Ukraine launches first national compensation programmes for war-damaged business assets and war-risk insurance premiums

On 28 November 2025 the Cabinet of Ministers of Ukraine, by its Resolution no.1541, adopted a regulation introducing the first state mechanism for (i) partial compensation of the value of business property destroyed or damaged as a result of Russia’s armed aggression and (ii) partial compensation of insurance premiums under war-risk insurance policies (the “Regulation”). This Regulation enters into force on the day of its publication and the budget-funded compensation schemes provided for therein will apply from 1 January 2026.

Under the Regulation, compensation will be administered by Private Joint-Stock Company “Export Credit Agency” (“ECA”) within the following caps applied per business entity together with its related parties: (i) up to UAH 10 million for compensation of destroyed or damaged property and (ii) up to UAH 1 million per year, in the aggregate, for reimbursement of war-risk insurance premiums. In addition, compensation is limited by the amount of budgetary allocations in the State Budget of Ukraine for the relevant year and, for 2026, public sources indicate that the State Budget allocates UAH 1 billion for this mechanism. Once the total volume of applications exceeds this amount, the ECA must stop accepting new applications.

Participation in both programmes is voluntary and subject to a fee. To participate in the property compensation programme, an applicant must make a contribution equal to 0.5% of the total amount of potential damage for all assets identified in the programme participation application. For insurance premium compensation, there is a one-off payment UAH 5,000 for each application to participate in the insurance compensation programme (i.e., per insurance policy).

Applications are open to Ukrainian private companies and individual entrepreneurs that are not under sanctions, have no tax debt, are not subject to bankruptcy proceedings or liquidation and are not otherwise excluded under the Regulation.

This alert provides an overview of the new scheme and outlines practical steps businesses should take now to prepare for applications in early 2026.

Compensation for destroyed or damaged property

The property damage compensation programme extends to “business assets” such as capital assets owned by the applicant and used – or previously used – for its core business activities before the damage or destruction occurred. In particular, the programme covers buildings and structures (industrial, administrative, storage, etc.), separate premises forming part of a building (offices, workshops), construction in progress where construction started after 1 January 2021, as well as external and internal engineering networks and equipment.

An additional requirement is that said capital assets must be located in so-called high-risk regions. For the purposes of the Regulation these currently include Dnipropetrovsk, Donetsk, Zaporizhzhia, Mykolaiv, Odesa, Poltava, Sumy, Kharkiv, Kherson and Chernihiv, excluding temporarily occupied territories.

Compensation may be claimed only in respect of property that was destroyed or damaged after the 1st day of the month following the date on which the Regulation enters into force, provided that at the time the damage occurred, the relevant business entity is enrolled in the property compensation programme and, at the time the compensation decision is made, it does not fall within any of the exclusion categories set by the Regulation. Losses incurred before the above-mentioned date are outside the scope of the programme.

At the initial stage, in order to participate in the property damage compensation programme, an applicant must submit to the ECA an application using the standard form (to be adopted and published by the ECA). The application must be accompanied, inter alia, by: (i) copies of the title documents for the relevant assets, (ii) a valuation report confirming the actual value of each asset, prepared by a licensed appraiser and dated no earlier than 90 days before submission to the ECA and (iii) evidence of payment of the participation fee. The ECA has 30 calendar days to consider the application and notify the applicant of its decision. In case of deficiencies in the documentation and/or failure to pay fee in full, the applicant has 10 calendar days to remedy the deficiencies, include payment of the outstanding part of the fee. Otherwise, the application may be left without consideration and the fee already paid is to be returned to the applicant.

Following the destruction or damage of the relevant asset as a result of war-related events covered by the Regulation, a business entity already enrolled in the property damage compensation programme must submit to the ECA a separate compensation application in respect of each affected asset (using the standard form to be adopted and published by the ECA).

Such a compensation application may be filed only once the required set of documents relating to the damaged or destroyed assets has been submitted to the State Register of Property Damaged and Destroyed as a Result of Hostilities, Terrorist Acts and Sabotage Caused by the Armed Aggression of the Russian Federation against Ukraine (the “Register”), as specified in the Regulation. These documents include, among others: (i) the title and technical documentation of the assets; (ii) a commission report or technical inspection report on the damaged or destroyed property and a report containing a conclusion on its technical condition, each prepared in accordance with the applicable procedures; (iii) acts or other documents issued by the competent authorities confirming the destruction or damage and (iv) a valuation report and a certificate indicating the amount of actual damage to each asset, prepared by a licensed valuer.

The Regulation also provides for an assignment mechanism. By submitting a compensation application, the business entity accedes to a standard assignment agreement under which its claim against the Russian Federation for losses resulting from the destruction of immovable property caused by hostilities, terrorist acts or sabotage is assigned to the state, to the extent of the compensation paid. The claim is transferred at the moment the relevant compensation amount is credited to the business entity’s account. The amount of such a claim is determined for each asset on the basis of the valuation report submitted to the Register. It may cover only actual losses and may not exceed the amount of potential damage specified by the business entity in the initial application for participation in the programme.

The ECA must review a compensation application within 30 calendar days; this period may be extended once by up to an additional 30 calendar days. Following its review, the ECA may approve the application, refuse it on the limited grounds set out in the Regulation (for example, where the applicant is not eligible, the application is out of time or double recovery has already occurred) or leave it without consideration if the identified deficiencies are not remedied within the prescribed time limit.

Compensation for war-risk insurance premiums

This compensation is available only for the insurance policies that meet a set of criteria laid down in the Regulation. In particular: (i) the policy covers specific war risks listed in the Regulation, (ii) the insured amount does not exceed the actual value of the property at the prices and rates effective on the date of execution of the insurance contract (or amendments thereto), (iii) the insurance rate for war risks is stipulated separately from other insured risks and covers exclusively the capital assets specified in the Regulation (i.e. the same type of assets that are eligible under the property damage compensation programme described above), (iv) the insured assets under the policy are limited to such eligible capital assets, (v) the insured party is an entity or person eligible under the Regulation and (vi) the term of the policy does not exceed one year. In addition, the relevant insurance policies must be entered into after the first day of the month following the date on which the Regulation enters into force and the policyholder must not fall within any of the exclusion categories set out in the Regulation.

Compensation for the insurance premiums is paid after the expiry of the insurance contract and is calculated in accordance with the formula provided in the Regulation, subject in any event to an overall cap of UAH 1 million.

To participate in the programme, the business entity must, together with the documents required to enter into the insurance contract, submit an application to participate in the compensation programme to the insurer (using the form to be prepared and publish by the ECA). The allocation and supporting documents are submitted to the insurer, which before the insurance contract is executed, must notify the business entity whether it has been enrolled in the programme or refused participation, indicating the grounds for refusal.

Following the expiry of the insurance policy, the business entity – programme participant – must submit to the ECA an application for compensation in respect of a specific insurance contract (in the form approved by the ECA and published on its website), together with a package of documents specified in the Regulation (such as copies of title documents for the insured property, the initial application to participate in the programme and the insurer’s notice of enrolment, a copy of the insurance policy, evidence of payment of insurance premium, etc.). If the insurance policy is terminated early or the insurance premium is not paid in full, the entity loses its right to receive compensation.

The ECA then reviews the compensation application within 30 calendar days; this period may be extended once by up to an additional 30 calendar days. The review and decision-making process largely mirrors that for property damage compensation applications: the ECA may approve the application, refuse it on the limited grounds set out in the Regulation (for example, where the applicant or the policy does not meet the eligibility criteria) or leave it without consideration if identified deficiencies are not remedied within the prescribed time limit.

Key practical considerations and expectations

A key feature of both compensation programmes is that, even where an application is approved, payment is not guaranteed in practice. Under the Regulation, both compensation for destroyed/damaged property and reimbursement of war-risk insurance premiums are made by the ECA only within the limits of state budget funds allocated for the relevant programme. If there is no budget financing, the compensation is not paid, while the participation fee (including the 0.5% contribution for property compensation and the UAH 5,000 fee per insurance contract) is not refunded.

The Regulation does not set a specific deadline for the payment of approved compensation. In addition to the ECA’s internal review timelines, the Ministry of Economy of Ukraine must transfer budget funds to the ECA before any compensation can actually be made. In practice, this means that successful applicants should expect a time lag between approval of their application and receipt of funds. As mentioned above, for 2026, the state budget provides for UAH 1 billion for both programmes. However, there is a general expectation that the total amount of business losses and potential insurance needs significantly exceeds this figure.

From a practical perspective, companies that intend to rely on these programmes should treat them as one of several recovery tools rather than as a guaranteed source of funding. Early registration of damage in the relevant state registers, timely preparation of documentation and prompt submission of applications in 2026 are likely to be critical for those seeking to maximise their chances of actually receiving compensation within the available budget.