Insurance of local government budgetary units

Abstract

An insurance contract should ensure receiving a compensation that maximally offsets an incurred loss. This is a role of an insurance program implemented as part of a modern insurance policy, including by local government units and their budgetary entities. The primary function of the compensation is to provide restitution, which means a restoration of assets to their pre-damage state. The principle of a full compensation, as expressed in Article 361(2) of the Civil Code, implies that the compensation must be proportionate to a damage and aimed at remedying it. However, under public finance regulations, municipal, poviat, or voivodeships budgetary units do not have an unrestricted control over the compensation received, as it constitutes revenue that must be transferred to the budget account of the respective local government unit. The purpose of this study is to answer a question: what legal or contractual solutions allow a budgetary unit to use the awarded compensation for damage restitution?

Keywords

• budgetary unit
• gross financing
• damage compensation
• insurance policy
• insurance program
• insurance broker