a few exceptions. Some tax reliefs were imposed such as no-penalty regime for the taxpayers for untimely payment, incomplete payment or untimely reporting to the tax authorities. From the moment of the start of quarantine and up until its end the lessees were granted a right to ask for reduction of lease payment if the leased property could not be used due to imposed quarantine restrictions. The debtors were relieved of the obligation to pay penalties for breach of obligations under the loan agreements during quarantine or 30 days after its end. The limitation period was extended up until the end of quarantine.


As to employment, due to the covid-19 pandemic unpaid leave could be extended to any maximum duration. The employer was granted a right to request employees to work from home with full pay. Flexible working hours were introduced as the new type of working hours. It is recommended to transfer the employees to work from home, if possible. For those employees who cannot work remotely, it is recommended to abide by all health and safety instructions so that the fine for violation of quarantine restrictions could not be imposed.


The covid-19 pandemic also affected court proceedings. The participants to the case were allowed to take part in the court hearing through videoconference with the use of their own facilities. The court was allowed to forbid the presence of the people in the court hearing, who are not participants to the case. All the procedural terms, for example, the term for submission of appeals and cassation appeals, were extended up until the end of quarantine. This provision caused a lot of problems and ambiguities - the court decisions did not become effective and could not be enforced, the court proceedings were, in fact, put on hold. Later on the procedural terms were renewed from 6 August 2020. Instead the participants to the case were granted the right to renew the missed procedural term or ask the court to extend it due to quarantine and the imposed restrictions. It is important to keep up with the procedural terms thoroughly, nevertheless the new provisions of procedural legislation concede their extension or renewal. Also, it is recommended to take part in court hearings through videoconference in order to diminish the risk of virus spreading.

Covid-19 insurance

The state bodies of Ukraine did not adopt or implement any state insurance programmes against covid-19. Insurance against covid-19 is not obligatory in Ukraine. However, most of the private insurance companies prepared the specific insurance programmes addressing covid-19 risks.

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The article is available in Ukrainian

Oleksandra Bortman


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Oleksandra Bortman