COLLECTION OF THE BANK’S CLAIM UPON THE OCCURRENCE OF THE INSURED EVENT OF THE BORROWER’S DEATH

This paper examines the issue regarding the collection of bank claims in the event of the borrower’s death, where the loan agreement is concluded with an insurance policy covering the risk of death, where it is stipulated that the bank is the insurance beneficiary or the policy is assigned in favor of the bank. If, following the occurrence of the insured event – death, it is determined that the borrower’s health, i.e. the insured’s, had been previously impaired, insurers may refuse the claim for payment to the insurance beneficiary – the bank, citing standard provisions on exclusions under the insurance contract and terms and conditions. Through analysis of available sources and case law, this paper explores whether, in the event of the borrower’s death, the bank is obliged to exhaust all possibilities for collecting the remaining loan debt from the insurer pursuant to the insurance policy, or whether it has the right to choose the order of collection. Specifically, the study examines whether the bank may demand collection of the debt from the borrower’s heirs regardless of the concluded insurance agreement and without prior proof that collection from the insurer was not possible.

Keywords: claim collection, bank, insurance, borrower, death.