What you need to know when entering into an insurance contract

Buying insurance means entering into an insurance contract and paying the premium specified in it. An informed and careful approach to this process is essential for you to be satisfied with the protection you receive under your insurance policy.

 

Who develops insurance products?

Insurance is a product solution developed by insurers. They are also the ones who pay out compensation to insured individuals. That’s why the insurance contract is concluded between you, as the insured, and the insurer, whose product you will use under the terms of the agreement.

Insurers may only operate if they have received authorization from the Financial Supervision Commission (FSC) or another regulatory authority within the European Union and conduct business in the Republic of Bulgaria under the right of establishment or the freedom to provide services (EU freedoms). A list of licensed insurers and those authorized to operate under the EU freedoms can be found in the Public register of the Insurance market on the FSC website and in the FSC mobile app.

 

Where can you buy an insurance product from?

Consumers can purchase insurance directly from insurance companies or use the services of intermediaries. There are specific legal requirements for engaging in insurance intermediation. Lists of registered insurance intermediaries can be found on the FSC website.

Insurance brokers usually offer products from multiple insurers. By surveying the market offerings, they can advise their clients on the most suitable insurance solutions. They also often provide after-sale services, such as tracking premium payments or assisting in case of an insurance claim.

Insurance agents offer product solutions from one insurer only.

Ancillary insurance intermediaries offer certain insurance products as an add-on to their main goods or services. Examples include:

-          Travel agencies and tour operators – travel insurance bundled with travel packages

-          Airlines and transport companies – flight cancellation, lost baggage, and other travel insurances

-          Car dealerships and auto repair shops – Third-Party Liability (TPL) or Casco insurance

-          Electronics and tech retailers – device protection, extended warranty, or accidental damage coverage

-          Hotels and booking platforms – reservation cancellation insurance or medical coverage during stays

-          Banks and financial institutions – credit, savings, or financial service protection insurance

-          Mobile operators – mobile device insurance as part of subscription plans

-          Online platforms and retailers – delivery, product, or goods insurance

 

Entering into an insurance contract: purchasing a policy

Often referred to as a policy, the insurance contract is a bilateral written agreement in which the insurer agrees to cover a specified risk and, in the occurrence of an insured event to pay a compensation or a benefit to the insured or to a designated third party in exchange for the premium paid.

Before signing an insurance contract

As with any contract, by signing it, you agree to its terms and accept certain obligations. That’s why it’s essential to carefully review all clauses before committing. They are included in the insurance contract.

Don't hesitate to ask specific questions—it’s your money and your security, after all! The person selling you the insurance should act as your guide in choosing the right coverage for your needs. Based on the information you provide your insurance needs will be assessed. You must receive clear and comprehensive information about the product and its use so that you can make an informed decision.

At the same time, your responsibility as insured is to provide accurate and truthful information without hiding any circumstances relevant to the coverage. Otherwise, your claim might later be denied. If any related circumstances change during the contract period, you are also obligated to notify your insurer.

By signing the contract, you agree to the specified premium and payment method—whether as a lump sum or in instalments.

What does the insurance contract consist of?

Typically, an insurance contract includes the insurance policy (specification) and general terms and conditions. There may also be additional accompanying documents.

The policy (specification) includes the insurer’s and insured’s details, information about the insured object with relevant details about the insurance coverage, insured amount, premium, territorial scope, effective date, duration and other conditions depending on the insurance product type.

The general terms are structured into sections with comprehensive information regarding the rights and obligations of both parties and various aspects of the contractual relationship. Key sections include:

-          Insurance coverage

This section provides details about what is and isn’t covered under different risks. It’s especially important to review this part carefully to avoid unpleasant surprises in case of a claim. For example, your home insurance may cover “short circuits and power surges,” but state that such risk is not covered if caused by an appliance older than 10 years.

-          Exclusions of liability

This section outlines events for which the insurer is not liable. These may include major, catastrophic events (natural disasters, fires, floods, earthquakes) or cases where the insurer’s liability is waived (e.g., the insured event was deliberately caused). In the case of motor insurance, there is an exclusion from liability in the event of a traffic accident in which the insured person was under the influence of alcohol or drugs. In life insurance, an exclusion might be a suicide or attempted suicide; in property insurance—improper use or storage of the insured property.

-          Parties’ responsibilities in case of an insured event

This section details the deadlines and procedures for filing a claim, required documents, claim assessment, and payment of compensation.

-          Determination of compensation

This section outlines specific conditions such as "deductibles" (where the insured covers part of the damage), "first risk" clauses, and others.

-          Dispute resolution methods, contract termination, and more

While reviewing your insurance contract, you might come across terms you're unfamiliar with or unsure how to interpret. Usually, definitions are provided in the General Terms. Still, you can freely ask your insurer for clearer explanations—about terms or any other contract details.

 

How can you buy insurance?

The traditional method is to buy the policy in person at an insurance office. Another increasingly popular option is purchasing it online—via a website or mobile app. This is offered both by insurance companies and brokers. The online insurance purchase process typically includes: providing information about the insured object and person, choosing coverage, receiving and comparing offers, selecting a product, paying by card or other online payment methods, and receiving the policy.

To ensure greater security and minimize cyber fraud risks, make sure to use the official website or mobile app of a licensed insurer or intermediary—check the register on the Financial Supervision Commission’s website (www.fsc.bg), under the “Registers” section.

 

Useful links:

Financial Supervision Commission