Now, more than ever, Ukraine is on the path of European integration, adopting laws that comply with European norms and synchronize our country even more with the countries of Europe. The news that Ukraine is joining the common roaming zone with the EU has not had time to disappear from the news columns, in connection with which our citizens will be able to receive roaming services in the countries of the European Union in the “Roaming like at home” mode, as the following law appeared – “On mandatory civil liability insurance of owners of land vehicles”.
“FACT” IA invited the lawyers of the “Repeshko and Partners” bar association to comment on the new norms of the law “On mandatory civil liability insurance of owners of land vehicles”.
The Verkhovna Rada of Ukraine not only adopted the new version of the law “On compulsory civil liability insurance of owners of land vehicles”, but also made changes to a number of other laws regulating the specified area. The main provisions of this law will enter into force on January 1, 2025, with the exception of some articles for which phased entry into force is provided – for example, there is a rule that will enter into force five years after Ukraine’s accession to the European Union – this is Part 2 of Art. 14 of the specified law.
Let’s consider the main differences between the current law and future regulations. It should be noted that, in general, nothing new is happening in this area – the norms of the previous law were adopted exactly 20 years ago – in 2004, and have been working quite well lately.
Currently, the established limit of liability of the insured for damage caused to the life and health of the injured person is 320,000 hryvnias per victim, regardless of the number of victims. In turn, the damage caused to the victims’ property amounts to 160 thousand hryvnias per victim, but no more than 800 thousand hryvnias per insured event.
According to the new version of the law, the amount of these payments will gradually increase. For the damage caused to the life and health of the injured persons, the following limit amounts of payments are provided:
- from January 1, 2025, in the amount of 500,000 hryvnias per person and 5 million hryvnias per insured event, regardless of the number of victims.
- from January 1, 2026, but no earlier than January 1 of the year following the year of termination or cancellation of martial law in Ukraine in the amount of 1 million hryvnias per person and 20 million hryvnias per insured event, regardless of the number of victims.
- from January 1 of the year following Ukraine’s accession to the European Union in the amount of 10 million hryvnias per person and 50 million hryvnias per insured event, regardless of the number of victims.
- from January 1, the second year after Ukraine’s accession to the European Union, in the amount of 20 million hryvnias per person and 100 million hryvnias per insurance case, regardless of the number of victims.
For damage caused to the victim’s property, the amount and limit of payments is:
- from January 1, 2025, 250,000 hryvnias per injured person and 1.25 million hryvnias per insured event, regardless of the number of victims;
- from January 1, 2026, in the amount of 2 million hryvnias for one insured event, regardless of the number of victims;
- from January 1 of the year following Ukraine’s accession to the European Union in the amount of 10 million hryvnias per insurance event, regardless of the number of victims;
- from January 1 of the second year after Ukraine’s accession to the European Union in the amount of 16 million hryvnias for one insurance event, regardless of the number of victims;
An increase in the amount of insurance payments will necessarily lead to an increase in the price of the insurance policy itself, since the amount of insurance payments is formed precisely at the expense of insurance payments. However, whether the specified increase in price is good or bad is a rhetorical question. According to the current regulations, as the insurance payment of the motorist does not fully cover the amount of the damage caused, the victim has the right to file a claim through the court for compensation for the same difference between the amount of the insurance payment and the actual amount of the damage caused. If the perpetrator of the road accident has no property or any official income, the question of paying the victim’s money sometimes hangs for a while, and sometimes it happens altogether according to the principle – “I forgive everyone to whom I am guilty.”
In this sense, changes in the law better protect the victim. But in connection with the increase in the cost of a motor vehicle policy, the question will arise about the feasibility of insuring some vehicles, the cost of which will be equal to the cost of three to five years of motor vehicle payments. For the sake of fairness, it should be noted that even now there are drivers who have quite decent cars, but do not have a civil liability policy. However, what we see in relation to the increase in the limit of insurance payments is bringing them up to the level that is in effect in the EU. At the same time, we hope that salaries in our country will also be gradually brought up to the European level.
It should also be noted that the law provides benefits for some categories of citizens for paying for one autocivilian policy. Thus, 50% of the cost of the policy will be paid by disabled people of the 1st group, participants in hostilities, pensioners who drive a vehicle with an engine capacity of up to 2500 cm3 or an electric motor with a power of up to 100 kilowatts.
The cost of the insurance policy will be determined by each insurance company independently, in the law it is called “insurance premium”. At the same time, when calculating the price, the insurance company is allowed to take into account the history of road accidents due to the fault of the vehicle owner under mandatory civil liability insurance. Also, the deductible was removed from compulsory civil liability insurance contracts. Moreover, the law expressly forbade the application of a franchise under contracts of compulsory civil liability insurance.
The next innovation, which is provided for by the law itself, will be direct regulation. It should be noted that this is nothing new in the insurance market itself – for many years some large insurance companies have concluded agreements with each other and offer vehicle owners a very convenient product – the victim receives compensation from the insurance company with which he has an insurance contract. And then this insurance company itself turns to the insurance company of the culprit and receives compensation from it for the accident caused. The essence of the direct regulation under the new version of the law is that if the traffic accident occurred with the participation of only two insured vehicles or only two vehicles, of which the vehicle owned by the injured person is insured, and the damage is caused in the form of damage or destruction of the vehicle, the injured person has the right to apply to his insurance company for compensation for the insured event. At the same time, the law categorically stipulates that in the case of contacting the injured person’s insurer, it is already prohibited to contact the insurance company of the person responsible for the accident, and vice versa. In case of causing damage to life and health, there are no grounds for direct regulation.
By the way, previously, if the culprit of the accident did not have a motor insurance policy, but the victim did, then compensation for damage occurred through an application to the Ministry of Internal Affairs and Communications. In some cases, applying for payments to the MTSU is also provided for by the new version of the law.
In addition, according to the new regulations, in case of damage to the vehicle, the following is compensated:
- directly the restorative repair of the vehicle to the condition it had before the accident;
- evacuation of the vehicle within 150 km from the scene of the accident on the territory of Ukraine to the place where the injured person lives, or the place where the vehicle will be repaired;
- payment of parking services in the event that the vehicle needs to be moved to the parking lot for good reasons, but no later than the date of receiving the insurance payment.
At the same time, restorative repair of the vehicle can be carried out by the appropriate person (STO), who is chosen by the victim from the list of persons determined by the insurer (MTSBU). If the list provided by the insurer (MTSBU) includes less than three service stations within 150 km from the place of residence of the injured person or the location of the damaged car, the injured person has the right to independently choose a service station for repairing the damaged car.
Here is an interesting question regarding the work of the STO. At these companies, the price does not always correspond to the quality, moreover, usually the owners of vehicles entrust their iron horse to masters proven over the years. Only time will tell how and in what terms the service stations selected by the insurance companies will be repaired. We hope that the market economy and healthy competition will do their job and repair work will be done quickly and efficiently.
In the event of the victim’s refusal to carry out repair work at the service station offered by the insurer, compensation is paid to the victim’s bank account in an amount that is calculated using the appropriate licensed software or by the subject of the evaluation activity on the order of the insurance campaign, but without taking into account the cost of wear and tear of the car.
It is currently unknown which way will be the most profitable for the owner of the vehicle. Everything will depend on the extent to which the repair cost calculated by the insurance company will correspond to the reality and how quickly and qualitatively, in turn, the service station will carry out repair work.
However, we are still far from the service level of the leading countries. For example, in Canada, in the event of an accident, the insurance company, taking the vehicle for repair, provides the injured person with a car of the same class as the damaged car for free use for the entire duration of the repair.
The following changes refer to the European protocol, which is a very convenient tool in certain cases of road accidents and has already become quite widespread. The limits of insurance payments, which were in effect when the Euro protocol was drawn up, are canceled. With the entry into force of the law, it will be possible to issue it within the framework of general insurance payments for vehicle damage. Currently, the insurance company’s liability limit under the condition of drawing up a European protocol is 80,000 hryvnias. We would like to remind you that the police do not accept participation in traffic accidents when drawing up the Euro protocol, and the choice of currently registering a traffic accident with the Euro protocol or the classic option with the participation of the police is at the discretion of the participants in the traffic accident.
Under the new law, the time for making a decision on insurance payment will also change. Now this period is 90 calendar days, and from 2025 it will be 60 calendar days from the date of submission of the application and all the necessary documents, which is quite a positive moment. However, if the insurance company needs to carry out additional studies and examinations for 90 calendar days, the payment period can still be extended up to 90 calendar days. We hope that insurance companies will not abuse this.
It is also possible to conclude an internal vehicle insurance contract for a year or six months, and in some cases stipulated by law for a period of 15 calendar days, 21 calendar days, one to five months.
An international insurance contract can be concluded for a period of 15 calendar days, 21 calendar days, and for one, two, three, etc. month and up to a year.
What other nuances and surprises are contained in the new legislative changes will be revealed by time and the adoption of by-laws for their implementation.
