Contract on compulsory insurance -Law office of Dragana Lj. Djordjevic

Contract on compulsory insurance, conditions for and content were regulated by the provisions of Law on Compulsory Traffic Insurance (“Off. Herald of RS”, Nos. 51/2009, 78/2011, 101/2011, 93/2012 i 7/2013 – Constitutional Court decision).

The owners of means of transport, used for public transport, and the owners of other means of transport shall be required to sign a contract on compulsory insurance before the means of transport is used for transport and for the following types of compulsory traffic insurance:

Accident insurance of passengers in public transport
Third party liability insurance for owners of motor vehicles
Aircraft passenger and third-party liability insurance for aircraft owners
Third party boat insurance for boat owners.

In case bankruptcy proceedings are initiated against the insurance company, the concluded compulsory insurance contract shall remain valid until its expiration date.

Effects of the contract on compulsory insurance

An insurance company shall enter into a contract on compulsory insurance at policy conditions and scales of premiums applicable at the time such insurance contract is made.

An insurance company may not refuse an application for compulsory insurance contract if the policyholder accepts the policy conditions and scales of premiums of the insurance company for that type of insurance valid at the time of applying for the insurance contract.

Policy conditions are an integral part of the compulsory insurance contract and the insurance company is obligated to hand them over to the policyholder when closing the contract.

The policy conditions which grant lesser rights to damaged parties than those provided by Law on Compulsory Traffic Insurance shall have no legal effect.

Liability undertaken by an insurer under the compulsory insurance contract shall, if not agreed otherwise, begin from the expiration of the 24th hour of the day indicated on the insurance document as the date of commencement of coverage and shall cease upon the expiration of the 24th hour of the day indicated as the expiry date of coverage.

Notification on policy conditions and scales of premiums

An insurance company shall submit to the National Bank of Serbia (NBS) the policy conditions of compulsory insurance, the scales of premiums and the premium system with technical bases not later than 90 days prior to implementation, solely for the purpose of verification of their compliance with regulations, actuarial principles and the insurance profession rules.

If the NBS determines that the policy conditions, the scales of premiums and the premium system are not in compliance with legislation, actuarial principles and the insurance profession rules, it shall issue an order to the insurance company to bring them in line with legislation, principles or rules within 30 days.

If the NBS has issued the order, the insurance company may not implement the policy conditions and premium system for compulsory insurance on account of which the order was issued, until the order from that paragraph has been observed.

At the same time, the insurance company shall submit to the NBS the opinion of a certified actuary on the sufficiency of insurance premium for the permanent settlement of all liabilities under the compulsory insurance contract and insurance administration costs, as well as a three-year business plan of the company illustrating the sufficiency of the calculated premiums.

Sum insured and sum assured

The amount payable by the insurance company under compulsory insurance shall be limited to the sum insured and/or assured applicable at the date of the loss event unless a higher sum has been provided for under the insurance contract. The sum insured and/or assured means the maximum amount payable by the insurance company for a single loss event.

The RSD equivalent of the sum insured and/or assured, the compensation for small claims and 10% franchise of injured person in case of damages caused by the use of an unknown motor vehicle shall be calculated at the middle exchange rate of the NBS on the date of the loss event.

Obligations of the owner and/or person operating the means of transport

A person operating the means of transport (hereinafter: a driver) shall keep the insurance policy or other evidence of a concluded insurance contract on hand while using the means of transport and shall present it upon request of an authorised official.

In case the means of transport is operated by a driver other than the owner of the vehicle, the owner of the vehicle shall provide the driver with the insurance policy during the use of the vehicle or with some other evidence of a concluded insurance contract, and the owner should also have the European Accident Report.

Notwithstanding the person operating an aircraft shall be obliged to present insurance policy or other evidence of a concluded compulsory insurance contract on accident insurance of passengers in public transport and aircraft passenger and third-party liability insurance for aircraft owners, at the request of an authorised official prior to aircraft take-off or after landing.

In the event of a traffic accident, the driver shall be obliged to provide personal data and details of compulsory insurance policy to all persons involved in the accident who are entitled to compensation claims pursuant to Law on Compulsory Traffic Insurance.

Insurance company’s obligation to compile data

The insurance company shall compile, process and keep data for compulsory insurance on policyholders, insured means of transport, loss events and settlement of insurance claims. The insurance company shall organise, keep and maintain a database on:

policyholders
means of transport
loss events
claim assessment and settlement.

Data be compiled, processed, kept and used in compliance with the law governing the protection of personal data and regulations on the manner of compiling, keeping and submitting insurance data as prescribed by Law on Compulsory Traffic Insurance.

The Association of Serbian Insurers shall prescribe in detail the content of data as well as the manner of their compilation, keeping and submission.

Compilation, keeping and use of the insurance company’s database

The data on policyholders means of transport loss events claim and assessment and settlement, shall be collected directly from persons the data pertain to or from other persons (participants in and witnesses of a loss event). When the records of data are kept by the traffic security bodies, judicial entities, health, retirement and disability insurance funds, healthcare and social services institutions, data shall be compiled from these bodies and institutions.

Bodies, institutions and individuals possessing data or databases shall deliver such data to the insurance company upon request.

Data on policyholders means of transport loss events claim and assessment and settlement, shall be kept for ten years after termination of the insurance contract, and/or after the claim payment proceedings are concluded and may be used, free of charge, by the claimants as well, at the time of filing the compensation claim with an insurance company.

Exemption from compulsory insurance

The provisions hereof shall not apply to the means of transport of the Serbian Armed Force.

Application of provisions of the Insurance Law

Provisions of the law governing insurance services shall apply to the incorporation, operation and supervision of compulsory insurance companies respectively Insurance Law unless otherwise provided by Law on Compulsory Traffic Insurance.

Application of other laws on contract on compulsory insurance

The law on contracts and torts and other relevant laws governing the contracts on specific classes of insurance shall apply to contracts on compulsory insurance, unless certain matters are regulated otherwise by Law on Compulsory Traffic Insurance.