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4 cases when the insurance payment is not enough for repairs
Situations when the insurance payment is not enough for repairs are not uncommon. Why does this happen? Is it fair for an insurer to pay less than the cost of repairs?
Volodymyr Shevchenko, Director General of MTIBU, spoke about how to avoid such situations and receive the missing funds.
Starting from September 21, 2019, the maximum amounts of payments under the contracts of compulsory insurance of civil liability of vehicle owners (CTPCI) have increased by one third and now amount to
- UAH 130,000 - for damage to "hardware" (car and other property)
- UAH 260,000 - for damage to life and health.
According to MTIBU estimates, only in 1-2% of accidents did property damage exceed the previous limits (UAH 100,000). But in the total amount of payments, such insured events accounted for about 6-7% of the money paid by insurers under the "motor citizen".
In other words, we had few victims who were involved in accidents with damage exceeding the maximum limit. But all of these accidents were so significant that in the total amount of payments, these amounts are quite significant.
I should note that the new limits will not be enough again. Because one major accident can cause hundreds of thousands of hryvnias in damage. Especially an accident involving several cars. And that is why in the new draft law on motor third party liability insurance we will provide for a gradual increase in the limits of insurance payments to millions of hryvnias.
But the problem is not only that the maximum amounts are not enough. Payments are not enough because the settlement procedure is outdated - insurers apply a deductible, take into account wear and tear, etc.
Case 1: An MTPL insurance contract is concluded with a deductible
A deductible is a part of the loss that is not compensated by the insurance company under the insurance contract. In CMTPL insurance, the deductible may be up to 2% of the sum insured for property damage. That is, now, after the limit has been increased, the deductible will be UAH 2600 (previously, before the increase, it was UAH 2000).
How can an accident victim receive this amount?
You have to file a claim for compensation with the culprit of the accident, there are no other options. The new law on compulsory motor third party liability insurance, which is currently being drafted, provides for a gradual transition to concluding motor third party liability insurance contracts exclusively without a deductible.
Case 2: A traffic accident is registered using the Europrotocol
The Europrotocol is a special form of notification of an accident that is filled out by the drivers involved in the accident at the scene of the accident, then provided to the insurer and becomes the basis for paying insurance compensation. In Ukraine, the Europrotocol can be filled out both in paper form and in electronic form, using the "electronic Europrotocol" system.
The Europrotocol can be used only under certain conditions, and payments for an accident registered with its help have a separate limit of UAH 50,000, which has remained unchanged.
If you have any doubts about whether the damage falls within the UAH 50,000 limit, it is better to call the police and report the accident according to the usual procedure. Otherwise, the insurance company will not be able to pay more than UAH 50,000, and you will have to contact the culprit of the accident for compensation for damage in excess of this limit.
Case 3: Payment is made taking into account the wear and tear of the car
This is one of the sore points in CMTPL, and a frequent cause of complaints from insurance company clients. However, insurance companies strictly adhere to the provisions of the current law "On Motor Third Party Liability Insurance" and the Methodology for Commodity Expertise and Evaluation of Wheeled Vehicles. Depreciation is calculated based on both the vehicle's service life (5 years for passenger cars made in the CIS countries; 7 years for passenger cars made in other countries) and the specifics of the vehicle's operation and condition, which are set out in the Methodology.
Depreciation is calculated if:
- the car is operated in an intensive mode (actual mileage is at least twice the standard mileage);
- the components of the body, cab, frame were restored by repair or have corrosion damage or damage in the form of deformation;
- the car was used as a taxi, special purpose vehicle, and in some other cases.
The victim may receive compensation for the amount of wear and tear from the culprit of the accident voluntarily or in court.
The rule on payment based on wear and tear is frankly outdated and unfair. The possibility of changing the principle of compensation for such damage to cars in the new law "On Motor Third Party Liability Insurance" is currently being discussed. If the draft law is passed, the victim will be paid the full amount necessary for the restoration of the car.
Case 4: Several cars were damaged in one accident
How is the amount of damage compensation calculated in this case? The total amount for property damage to all victims of one accident is equal to five times the maximum payment, i.e., it is currently UAH 5 * 130 thousand = UAH 650 thousand.
However, the Law "On Motor Third Party Liability Insurance" stipulates that if the total amount of damage in one insured event exceeds five times the sum insured (UAH 650 thousand), the compensation to each victim is proportionally reduced. Therefore, in some cases of an accident with a large number of damaged cars or several cars with significant damage, each victim may be paid compensation that does not cover the entire amount of damage.
So what to do if the repairs cost more than the insurance payment:
- The missing amount can only be recovered from the culprit of the accident, either voluntarily or through the courts.
- To avoid situations when the insurance payment under a motor vehicle liability insurance policy is not enough to cover the repair, I advise you to conclude an additional civil liability agreement and a motor hull insurance policy. At least until the Verkhovna Rada adopts a new law "On Compulsory Motor Third Party Liability Insurance".
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