How to distinguish limited from unlimited insurance
Is it possible for another driver to drive if the insurance is limited - which insurance is cheaper - limited or unlimited and what is the difference between them
We have already discussed the topic of unlimited insurance, and now it’s time to discuss a limited policy. The agenda will include questions about the cost and benefits of this type of insurance.
How much does limited car insurance cost?
A limited insurance policy is no different in appearance from an unlimited one. The changes concern only point 3, where a check mark will be placed opposite the line that limits the circle of persons who can drive the vehicle. In addition, below is a table in which the data of all people who will have access to your car will be entered.
The cost of such insurance consists of several coefficients, on the basis of which the MTPL insurance premium will be calculated.
So, we present a list of values that directly affect the price:
Driver's experience and age.
As for the coefficient of the number of persons, in this case it will be – 1. The final price of compulsory motor liability insurance can be discussed after calculating all values individually.
Is it possible for another driver to drive if the insurance is limited?
If the person for whom compulsory motor liability insurance is issued decides to purchase a limited insurance policy, then only those persons specified in the policy can drive the vehicle.
One of the most common questions is: can I drive a car if I am not included in the insurance, but the owner is nearby? Well, as we said above – no, you can’t. Only those who, in accordance with insurance, have access to it, have the right to drive a vehicle.
Which insurance is cheaper: limited or unlimited and what is the difference between them?
Based on the data provided by Bank of Russia Directive No. 5000-U dated December 4, 2018, the coefficient for a limited policy is 1, and for compulsory motor liability insurance without restrictions is 1.87. Based on this, we can conclude that in order for any number of people to drive your car, you will have to overpay. However, if there is no urgent need for this, then in order to save money, I advise you to take out a policy with a limitation.
So what is the difference between unlimited and limited insurance? As you already understood - the number of persons who will be allowed to drive the vehicle. Another difference is the cost of the policy, since in addition to the coefficient for the number of persons, you will be given the maximum value of the BMC, which is determined for each driver who is allowed to drive a vehicle.
6. For compulsory insurance contracts that provide for a limitation on the number of persons allowed to drive a vehicle, the insurance rate is calculated using the maximum value of the KBM coefficient determined for each driver allowed to drive a vehicle.
Clause 6 of Appendix 5 of Bank of Russia Directive No. 5000-U dated December 4, 2018.
Also, the cost will be affected by the age of all drivers, since the maximum FAC value will be taken based on their age and experience.
If the insurance policy specifies more than one person allowed to drive a vehicle, the maximum FIC coefficient determined in relation to persons allowed to drive a vehicle is taken into account when calculating the insurance premium.
Clause 1 Notes to Part 4 of Bank of Russia Directive No. 3384 dated September 19, 2014 – U.
If you gather 5 people with up to 3 years of experience under the age of 22, it is more profitable to take unlimited insurance. But if you are only 2 people with decent experience over the age of 22, then don’t hesitate to take out a limited OSAGO policy.
Unlimited MTPL insurance and its features
Both legal entities and individuals can make compulsory motor liability insurance without restrictions, the price of which will be calculated using the KO coefficient. This article will discuss what unlimited insurance is, how much it costs, whether it has advantages and disadvantages, how it differs from a closed insurance policy, whether it is possible to make an unlimited insurance policy out of a limited one, etc.
What is unlimited compulsory motor liability insurance?
In the insurance market, MTPL without restrictions means an insurance policy issued for an unlimited number of drivers who have the right to drive a vehicle. Such insurance must be taken out by legal entities, and individuals can take out it at their personal choice. The registration conditions are specified in Chapter 1. Regulations of the Central Bank No. 431-P.
Thus, the regulatory document states that when concluding an insurance policy without restrictions, the policyholder must provide personal information about the owner of the vehicle. In the case of a legal entity, such data will include the place of registration of the organization, the number of the registration certificate, information about the participation of the insured vehicle in accidents in previous insurance periods, etc.
Cost of insurance in 2018
The price of compulsory motor insurance without restrictions can be several times higher than the cost of a policy that specifies citizens who have the right to drive a vehicle. This is primarily due to the coefficient (CO) established by Central Bank Directive No. 3384-U. For limited compulsory motor liability insurance, this coefficient is equal to 1, that is, when multiplied by the base rate, the price of the policy will not change in any way. For unlimited, the coefficient is 1.8, that is, other things being equal, the cost will almost double.
Example of the cost of compulsory motor liability insurance without limiting the number of drivers
Insurance for a BMW car, owned by a 29-year-old individual from Moscow, will cost 16,308 rubles from one of the insurance companies. Under the same conditions, but for a legal entity, it will cost 11,115 rubles. If an individual sets a limit on the number of persons who have the right to drive a given car, then the policy can be purchased for 9,060 rubles.
The cost of unlimited insurance will depend not only on the coefficient KO, but also on the region of registration of the owner of the vehicle, the power of the car and other coefficients that companies use for calculations in accordance with legal norms. Age and experience are not taken into account when determining the price, and the class and KBM (coefficient determined by the number of accidents) are determined according to the data of the car owner. For each year of driving a vehicle without accidents, a 5% discount is applied, but in the event of an accident during the insurance period, a “malus” of 15% is applied.
Unlimited insurance - pros and cons
Since it is not possible for legal entities to choose which insurance to take out, there is no point in focusing on the advantages or disadvantages of an unlimited policy. But individuals should weigh the pros and cons before applying, and only after making a final decision contact the insurance company. Table 1 presents the main pros and cons of this type of compulsory motor liability insurance.
Open MTPL insurance is suitable for car owners who need to provide the right to drive a vehicle to drivers with little experience or under 22 years of age, with a high KBM, etc. Since the cost of limited insurance is calculated based on the worst performance of one of the drivers, removing the restrictions can be a good solution. In the presented case, compulsory motor liability insurance will cost even less.
Do you need a power of attorney for a car with open MTPL?
Until 2012, the Road Traffic Rules included a clause obliging the driver to carry a power of attorney. After the changes come into force, the traffic police officer has no right to demand either a power of attorney to drive a vehicle, or a PTS, or a CP agreement, etc. But for actions other than driving a car, the driver may need a written power of attorney. This applies to situations when it is necessary to undergo maintenance, pick up the car from the impound lot, register it with the traffic police, etc. A notarized declaration of power of attorney is not required according to Art. 185.1 of the Civil Code of the Russian Federation. If the document is issued by a legal entity, only its signature and seal will be sufficient.
Limited car insurance and its conditions
The MTPL policy with restrictions must indicate all drivers allowed to drive the car. To do this, when writing an application, the policyholder must indicate their personal data, driver’s license numbers, etc. This information is necessary for the insurance company to correctly calculate the cost of the MTPL policy. The price of such insurance, unlike closed insurance, will depend on the insurance policy, age and experience of the driver and other factors. Table 2 shows the difference between insurance with and without restrictions.
Clause 3 of the insurance policy must indicate all people allowed to drive the car. There are 4 lines allocated for entering information (full name, number, series of driver’s license, class). The cost of insurance will be calculated based on the worst indicators. If the owner of the car has driving class 10, then he has the right to receive a discount on the policy of up to 65%. But if a driver with class 2 is allowed to drive his car, then the price will be calculated based on his KBM and he will have to pay an additional 40% for insurance. The same calculation principle applies to other coefficients.
How to convert a limited OSAGO into a policy without restrictions?
In order to make changes to the insurance policy, the policyholder must submit a written application to the insurer. According to clause 1.10 of the OSAGO Rules, the company in this case has the right to demand additional payment for insurance. Since the KO coefficient differs for open and closed insurance, the cost will be recalculated, which is not always profitable. After the additional payment made by the car owner, the insurer must issue a new OSAGO policy.
The insurance company will also make these changes to the unified information database and the insurance contract no later than 5 business days from the date of application by the vehicle owner. If the policy was electronic, then, at the request of the policyholder, it can be replaced with a new paper one indicating that the car can be driven by an unlimited number of people.
Conclusion
Thus, the main difference between the two types of insurance is the number of people who will have the right to drive the vehicle. The cost of MTPL insurance without restrictions may be higher than the limited one, since the calculation uses a larger KO coefficient and does not take into account the driver’s discount under the KBM. In the case of legal entities, the age and length of service coefficient is also not applied. If desired, an individual can always make changes to the policy - add new drivers to limited insurance or make it open.
Limited MTPL insurance. Review of limited MTPL policy, its advantages and features.
An insurance policy can include a variety of options that affect its cost. These include the number of persons admitted to management. An experienced driver will pay much less for a policy than a young car owner. I will tell you in the article how the price of limited insurance is determined, how it is issued and other important details.
○ Limited insurance what is it?
Limited insurance means that only certain drivers are allowed to drive a car. This is its difference from unlimited, when different drivers who are not directly included in it can drive under the policy.
○ Advantages and disadvantages.
The advantage of limited insurance is its price: if the driver is experienced, over 22 years old, has a good accident-free driving class and plans to use the car himself, then he will receive a good discount. In the case of unlimited insurance, the coefficient will be maximum, regardless of how experienced drivers get behind the wheel.
The disadvantage of limited insurance is that you cannot transfer control to drivers not named on it.
○ Cost of limited insurance.
The cost of limited insurance is influenced by two indicators: the age and experience of the driver and the accident-free driving class. The more experienced, older and more careful the driver, the less money he will pay. If there are several drivers, and they have different ages and experience, then the highest coefficient is applied.
If the policy has no restrictions on the number of persons allowed to drive, then the maximum possible coefficient is applied - 1.8, the same as for young inexperienced drivers.
○ How to get limited insurance.
Limited insurance is issued in the standard manner: when writing an application, you must indicate which drivers are allowed to drive a car and provide their license, the details of which are entered into the policy form.
○ Operated by a person not included in the insurance:
Only those included in the policy are allowed to drive a car. Others cannot use the vehicle.
✔ What a responsibility.
If the unregistered driver ends up in an accident, compensation will be denied. All damage will be covered by the person responsible for the accident.
In addition, such a driver will face a fine.
- “Driving a vehicle during the period of its use, not provided for by the insurance policy of compulsory insurance of civil liability of vehicle owners, as well as driving a vehicle in violation of the conditions provided for by this insurance policy for driving this vehicle only by the drivers specified in this insurance policy - entails the imposition of an administrative fine of in the amount of five hundred rubles. (Clause 1, Article 12.37 of the Code of Administrative Offenses of the Russian Federation).”
✔ How to add an additional driver.
You cannot register drivers yourself. To do this, you need to contact the insurance company and provide an additional driver's license. No additional payment will be required if the same coefficient applies as to the car owner. If the driver being entered is less experienced, then you will have to make a small difference, which is added up due to the applied coefficient.
- “For compulsory insurance contracts that provide for a limitation on the number of persons allowed to drive a vehicle, the insurance rate is calculated using the maximum value of the KBM coefficient determined for each driver allowed to drive a vehicle (clause 7 of the Note to Part 2 of the Bank of Russia Directive dated 09.19.2014 No. 3384 – U).”
✔ When it is possible not to include an additional driver.
There is no need to enter an additional driver if the policy provides for the use of a car without restrictions on the number of persons allowed to drive.
✔ Responsibility for unauthorized entry of the driver into the policy.
In essence, these actions are a violation of the insurance contract. If such a person gets into an accident, the insurance company will refuse to pay.
○ How to make unlimited insurance from limited insurance.
To do this, you need to contact the insurance company and write an application for changes to the insurance. Based on the application, a new policy will be issued.
If, when you initially took out insurance, a coefficient below 1.8 was used, then the cost of the policy will be recalculated upward. And the car owner will have to make an additional payment.
○ Advice from a lawyer:
✔ Registration of limited insurance for legal entities.
Organizations take out insurance in the same manner as citizens, with the only difference being that the owner of the car is a legal entity.
When filling out the application, an authorized person (manager or other employee acting by proxy) indicates the drivers allowed to drive. If they have different coefficients, then the largest one is applied.
✔ How to find out if your insurance is limited?
The policy form has a section dedicated to the number of persons allowed to manage it. There can be two options: the first - the line “without restrictions” is marked with a sign, meaning that anyone can drive the car, the second: the persons who can drive this car are listed.
This information can be obtained via the Internet on the RSA website by going to the policy check page. By entering the vehicle data in the appropriate fields, you can obtain information about the number of drivers allowed to drive, the insurance contract, and the name of the insurance company.
Published by: Vadim Kalyuzhny , specialist of the TopYurist.RU portal
Differences between limited and unlimited insurance for a car and other vehicles
An insurance policy in our time is a necessary security tool for road users and property interests related to transport. It can provide a variety of options that will affect its cost. Experienced drivers who own expensive cars prefer not to skimp on insurance in order to protect themselves from unpleasant situations on the road.
What is unlimited insurance
The first thing every driver needs to know is that there are limited or unlimited insurance policies. The restriction implies that only a specific list of drivers is allowed to drive a car. Unlimited MTPL insurance means that its coverage applies to any person with a driver’s license, even if he is not included in the contract. Naturally, this option will cost more, and it is not related to how much driving experience the policyholder has, that is, how experienced he is.
MTPL insurance without restrictions does not allow you to transfer control of the car to persons who are not specified in it. This is one of the reasons why it is not as popular in our country. Another reason is financial, because this policy of unlimited CASCO or OSAGO insurance will cost more. If the same car is used by several drivers, then several people can be included in the policy or protection can be immediately issued without restrictions. In the last option, in paragraph 3 and in the column “Concluded in relation to an unlimited number of persons” you can see a check mark. This is roughly what insurance without restrictions looks like in practice.
Cost of unlimited insurance
Many car enthusiasts are rightfully interested in the question: how much does unlimited car insurance cost? You need to start with what factors influence its cost. First of all, this is the driver’s experience and his age. Secondly, how accident-free his driving was. That is, the more experienced and careful the driver is, the less insurance premium he will have to pay. In the event that several drivers are admitted, and each has their own individual parameters, the maximum value criterion will be applied.
Therefore, taking out an insurance policy with a limitation is very simple. If the cost of unlimited insurance seems quite high, then the standard procedure will apply. In the process of filling out the application, the owner indicates which people will be allowed to drive, and the driver’s license details are written down on the policy form.
The relatively high price of insurance without limits is its main disadvantage. After the revision of basic tariffs by the Central Bank and the Ministry of Finance, the coefficients that form its cost did not change. However, the answer to the question of which insurance is cheaper for an unlimited number of drivers lies in the increasing coefficient, which today is equal to 1.8. If a specific list of persons admitted for management is included in the policy, then its value will be equal to 1, that is, there will be no increase in price.
Benefits of the policy without restrictions
The so-called “open” insurance assumes that absolutely any driver can legally drive a specific vehicle. To do this, it is not even necessary to issue a power of attorney. There is also no need to notify the insurance company. The personal data of each person allowed to drive has a direct impact on the price of the policy.
The main advantages of choosing unlimited compulsory motor liability insurance are obvious. There is no need to worry about which driver will be behind the wheel of a particular vehicle today or tomorrow. That is, even if an accident occurs, it will be covered by insurance coverage. The main thing is that he has a driver's license and is not under the influence of alcohol or illegal drugs.
This type of insurance is appropriate when the owner of the car or one of the registered drivers is under 22 years of age and/or the total driving experience does not exceed 3 years. It turns out that when calculating the insurance payment, the maximum coefficient of 1.8 will still be taken. Under such conditions, it makes sense to buy compulsory motor insurance without restrictions and allow any driver to drive a vehicle if the need arises.
Disadvantages of an unlimited policy
The main disadvantages of an “open” policy come down to the following 2 main points:
- its cost immediately increases by 80%;
- discounts for accident-free driving (the so-called “KBM”) apply only to the owner of the car.
Unlike an “open” contract, unlimited insurance has another drawback. Every time you need to allow a new person to drive a vehicle, you will have to notify your insurer in writing. Even when the owner is nearby in the cabin, an unauthorized driver is prohibited from driving the car, otherwise the contract will not be valid. How much more expensive one type of contract is in relation to another, everyone decides for themselves.
KBM with unlimited insurance
We should start with what the abbreviation KBM represents. This is the “bonus-malus” coefficient, which in the language of insurers can be translated as “good and bad”. In other words, it represents the discount that you can expect for driving without accidents. This parameter can be either downward or upward. With its help, insurance protection can become more expensive or cheaper for the car owner.
It is not difficult to guess that the increasing coefficient is applied to those drivers who often become the culprits of road accidents. On the contrary, those who have not had an accident for a long time usually receive a discount on registration. The initial coefficient for a newly insured car is always equal to 1. Then it will change based on the number of accidents for each year of operation, decreasing by 5% from this value. The largest discount can reach 50% of the base payment - that is, experienced drivers theoretically pay 2 times less compared to beginners.
With each insured event, the size of the insurance premium will increase again. If you regularly get into road accidents, the cost of insurance can increase by 2.5 times. The bonus-malus parameter is not affected by insurance events in which the insured person was not found guilty, that is, the accident occurred due to the mistakes of others. KBM is necessary and taken into account in cases where we are talking about compulsory motor liability insurance with a limited list of persons included in the contract. To calculate the cost, the worst KBM from the entire range of drivers allowed to drive a vehicle is taken into account. Another important point is related to issues of ownership and management: the insurance history of the vehicle owner and his history as a driver are different and are taken into account separately when compiling compulsory motor liability insurance.
Do you need a power of attorney if the compulsory insurance is unlimited?
Just a few years ago, in order to drive someone else’s vehicle, you had to be included in the MTPL policy, as well as have a power of attorney from the owner of the car to drive it. This brought unnecessary trouble to drivers, after which changes were made to the legislative framework. Now, if the driver is listed in the MTPL insurance, then he no longer needs to have a power of attorney to drive. This document has been removed from the list of mandatory documents that may be required by a traffic police inspector.
The fact that the driver is noted in the OSAGO agreement for a specific car confirms the legality of his presence behind the wheel. It’s not at all difficult to add a new person to your car insurance policy. To do this, you can contact the insurer’s office directly or purchase the contract electronically. A power of attorney from the owner will now be required in strictly limited cases. For example, if you need to travel outside the country in someone else’s car, sell it, register or remove it, undergo a technical inspection or diagnostic card, etc.
Which is better - limited or unlimited compulsory motor liability insurance?
Insurance with limitations has its pros and cons - first of all, it all depends on the amount of the insurance payment. For those who do not want to shell out extra money and know in advance that only selected people will get behind the wheel, it makes sense to take out a limited compulsory motor liability insurance policy. In all other cases, limited insurance may lead to a conflict in the event of an emergency event.
Another important point: only private individuals are allowed to enter into an agreement with restrictions, listing specific drivers. Therefore, when it comes to an enterprise of any form of ownership, the contract is always drawn up for an unlimited number of drivers. The difference between limited insurance is that it does not cover absolutely all life situations.
Insurance agents themselves recommend choosing one or another policy based on the need and frequency of allowing 3 persons to manage. Despite the fact that the cost of the policy may seem lower and the registration simpler, difficulties may arise when switching to a limited contract or registering for a new car (calculating bonus-malus coefficients).
Drivers who have taken out a policy without restrictions do not have to fear not only an accident, but also an inspection by traffic police inspectors. In addition, such a program allows you to resort to the help of completely third-party drivers, for example, when they are involved in the “sober driver” service. For courier, taxi and other companies with a large staff of drivers, it is generally indispensable in all other cases when it comes to the constant use of vehicles.
How to convert limited insurance to unlimited
This procedure is provided for by all insurance companies without exception. All that is required is to contact your insurer and request a change. After recalculating the conditions, the insurer will issue a policy with new conditions. As a rule, the cost of insurance protection will then be recalculated upward. In order for the changes to take effect, an additional payment must be made to the cashier.
To find out whether there are restrictions on insurance, you need to look at the section that contains information about the number of drivers who have the right to drive a vehicle. If the line titled “without restrictions” is checked, it means that the car can be driven by anyone who has a valid license with the appropriate category. Otherwise, persons with management rights will be listed by name.
If the application is written not by the policyholder himself, but by another person to whom the powers have been entrusted, then he will be asked to present a notarized power of attorney. After making changes, the insurance company will withdraw the old policy and issue a new one in return, which will necessarily contain a note about the original contract, as well as the reasons for its renewal. When receiving a new policy, you must check the correctness of all data entered into it.
The maximum permissible number of persons included in one “motor citizen” agreement is not limited by law. Formally, they can even be listed as several dozen people. However, in practice, in such cases it is recommended to issue an unlimited compulsory motor liability insurance policy, which greatly simplifies the interaction of the parties in controversial situations.
How many people can be included in the policy? And what is the most profitable way to apply for compulsory motor liability insurance: without restrictions or limited?
The OSAGO agreement form itself provides 5 lines for entering the names and other data of the drivers who will drive this car. At the same time, there are no restrictions for legal entities to enter a larger number of employees who will be entrusted with the vehicle. In many cases, it is simply profitable to take out open insurance, which allows you to transfer a car to an unlimited number of people.
How many people can be included in compulsory motor liability insurance?
The law does not limit the number of people who can be enrolled in MTPL. Insurance companies often indicate that in insurance with restrictions there can be no more than 5 of them. At the same time, if you set the condition in advance that a significantly larger number of drivers will be present in the contract, you will simply need to issue a different type of motor vehicle license, differing from a regular contract only the presence of an additional form and a significantly higher cost. So, when more than 5 people contribute, a coefficient of 1.8 is applied to the current price, that is, this form of financial protection will cost almost twice as much. And one more thing - on the back of the contract there is a line - “special notes”, which allows you to expand the functions of the policy. By checking it, you can add as many drivers as needed.
How to correctly change information in your MTPL policy
In accordance with the legislation in force since 2002, any new information that the policyholder has, including the need to add a new driver to the contract, must be recorded only after informing the insurance company about it. Thus, any form provides for an additional agreement in which new data may be reflected. This applies not only to a different last name or first name, place of residence or license plate number of the car, but also to the driving license of the added person who is allowed to drive the vehicle, as well as passport data and even telephone number.
The time frame for changing information is not specified by law, but it is in the interests of the car owner to do this as soon as possible.
How to include people in MTPL insurance
In order to add new drivers to the MTPL, it is necessary, firstly, to inform the insurer about this, since only he is authorized to make such changes. Secondly, for adding each person you will have to make a corresponding additional payment to the already paid cost of the contract. Last names and other data are entered into an additional form, drawn up in duplicate.
Features of calculating surcharges
In order to determine the amount of surcharge for additional drivers included in the current MTPL agreement, it is necessary to take into account the coefficient of 1.8 to the accepted cost of the policy. Thus, regardless of the region, the pricing policy of the company providing the financial protection service, and other various factors, you will simply need to pay 80% more than in the usual version (when the right to drive a car is granted to only one person).
Which insurance will be cheaper?
At first glance, unlimited MTPL insurance is much more expensive than regular insurance. This is because the risks increase. At the same time, there are clear benefits to its design. So, for example, if the drivers are persons with little driving experience, this will not in any way affect the overall price of the policy, since coefficient 1 is applied here. At the same time, in a regular contract, you will have to pay taking into account the coefficient + 0.8. And it turns out that in reality an insurance policy without restrictions on the number of persons is much more profitable, since you do not need to contact the insurer every time.
Pros and cons of open insurance
One of the main advantages of open (without restrictions) insurance is the ability to grant the right to drive a car to any person at any time. In this case, there is no need to visit the office of the insurance company every time.
The only drawback of this type of contract is its high (almost twice as much) cost compared to a limited type of compulsory motor liability insurance.
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