The State Duma will allow issuing short-term OSAGO policies – from one day to three months

In Russia, it will be allowed to issue short-term OSAGO policies – from one day to three months. The relevant amendments to the legislation of the State Duma will consider in the near future. The Russian Union of Motor Insurers warned that the price of a short-term OSAGO policy would be higher than that of a traditional annual one, such insurance would be of interest, most likely, only to taxi drivers.

On Monday, July 17, the State Duma Committee on the Financial Market recommended that a bill be adopted in the second reading (the planned date for consideration is July 20), which allows concluding short-term OSAGO contracts of a new type. Today, we recall, the default validity period of the contract is one year, while it is allowed to buy insurance for up to 20 days if a citizen needs to get by vehicle from the place of purchase to the traffic police, or a policy valid for 5 days if the car is registered abroad and is temporarily used in the Russian Federation. There are also so-called seasonal policies that are valid for three (or more) months a year, they are bought by car owners who, for example, use the car only in summer.

In June 2022, the Liberal Democratic Party submitted amendments to the law on OSAGO to the State Duma, allowing the conclusion of motor vehicle contracts for a month without any additional conditions. In April 2023, they were adopted in the first reading and have since been finalized to the second.

As Anatoly Aksakov, head of the financial market committee, explained, after “long discussions with the Central Bank, the government, the insurance community, motorists,” it was decided to divide OSAGO agreements into two types. The first is a regular policy valid from three months to one year (as it is now). The second is short-term, from one day to three months. For the first type of contracts, the rates and coefficients on the basis of which the cost of insurance is calculated will be set by the Bank of Russia (nothing will change in this part compared to the current procedure).

The price of short-term policies will be set by the insurers themselves using a new coefficient, which will be multiplied by the base OSAGO rate set by the Bank of Russia.

This coefficient, follows from the statement of Anatoly Aksakov, insurers will determine themselves, but the mechanism is still unclear – it, apparently, will be written down in the instructions of the Central Bank after the adoption of the law.

The bill will help increase the availability of policies for motorists who use their personal car from time to time (for example, as a taxi), said Evgeny Ufimtsev, president of the Russian Union of Motor Insurers. At the same time, he noted that such policies are likely to be noticeably more expensive when compared to the unit cost of one day compared to the usual annual insurance. “Nevertheless, this will allow taxi drivers to distribute costs as they earn,” said Mr. Ufimtsev. “Ordinary citizens are unlikely to benefit from a short-term policy.” “I support additional opportunities for our motorists,” one of the authors of the bill, deputy head of the LDPR faction in the State Duma, Yaroslav Nilov, told Kommersant. “The taxi industry has long asked for short-term OSAGO.”

“The purpose of concluding an insurance contract for one day is not entirely clear,” Igor Ivanov, deputy general director of RESO-Garantia, told Kommersant. “It is doubtful that such a policy will be in demand by car owners.” It was easier to expand the list of situations when it is allowed to conclude a contract for up to 20 days, the expert believes. Mr. Ivanov recalled that, having a valid OSAGO policy in hand, a car owner, in case of an accident that occurred through no fault of his own, applies to his insurance company (the so-called direct compensation mechanism, DLP). If the policy is valid for only a few days, then beyond this period the PVU will not be available for the driver – it will be necessary to seek compensation for damage from the insurance company responsible for the accident. “It is difficult to assess the extent to which such changes are necessary and expedient, and whether they will ensure the protection of the rights of victims,” adds Igor Ivanov.

Ivan Buranov