What is compensation in kind under compulsory motor liability insurance?
Natural OSAGO appeared on April 28, 2021. The essence of the new bill is that the injured party, in the event of an accident, receives a referral to a station that carries out repair work.
It turns out that this is compensation in which the client does not receive funds in hand, but provides a car for repairs. As for payment, all responsibility rests with the insurer.
As part of the new law, motorists were offered several advantages:
- The time for payment will be reduced, since there is no need to show the car to an expert and wait for the assessment results.
- Often, drivers did not have enough amount received, as a result of which they had to file a claim and go to court. Thanks to this law, the problem of underpayment has been resolved.
- Each driver can choose a station from the available list. Insurers are required to cooperate only with large car dealerships. It turns out that you won’t be sent to the garage for questionable repairs.
Thanks to in-kind compensation for damage under the MTPL policy, the state wants to protect itself from numerous scammers who make fake road accidents in order to gain profit.
Changes
As mentioned earlier, the main change in the Federal Law “On Compulsory Insurance...” is the priority of payment for repairs over monetary compensation for damage caused to vehicles as a result of an accident.
In general, the chronology of changes in the legislation on compulsory motor liability insurance looks like this:
On March 17, 2017, the State Duma adopted a law amending the legislative act, explaining that in case of an accident, injured drivers must first deliver their cars to services with which the insurance company has entered into contracts, while monetary payments take a back seat;- On March 28, the law was approved by the President of the Russian Federation and came into force.
It is worth considering that the above changes will only affect car owners who purchased MTPL policies after April 28, 2021. Those who purchased insurance before the specified date can receive compensation for damage to the car caused as a result of an accident, as before the amendments were made - in monetary terms, however, the calculation of the insured amount will be made taking into account the wear and tear of damaged parts.
According to the amendments made to the Law “On Compulsory Motor Liability Insurance”, drivers must now contact the insurance company for repairs, and not for money, as was previously the case. The difference between those who purchased a policy before April 28, 2017 and after is that in the first case, wear and tear of spare parts will be taken into account, but in the second, it will not.
Those. even if the car is 10 years old, the cost of parts is now calculated at real market prices, because it is at these prices that all services purchase the necessary materials. Car owners will receive money in their hands only in exceptional cases.
If the repair at the service station was carried out poorly, and some time after it the car became faulty again, this must be recorded through an independent examination. Subsequently, car owners can file a claim with their insurance company, because It is she who is responsible for the quality of the repair, and if deficiencies are discovered, the company is obliged to compensate for repeated requests for service.
Is it possible to get money
Having studied the reviews on the Internet, it becomes clear that not all car enthusiasts liked the innovation. Many road users are interested in whether it is possible to get cash and pay for repair work themselves.
The law provides for exceptions, as a result of which money is paid under compulsory motor liability insurance. Cash payment is made:
- heirs by law in the event of the death of the victim;
- if the victim suffered moderate harm to health;
- if the injured party is disabled and the car is necessary for medical reasons;
- in case of complete loss of the car;
- if the cost of repair work exceeds the established limit, within 400 thousand rubles, and the culprit does not agree to voluntarily pay the difference;
- with mutual guilt;
- if the insurer cannot ensure that repair work is carried out at the relevant station.
Also, payments under compulsory motor liability insurance in cash are provided by agreement of the parties. It is important to consider that the agreement must be in writing and signed by both the policyholder and the insurer.
Repair or wallet
Will all motorists receive compensation in kind?
Igor Zhuk:
The idea was conceived to improve the quality of customer service when settling losses in MTPL. In addition, we expect that its implementation will increase the availability of this type of insurance in problem regions.
Now priority is given to in-kind compensation for the consequences of accidents. The law will apply to new MTPL contracts. But at the same time, there are clearly defined cases when damage to a car owner will be compensated only by money. For example, if the car is completely broken and it is obvious that there is no point in repairing it. Or, when the amount of damage exceeds the payment limit established by law of 400 thousand rubles.
The law will apply to new auto insurance contracts
The victim can also make a choice in favor of monetary compensation for the consequences of accidents due to life circumstances. For example, if during an accident a person was injured, and therefore it is more important for him to spend the allotted money on restoring his health, and not on hardware.
How will it work?
Igor Zhuk:
Any insurance company offers the client a list of service stations and negotiates with him the issue of repairs even before concluding a compulsory motor liability insurance contract. In fact, the car owner can look at the websites of different insurers, the list of services with which they cooperate, and choose the option he likes. And the car enthusiast indicates it in his application.
The law specifically stipulates that the service station must be located no further than 50 kilometers. Do you mean from the place where the accident occurred?
Igor Zhuk:
Indeed, the service station should be located at a distance of no more than 50 kilometers either from the victim’s place of residence or from the scene of the accident.
It is important that the insurance company is responsible for the quality of repairs. The consumer may have natural questions: a service was imposed on me on the company’s website, but the service was not provided or it was provided poorly, what should I do?
In this case, the consumer files a claim with the insurance company, and it is obliged to consider the complaint in accordance with the established regulations.
A new edition of the insurance rules is currently being prepared, in which these requirements for organizing repairs will be enshrined. At the same time, the company will have the opportunity to prove that it compensated the client for the damage with the best service capabilities for him.
It is important for car enthusiasts that, according to the new rules, vehicle wear and tear will not be taken into account during repairs. After all, now, if a bumper is broken, the insurance company calculates its value and then deducts wear and tear from it. With compensation in kind, the wear and tear factor is not taken into account, unlike a cash payment.
Our country is large, for example, in the Oleneksky ulus of Yakutia, sometimes you need to travel half a day to get to the nearest settlement. Did you take this geographical factor into account when determining how far away the service station should be?
Igor Zhuk:
It's simple. If the company cannot provide the client with service points within a given distance of 50 kilometers, he will receive monetary compensation.
What if the insurer does not comply with its obligations? Are there any penalties for violators?
Igor Zhuk:
If the company violated the deadline for issuing directions for repairs to the victim, a penalty in the amount of 1 percent of the amount of insurance compensation for each day of delay may be charged. Failure to meet the repair deadlines may result in a penalty for the insurer in the amount of 0.5 percent of the insurance compensation.
If a company has repeatedly violated its obligations within one year, including the obligation to organize and pay for restoration repairs, we have the right to exclude it from compensation in kind.
But we, of course, are not introducing new rules for the sake of punishment, and we hope that the economic interest of companies in the opportunity to provide in-kind compensation will encourage insurers to conscientiously fulfill their obligations no less than the rules on penalties.
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If all the norms prescribed by law are met, insurers' costs may increase by 25 percent. Will innovation lead to the bankruptcy of a number of companies?
Igor Zhuk:
Yes, there is expert opinion that insurers' costs will increase. “In-kind” compensation excluding depreciation implies an increase in the cost of the company's expenses. But, on the other hand, insurers will pay less under writs of execution.
After all, what has been happening in recent years: companies received news about the insurance event after the fact, when, after a court decision, funds were written off from their accounts. Moreover, the amount often turned out to be many times greater than what the insurance company could have spent by paying directly to the car owner. Now the participation of insurance companies in compensating losses for MTPL events will be direct. According to the new law, information about each accident must initially go through the company. In addition, she still gets the opportunity to resolve the issue out of court. Car fraudsters and car intermediaries are disappearing from the chain; they are bilking companies out of non-insurance costs, which, according to the professional community, amount to tens of billions of rubles annually.
Therefore, the bill protects both the interests of motorists and bona fide insurers.
Should we expect that MTPL tariffs will increase?
Igor Zhuk:
We do not see a relationship between the introduction of “in-kind” compensation for damage and changes in tariffs. There are currently no plans for any tariff changes. We will monitor how the situation changes after the law comes into force, first of all, what will happen to the unprofitability of insurance companies, and whether costs, including legal ones, will increase.
Increasingly, experts say that the effect of increasing motor vehicle tariffs has already been exhausted. So, for 60 insurers from the top 100, payments under compulsory motor liability insurance exceed premiums
Igor Zhuk:
Unfortunately, we are seeing the depletion of reserves associated with the increase in compulsory motor liability insurance tariffs in 2014-2015. But we have not yet moved into the unprofitable zone.
According to our calculations, the combined loss ratio (CLR) - the ratio of losses and expenses of insurers to the earned premium - does not yet exceed 100 percent in the market as a whole. But in some regions the situation with unprofitability is much worse.
For example, it turned out that in Adygea, Karachay-Cherkessia, Ingushetia, and Ivanovo region, the average insurance payment is twice as high as the Russian average. After all, cars in these regions cannot cost more than in Moscow? Or there are statistics that in Volgograd cars are one and a half times more likely to get into accidents than in the country as a whole. In the same city, out of 100 road accidents, 67 end up in court (the average figure for the country does not exceed 17).
Since the beginning of this year, a system of mandatory e-MTPL and a “single agent”, including an electronic one, has begun to operate. Has this affected the availability of policies?
Igor Zhuk:
Now about 10 percent of MTPL policies are sold electronically. As of April 10, almost 900 thousand policies were sold this way. For comparison: over the previous year and a half, a little more than 300 thousand motor vehicle policies were sold. And in some regions, even more than 15 percent of contracts are now executed through electronic services. But we also understand perfectly well that for some people it will be more convenient and familiar to buy a policy through an agent. This also has its advantages, because if the car owner has not changed anything in his documents, then re-signing the contract through an agent occurs quickly - almost automatically. So offline sales will not disappear.
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We, as a supervisory authority, ensure that insurance companies sell MTPL policies without breaking the law. Now there are targeted checks of insurers, we are looking at how electronic sales are carried out, how company websites work.
We believe that we are on the right path. And if at first we received a large number of complaints about the actions of insurers under e-MTPL, now their number has decreased.
Now approximately 60 companies have a MTPL license, so it is possible to buy a motor vehicle policy online from any of them. This is the competitive advantage of the market.
What problems might arise in practice when the new law comes into effect?
Igor Zhuk:
Firstly, we can already feel the desire of companies to make maximum use of the law’s opportunities to prioritize repairs. I believe that this will lead to increased work with car service stations. They, in turn, will also need to strive to meet the requirements for the quality of repairs; they will need to expand the existing spare parts base.
Of course, much will depend on the public’s awareness of innovations, what rights consumers now have and how to use them. Therefore, we try to tell citizens about this, including with your help.
But we hope that, in general, the innovation will be positively received by both the consumer and the market, and will ultimately resolve a number of problematic issues in the field of compulsory motor liability insurance.
How are service stations for repairs determined?
The new rules spell out how compensation occurs for natural compulsory motor liability insurance and the choice of station. Having studied them, it will become clear that:
- The service station is chosen by the client, and not determined by the financial company at its own request;
- the insurer is obliged to issue a direction to a point that is located no more than 50 km from the scene of the accident or the registration of the car owner;
- if there is no service station nearby, then the insurance company is obliged to offer another one and pay the costs associated with additional transportation;
- resolve the repair issue within 30 days.
Important! If the financial company does not resolve the repair issue within 30 days, then, within the framework of the law, it will be obliged to pay the client a penalty for each day of delay. The penalty amount is 0.5% of the amount of damage.
Definition of compensation in kind
Compensation in kind under compulsory motor liability insurance is the restoration of the vehicle, which is paid for by the insurer; the choice of service station in this situation remains with the insured. The vehicle restoration location must be approved by the insurance company, since the relationship between a certain service station and the insurer must be secured by an agreement.
If at the time of the accident the vehicle was under warranty, the manufacturer’s liability in this situation remains in force. A vehicle that has been in use for less than two years will be repaired at the service station of an official representative, unless the owner decides otherwise.
Body and paint repairs have a warranty period of six months, other types of restoration - 1 year. These principles only work in relation to physical persons Organizations still have the right to choose whether they will receive money or compensation in the form of repairs. And yet, in some cases, physical. individuals have the opportunity to receive money instead of vehicle repairs.
The procedure for compensation in kind under OSAGO
Payment for motor vehicle liability under natural compulsory motor liability insurance is possible only after receiving written consent from the victim. Let's take a closer look at the payment procedure:
- Selection of service station. When contacting the loss settlement office, you must fill out an application indicating the name of the service station where you want to repair the damaged vehicle. As soon as the application is completed, the injured party receives a direction with which it is obliged to travel to the selected point. Application deadlines are strictly fixed, so do not delay.
- Providing transport. It is necessary to transfer the damaged car to the station and sign the acceptance certificate for the transfer. It is this document that indicates that the car is being transferred for repair work. The period during which the service station is obliged to fulfill its obligations is also fixed.
- Signing the act of completed work. The repaired car should be accepted according to the certificate. If you are not satisfied with the quality of the work, then you should not sign the document. In such a situation, you should write a statement asking to correct the shortcomings. If you receive a refusal, you should go to court. It is important to take into account that you do not need to show the repaired car to the insurer.
Service requirements
Today, there is a list of requirements that apply to service stations, such a list is also called a “triangle” - this is the quality of restoration work, the price and speed of its implementation. If the importer is responsible for quality and efficiency, then the insurance company can influence the price range.
In this case, dealer service stations have an advantage for policyholders, since they are interested in ensuring that all work is carried out efficiently and on time , since otherwise they may be deprived of the right to represent a certain brand of car on the market. Service stations are interested in customers, since today their underload is about 40-50%.
Insurers have developed a list of criteria, and each insurance company has its own. According to these criteria, insurance organizations not only conduct the initial selection of partner service stations, but also control them in the process of work.
These criteria most often include:
- Availability of modern service equipment.
- Proper and spacious organization of the repair shop space.
- Quality of the client area.
- The quality of the repairs carried out.
- The time frame during which car repair work is carried out.
- Also, an important criterion is the absence of acts of disagreement in working with other insurance companies.
The list of criteria also includes the availability of a full set of tools and equipment for bodywork and metalwork. IC does not impose requirements for the installation of equipment and parts from a specific manufacturer. For the consumer, in the end, the brand is of less importance, but the efficiency and quality of the work performed is of greater importance.
Insurers also put forward requirements that apply to station employees. Naturally, the Investigative Committee is not able to check the level of professionalism of each station employee, and in fact, the Investigative Committee is not obliged to do this. The insurance organization has one entry point: the service station management.
It is from them that the insurance company asks for the quality of the work performed, and this, in turn, depends on the professional skills of the employees.
What is more profitable: compensation in kind or money?
With the introduction of new amendments on compensation in kind for compulsory insurance, motorists began to think about what is more profitable: money or repairs. To answer this question, you need to understand what the client wants:
- quickly repair the car without solving financial issues;
- earn money and not do repairs.
Payment in kind is beneficial because:
- the client can receive a referral to a specialized service station on the day of application;
- no need to pay at the station yourself;
- You don’t have to worry about not having enough money to pay for the repairs;
- The car can be restored within a few days.
Payment in cash is advantageous because:
- the client himself decides whether to restore the car or not;
- the victim can repair the vehicle himself and save money.
When can you refuse the service?
Since April 28, compensation in kind has become the predominant option for providing an insurance policy, but the law leaves customers the opportunity to refuse this imposed service and receive monetary compensation.
In addition to the previously listed options for compulsory payment of insurance in cash, the policyholder may refuse repairs in the following cases:
- the insurance organization cannot provide him with a service station capable of performing repairs in accordance with the procedure established by law (in compliance with deadlines, quality and maintaining insurance);
- a written agreement has been reached between the client and the insurance company to waive in-kind compensation.
The second option is not beneficial for owners of non-new equipment, since the depreciation of the car is taken into account when calculating and paying compensation, and the amount of insurance compensation is significantly reduced. When sending for repairs, vehicle wear and tear is not taken into account.
Procedure for receiving compensation
If an accident occurs, the owner of the damaged vehicle, as before, contacts the insurer, writes an application for damage compensation, and hands over the vehicle for damage diagnosis. After conducting diagnostics and, if necessary, examination, the owner receives a referral to a technical station. service.
The longest time that can be spent on issuing a referral is 20 working days. After the vehicle has been repaired, the owner will need to test it and draw conclusions about how well the service station workers restored the car.
If everything is in order and there are no questions about the quality of the repair, you need to sign a specific report on the work done and pick up the vehicle. If, in the opinion of the vehicle owner, the repairs were performed unsatisfactorily and there are still questions regarding the quality of service, no documents need to be signed. In this scenario, the driver needs to display the entire list of problems found and demand that the insurer solve the problems that have arisen.
Even if the problems were not discovered immediately, but later, the driver also has the right to demand their elimination. If the insurer declines responsibility in this situation, the vehicle owner will need to go to court to resolve the issue.
How to choose a technical station service
Taking into account the new amendments to the legislation, the owner has the right to choose a service station in advance to restore his vehicle. What do I need to do? The insurer's website should contain a catalog of services whose relationship with the insurer is contractually established. Official dealers must also be on the list.
If the vehicle owner does not choose a service station independently during insurance, the right to choose remains with the insurance company. Of course, there is an option to negotiate with the insurance company about choosing a service station that is not listed on the insurer’s website, but your arguments must be very weighty and your position must be reasoned.
To implement this scenario, you need to contact the insurance company with a separate application with the information indicated below:
- name of service station;
- service location;
- OGRN and TIN of the organization repairing cars;
- organization partner card.
Vehicle repair at the insurer's service station
If the selected service station is in the catalog of the insurance organization, its location should not be located more than 50 km from the location of the accident or from the location of the vehicle owner’s residence. If there is no required station within the next 50 kilometers, the insurer is obliged to independently deliver the vehicle to the repair site.
There is a certain list of conditions that must be met by the service station for in-kind compensation:
- The time spent on repairs should not exceed 30 working days, starting from the time the vehicle is delivered to the service station.
- To replace damaged service station components, new ones must be installed, but they should not be “original”. Cars stand apart for which it is not possible to find such components.
- The service station must have the ability to use current methods of vehicle restoration.
- All procedures between the parties must take place as quickly as possible.
- The factory warranty must be maintained if the vehicle warranty has not expired.
Arguments for/against in-kind compensation
Compensation in kind has both advantages and disadvantages.
On the benefit side are:
- There is no need to look for a service station.
- You will get a truly good repair if you choose a service station wisely.
- It is possible to resolve the issue with those components that were not damaged in this accident, of course, for additional money.
The disadvantages include the following examples:
- The restoration of the vehicle may turn out to be of poor quality if the insurance company decides to gain money for itself. facilities.
- The location of the service station may be inconvenient, although in fact the location may follow the letter of the law.
- Restoration through in-kind compensation may take a longer period of time than the same repair carried out individually.
In most cases, the results of feedback leave much to be desired. Owners who took advantage of in-kind compensation point to the low quality of “non-native” components; also, not the most flattering reviews are received in relation to service stations and insurance organizations that “optimize costs” when restoring a vehicle, which directly affects the final result.
