Insurance of project assets is the obligation to insure items acquired using the contribution, which is usually enshrined in the agreement on the provision of a non-repayable financial contribution. The reason is simple: public funds financed assets that are meant to serve the purpose of the project throughout the entire sustainability period, and their destruction or theft would defeat that purpose. Contracts tend to require insurance against natural disasters, theft, and damage, at least up to the acquisition value and for the whole sustainability period. Assignment of the insurance payout in favour of the provider is also common. If an insured event occurs, the recipient must report it without delay and use the insurance payout to restore the assets, not for another purpose. Failing to insure the assets or interrupting the insurance is among the breaches that lead to a sanction or repayment of part of the contribution.
See also: Project sustainability, Contractual penalty in a project, Follow-up monitoring report.
