The workshop has burnt down, and among the loss adjuster's first questions are: when was the last electrical safety inspection, is there a lightning protection inspection certificate, who checked the fire extinguishers? If the report has expired or does not exist, the company manager thinks: “then they won't pay”. As a broker, I see that the firms carrying out the inspections often argue this way too – not without grounds, but it is not that simple either. An expired inspection is not an automatic ground for declining the claim; the question is whether the insurer can prove a causal link and gross negligence, or whether the conditions expressly make the inspection a condition of cover. This article is about that legal and evidential question.
- The electrical safety inspection is required by NGM Decree 40/2017 (XII. 4.), and the lightning protection inspection and the checking of fire safety equipment by the National Fire Safety Code (OTSZ, BM Decree 54/2014 (XII. 5.)) – the two inspections typically on a three- or six-year cycle, the operator's checks of fire safety equipment much more frequently; the periodic inspection is the operator's obligation.
- An expired inspection report is not in itself a ground for declining the claim: under Section 6:464 of the Ptk., the insurer is released from paying if it proves that the loss was caused unlawfully, intentionally or with gross negligence by the insured, its manager, or an employee or agent in a job role specified in the conditions – this requires a causal link between the omission and the fire.
- The situation is different if the conditions or a clause make a valid inspection an express condition of cover: in that case it is not a question of negligence but of cover – this has to be checked in your own conditions.
Which inspections are involved, and how often are they needed?
Three documents come up most often. The electrical safety inspection replaced the earlier shock protection and fire safety compliance inspections; it is governed by NGM Decree 40/2017 (XII. 4.) (the Electrical Technical Safety Regulations), which, depending on the nature of the installation and the use of the building, typically prescribes a three- or six-year cycle, and typically an annual one for electric hand tools; the periodic inspection is the operator's obligation, and a certificate is issued on the result. The lightning protection inspection is compulsory under the National Fire Safety Code (OTSZ), BM (Ministry of the Interior) Decree 54/2014 (XII. 5.): different cycles, typically three or six years, apply to standard-compliant and non-standard lightning protection, and an extraordinary inspection is required after a lightning strike, damage, extension or alteration. The operator's checks and maintenance of fire safety equipment – fire extinguishers, fire alarms, wall hydrants – are likewise prescribed by the OTSZ. It is worth setting down the exact cycle and the person responsible for your own site with a fire safety specialist or the inspector – the basic fire safety checklist provides a framework for this, but it is not official advice.
What does the inspection have to do with insurance?
It connects at three points. The first is the duty to prevent loss: under Section 6:463 of the Ptk., the insured must do what can be expected of it to prevent and mitigate loss, and the parties may agree on loss prevention measures – Hungarian corporate conditions typically state that compliance with legislation, official requirements, standards and safety regulations is part of loss prevention. The second is exemption: under Section 6:464 of the Ptk., the insurer is released from paying if it proves that the loss was caused unlawfully, intentionally or with gross negligence by the policyholder or the insured, a relative living in the same household with them, their member entitled to manage the business, their senior officer as defined in the conditions, or their employee, member or agent in a job role specified in the conditions – the law requires this rule to be applied also to breaches of the duty to prevent and mitigate loss, and the burden of proof lies with the insurer. That is why it is worth checking in your own conditions to which job roles the insurer extends the exemption. The third is an express condition in the policy: some conditions or clauses make a valid inspection a condition of cover, especially for fire-hazardous technology; in that case an expired report is not a question of negligence but of cover. Some conditions also stipulate a reduction of the payment where a loss prevention requirement is breached. In a claim, these three levels must be kept strictly apart, because the burden of proof and the consequence differ – and each differs from insurer to insurer.
The key question: causation and gross negligence
An expired inspection does not in itself cause a fire. Under the exemption rule, the insurer may be released from paying if it proves that the cause of the fire was an electrical fault that an inspection due at the time would have revealed, and that failing to carry out the inspection – with the company's management aware of the obligation – amounted to gross negligence. In an all-risks case (Pfv.I.21.240/2021/4.), the Kúria (Hungary's Supreme Court) applied the same principle: exemption required that the employee breached the safety rule knowing the prohibition and the reason for it. If the cause of the fire is not electrical – arson, a welding spark, fire spreading from next door, a lightning strike on an otherwise compliant system – the expired report has no connection with the loss, and the exemption typically does not stand. If the cause is electrical but the fault is recent – cable damage on a machine installed a week earlier – the connection between the missing inspection and the loss is also weak. The weakest position is where the company has known for years about the expired inspection, the previous report required faults to be corrected, they were not corrected, and the fire started precisely there: courts may regard this as grossly negligent conduct. The fire investigation report – the official document of the disaster management authority – is therefore the most important document in a claim: it records where and why the fire started, and this decides whether there is anything to discuss at all.
Leased premises: whose job is the inspection?
The electrical safety inspection is the operator's obligation; for leased premises, under the decree the owner is the operator, but the lease can transfer this to the tenant – in practice, the parties often do not even know who has it. In a claim this question becomes pressing: the tenant's property insurer is responsible for the tenant's equipment, the landlord's for the building, and both will look at who failed to act. The contractual arrangement described in the landlord and tenant article belongs here too: the lease should state who orders and pays for the inspections, and both parties should have a copy of the report.
What should the company do – before and after a loss?
Before a loss: collect the electrical safety, lightning protection and fire safety documents in one folder with their expiry dates, and order the inspection before it expires; if the report reveals a fault, have the repair carried out and documented, because a fault that has been identified but not corrected is the worst combination. Check in your own conditions whether the inspection is a condition of cover or falls only under the general loss prevention rule – the reading policy conditions article helps with this. After a loss: notifying the fire service, cooperating in the fire investigation, leaving the scene undisturbed until the loss adjuster's site visit and reporting on the insurer's claims line – in the sequence of the article on the first days after a fire. If the insurer declines the claim citing the expired inspection, ask in writing which clause of the conditions and which causal link it bases its decision on – the burden of proving the exemption is on the insurer. In a case that is stuck or disputed, I help where I can, acting on the company's behalf; deciding the dispute is not a matter for the broker or for the MNB (Hungary's central bank and financial supervisor), but ultimately for the court. And one honest sentence to finish: the inspection is not there for the insurer's sake. Electrical faults are among the common causes of fires at business premises, and the purpose of the report is that there should be nothing to report.
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Sources
- NGM Decree 40/2017 (XII. 4.) – Electrical Technical Safety Regulations (frequency of the electrical safety inspection, operator's obligation, certificate)
- BM (Ministry of the Interior) Decree 54/2014 (XII. 5.) – National Fire Safety Code, OTSZ (lightning protection inspection, checking of fire safety equipment)
- Lánglovagok: What's new with the electrical safety inspection? (the 2024 amendment of NGM Decree 40/2017, frequency, responsibility)
- Hungarian Civil Code (Ptk.) – Act V of 2013, Section 6:463 (duty to prevent and mitigate loss), Section 6:464 (exemption of the insurer)
- Kúria (Hungary's Supreme Court) Pfv.I.21.240/2021/4. – published decision: all-risks cover, exemption of the insurer for grossly negligent breach of the duty to prevent loss
- Generali General Property Insurance Conditions (ÁVF, text of 15 July 2001 under the old Civil Code – the current Generali conditions may differ), Chapter X – exemption; legislation and safety regulations as the loss prevention standard
