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3.11 PROPERTY INSURANCE

The borrower is responsible for all insurance costs in order to restore the original value of the collateral property (in cases involving partial damage) or to redeem the debt in full in the event that the property provided as collateral is destroyed (for example as the result of fire or explosion). In cases involving leased properties, an insurance policy may also be required which provides partial compensation for losses resulting from the inability to let out a damaged property.

Furthermore, should the value of the collateral fall, due inter alia to a general or local fall in property prices as certified by an official surveyor's report based on objective market parameters, the contract will grant the bank a right to require that the collateral be increased accordingly, or the provision of suitable collateral and/or the partial redemption of the loan.

The following is a detailed example of clauses.

INSURANCE CUVER

(a) The Borrower undertakes to:

(i) implement and maintain all risks insurance policies in relation to the property for amounts and insurance risks consistent with the best market practice, and in form and substance satisfactory to the Bank (the “Insurance Policies”);

(ii) maintain the Insurance Policies with leading insurance companies with adequate experience of the relevant area;

(iii) duly and punctually pay each premium and each further amount due under the Insurance Policies and promptly provide, upon the Agent's written request, copies of receipts or other documentary evidence of such payment;

(iv) refrain from making amendments to any Insurance Policy without the prior consent of the Borrower (on consultation with the Bank) and refrain from acting in any way that may make any Insurance Policy invalid or ineffective;

(v) promptly upon entering into any new Insurance Policy,

(a) provide details of each such Insurance Policy (including any actual or potential claim for damages) to the Bank;

(b) ensure that the receivables arising under such Insurance Policy are assigned by way of security pursuant to the Security Assignment, and comply with all steps and formalities required thereunder for validity and enforceability;

(vi) upon request by the Bank, where the Bank reasonably concludes that the insured value or the risks covered by an Insurance Policy are inadequate, procure the increase in the insured value and/or modification in the categories of risk covered in relation to such Insurance Policy to the extent and in the manner that Bank may reasonably deem appropriate.

(b) Where the Borrower fails to achieve or comply with the requirements and obligations under this clause, the Bank shall have the right (but not the obligation) to procure performance and/or enter into a new policy on the Borrower's behalf, in which case the Borrower shall be obliged to repay any amount incurred by the Bank in connection with the same within 15 Business Days of the relevant written request being made by the Bank.

 
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