Car insurance: the main points
"You call on God, but you have to do it yourself". This proverb is very applicable to the topic of risk insurance. When you buy a car, you want to think only about the positive aspects of its use. And this is correct. However, you should not forget that a car is a means of increased danger and, therefore, increased responsibility. After all, its operation involves risks of harm to the vehicle itself, its owner, and third parties.
Therefore, we hope for the best, but do not forget about the need to insure our liability (possible risks and losses).
The legislator also thought about this, providing for mandatory forms of insurance for vehicle owners. In addition to compulsory insurance, no one deprives car owners of the right to additionally use voluntary insurance.
In this section, we will consider in detail all the most important issues that may be related to vehicle insurance.
Insurance is a rather specific type of activity. Therefore, before we start talking about it, let's look at the main terms used in this area.
Insurance is a type of civil law relationship to protect the property interests of individuals and legal entities in the event of certain events (insured events) specified in the insurance contract or applicable law at the expense of monetary funds formed by individuals and legal entities through the payment of insurance payments (insurance premiums, insurance premiums) and income from the placement of these funds (Article 1 of the Law of Ukraine "On Insurance" i).
The subjects of legal relations are insurers and insureds.
Insurers are usually financial institutions or registered branches of foreign insurance companies that have obtained a license to conduct insurance activities (Article 2 of the Law of Ukraine "On Insurance" ii).
Insureds are legal entities or individuals who have entered into an insurance contract with insurers or are insureds in accordance with Ukrainian law (Article 3 of the Law of Ukraine "On Insurance" iii).
The fact of entering into such an agreement (which must be in writing!) may be evidenced by an insurance certificate, policy, or certificate, which are forms of an insurance agreement. Important! Such an agreement, along with other terms and conditions, sets out the amount of the insurance amount.
The insured amount is the amount of money within which the insurer is obliged to pay out in the event of an insured event under the terms of the insurance contract (Article 9 of the Law of Ukraine "On Insurance" iv).
In turn, an insurance payment is an amount of money paid by the insurer in accordance with the terms of the insurance contract upon the occurrence of an insured event (Article 9 of the Law of Ukraine "On Insurance" v). The types of insured events are specified in the insurance contract.
An insurance payment made by an insurer within the insured amount under a property and liability insurance contract upon the occurrence of an insured event is called an insurance indemnity (Article 9 of the Law of Ukraine "On Insurance" vi). The insurance indemnity may not exceed the amount of direct loss incurred by the insured.
Often, the insurer does not cover the entire amount of losses. The part of losses that is not compensated by the insurer under the insurance contract is called the deductible (Article 9 of the Law of Ukraine "On Insurance" vii).
The amount of the deductible can be set both as a percentage of the sum insured and in absolute terms
If the policyholder's loss is less than the deductible, then do not expect an insurance payment, if it is more, the deductible will reduce the insurance payment.
Of course, an insurance contract provides for the payment of insurance premiums by the insured.
Insurance payment (insurance premium, insurance premium) is a payment for insurance that the insured is obliged to make to the insurer in accordance with the contract (Article 10 of the Law of Ukraine "On Insurance" viii).
We've got the basic terminology down. Now let's take a look at the forms and types of insurance provided for by law.
Article 5 of the Law of Ukraine "On Insurance "ix establishes two forms of insurance: compulsory and voluntary. The forms of insurance, in turn, include certain types of insurance. At the same time, certain types of voluntary insurance repeat the types of compulsory insurance, but contain a wider range of risk coverage. Let's group the most common types of motor insurance in the table below.
Table. Types of insurance
| Voluntary insurance | Regulation The Law of Ukraine "On Insurance" |
Compulsory insurance | Regulation The Law of Ukraine "On Insurance" |
| Accident insurance | clause 2, Article 6 | Personal insurance against accidents in transport | clause 6, Article 7 |
| Insurance of land transport (e.g., motor hull insurance) | clause 6 of Article 6 | — | — |
| Cargo and Luggage Insurance | Article 6(9) | — | — |
| Insurance of civil liability of owners of land transport (including carrier's liability) | clause 12 of Article 6 | Insurance of civil liability of owners of land transport | clause 9 of Article 7 |
i Article 1: Definition of insurance
Insurance is a type of civil law relationship to protect the property interests of individuals and legal entities in the event of certain events (insured events) specified in an insurance contract or applicable law at the expense of monetary funds formed by individuals and legal entities through the payment of insurance payments (insurance premiums, insurance premiums) and income from the placement of these funds.
ii Article 2. Insurers
Insurers authorized to carry out insurance activities in Ukraine are:
financial institutions established in the form of joint-stock, full, limited or additional liability companies in accordance with the Law of Ukraine "On Business Associations" (1576-12), taking into account that each such financial institution must have at least three members and other features provided for by this Law, and have obtained a license to carry out insurance activities in accordance with the established procedure (hereinafter referred to as resident insurers);
permanent establishments registered by the Authorized Body in accordance with this Law and the legislation of Ukraine in the form of branches of foreign insurance companies that have also obtained a license to carry out insurance activities in accordance with the established procedure (hereinafter referred to as branches of non-resident insurers).
Non-resident insurers are financial institutions established and licensed to conduct insurance activities in accordance with the laws of the foreign countries in which they are registered.
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In certain cases established by the legislation of Ukraine, state organizations established and operating in accordance with this Law shall be recognized as insurers. In this case, the use of the words "state", "national" or derivatives thereof in the name of the insurer is permitted only if the state is the sole owner of such insurer.
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Only insurance, reinsurance and financial activities related to the formation, placement and management of insurance reserves may be the subject of an insurer's direct activities.
The above activities are allowed in the form of providing services for other insurers on the basis of civil law agreements, providing services (performing work) if it is directly related to the above activities, as well as any operations to meet the insurer's own business needs.
Life insurers may provide loans to policyholders who have entered into life insurance contracts.
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Legal entities that do not meet the requirements of this Article may not engage in insurance activities.
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iii Article 3. Insurers
Insurers are legal entities and legally capable individuals who have entered into insurance contracts with insurers or are insureds in accordance with Ukrainian law.
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iv Article 9. Sum insured, insurance benefit, insurance indemnity and deductible
Sum insured means the amount of money within which the insurer is obliged to pay out in the event of an insured event in accordance with the terms of insurance.
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v Article 9. Sum insured, insurance benefit, insurance indemnity and deductible
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Insurance benefit means an amount of money paid by the insurer in accordance with the terms of the insurance contract upon the occurrence of an insured event.
Insurance payments under a life insurance contract are made in the amount of the insured amount (part thereof) and/or in the form of regular, consecutive payments of the amounts specified in the insurance contract (annuity).
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vi Article 9. Sum insured, insurance benefit, insurance indemnity and deductible
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Insurance indemnity means an insurance payment made by an insurer within the insured amount under property and liability insurance contracts upon the occurrence of an insured event.
The insurance indemnity may not exceed the amount of direct loss incurred by the insured. Indirect losses shall be deemed insured if provided for in the insurance contract. If the sum insured is a certain proportion of the value of the insured object of the insurance contract, the insurance indemnity shall be paid in the same proportion of the losses determined in respect of the insured event, unless otherwise provided by the insurance terms and conditions.
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vii Article 9. Sum Insured, Insurance Indemnity, Insurance Benefit and Deductible
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Deductible is the part of losses that is not reimbursed by the insurer under the insurance contract.
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viii Article 10. Insurance premium and insurance rate
Insurance payment (insurance premium, insurance premium) is a payment for insurance that the insured is obliged to make to the insurer in accordance with the insurance contract.
Insurance rate - the rate of insurance premium per unit of the sum insured for a specified insurance period.
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ix Article 5. Forms of insurance
Insurance can be voluntary or mandatory.
Mandatory types of insurance introduced by the laws of Ukraine shall be included in this Law. It is prohibited to carry out compulsory types of insurance that are not provided for by this Law.
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