Which insurance is cheaper: limited or unlimited?
Insurance in questions and answers
Which insurance is cheaper: limited or unlimited?
According to the legislation of the Russian Federation, any citizen who has purchased a car is required to obtain compulsory motor liability insurance. Insurance is a mandatory procedure, but the car owner chooses the type of insurance independently.
There are two types of MTPL insurance policy: limited or unlimited. They differ only in the number of people who are allowed to drive a given vehicle (the list of persons is listed in the policy itself).
If only the owner or his wife will drive the car, it is better to choose limited insurance.
An MTPL policy with a limited list of persons will cost significantly less than unlimited insurance. Attention! You should not allow a person who is not registered with your insurance to drive a car. If this person causes an accident, he will not be able to use the insurance policy and will suffer significant financial losses.
A limited type of compulsory motor liability insurance implies that the car will be used by any number of people authorized to drive this car. Often such insurance is taken out by organizations that do not know in advance how many people will be allowed to drive a company car.
Which insurance will be cheaper?
According to the Central Bank Guidelines, the coefficient for insurance with a limitation is 1, while unlimited compulsory motor liability insurance is paid taking into account the coefficient of 1.8. We can conclude that limited insurance will cost almost twice as much as unlimited insurance. In addition to the coefficient, the cost of an unlimited MTPL policy includes the maximum value of the KBM calculated for each driver registered in the MTPL policy.
Thus, the question of which insurance is cheaper can be answered unequivocally – limited! If the car will be driven by one family of several people, it is better to buy a limited MTPL policy; it will be much cheaper than unlimited insurance.
Unlimited or limited MTPL insurance policy - what is the difference?
When concluding an insurance transaction, motorists can purchase a policy under certain insurance conditions. These include choosing the number of drivers who can drive a given car. When is the best time to go for limited coverage? What benefits can you get from drawing up an open insurance contract? What to look for when choosing?
What is OSAGO without restrictions and the principle of use?
A free opportunity to operate a car or motorcycle is provided for car owners by an open contract of compulsory insurance of the vehicle owner in front of other road users. A standard policy does not provide this opportunity, allowing only certain people to travel behind the driver's seat.
The owner of a car insured under an open access car policy will receive the required compensation in the event of an accident. That is, if the driver driving the car is not the culprit of the accident. Open insurance is distinguished by a note in clause No. 3 of the policy. The difference lies precisely in the contract provision being discussed.
Open policy - pros and cons
Individuals can exercise the right to choose when concluding a compulsory insurance transaction (organizations do not have this opportunity). The driver should carefully weigh his decision regarding the circle of people he trusts. When choosing, it is important to objectively consider the pros and cons of open insurance.
The advantages of a free contract include:
- A small package of documents necessary to conclude a transaction;
- reducing the possibility of overpayments if car drivers are under 22 years of age and have little experience;
- the ability to transfer control to any driver without risks;
- no need to supplement the list with driver data.
Among the significant disadvantages of the policy are:
- Inability to receive a discount due to extensive driving experience;
- increased price of MTPL policy;
- lack of consideration of the individual accident-free driving coefficient and the impossibility of its application when subsequently obtaining a compulsory insurance policy.
If a group of young and inexperienced drivers sharing one car wants to save money, it makes sense to evaluate the cost of insurance that allows free access to the steering. Older motorists with experience can purchase compulsory motor insurance for a limited number of people, taking advantage of the bonus-malus discount.
Who benefits from taking out an unlimited MTPL policy?
There are certain categories of citizens for whom open insurance will be a beneficial solution. Other motorists risk losing money when purchasing a car free access policy.
As stated earlier, the first category is young people with up to 3 years of experience. Concluding an unlimited deal on such conditions is beneficial both for a group of friends who have decided to buy a car with common funds, and for ordinary beginners. Due to the increased rate for the length of service and age coefficients, the difference in the price of the policy will be small. However, if desired, the owner of the vehicle will be able to transfer control to a friend or other loved one.
The next category of beneficiaries is the owners of organizations. The issue of open insurance is especially relevant for taxi fleet owners. The reason is simple: enterprises have many drivers under their command, who take turns performing their duties.
Unlimited insurance will relieve legal entities from the need to enter the details of each individual motorist and will significantly save money. In addition, the presence of open compulsory motor liability insurance is the responsibility of this group of citizens.
An insurance policy that does not limit the number of persons allowed to drive is also beneficial for those who have their own driver. This is the most profitable option for such an individual, since personal drivers may change during the insurance period.
Cost of unlimited insurance pros and cons
The Russian Federation regulates the sizes of base rates and coefficients that are taken into account when registering compulsory motor liability insurance. If there is a mark about an unlimited number of persons, the size of the value will be 1.8. This means that the price of the policy can be equal to 180% (compared to the standard one).
Changing limited car insurance to unlimited
If there is a valid limited compulsory insurance policy, the motorist can replace it with an open one. To do this, you need to come to the office of the insurance company and explain the reason for changing the insurance conditions and perform the following actions:
- Fill out a request where the policyholder indicates which provisions of the contract he wants to update.
- Wait until the employee replaces the document with a new form that meets the client’s requirements.
- Check the entered information.
- Pay for the policy.
It is worth noting that the new policy number will be identical to the old one. The form will only contain a note in column No. 8, which will contain a description of the reason for the replacement. After the calculation, the motorist will have to pay extra for making changes and use a new unlimited insurance policy.
If an employee at the company office suggests not replacing the policy, but making changes to the text of the old one, you cannot agree. In the event of a traffic accident, such a policy is not considered valid.
Is KBM taken into account when insuring without restrictions?
An excellent opportunity to receive a discount for exemplary drivers is the accident-free driving rate. Accident-free driving is encouraged by insurance companies with reduced insurance prices. KBM will be taken into account when applying for any type of insurance policy. It is also possible to recalculate the value when changing insurance parameters.
If a car owner wants to purchase insurance that limits the list of permitted drivers, the calculation will use the highest accident-free rate (an assessment of the driving history of the driver with the maximum value for this coefficient). When purchasing open insurance, the vehicle owner's indicator is taken into account.
Which insurance will be cheaper?
The Central Bank of the Russian Federation has decided that the coefficient for insurance that does not require free access to a vehicle is equal to one. This government decision does not imply any additional costs.
An open OSAGO policy costs almost twice as much. Those wishing to transfer control of the car at their own discretion will be required to pay a large amount in order to reduce the risks of the insurance company.
We can safely say: in percentage terms, the indicators show that a closed policy is a more advantageous offer. In addition, when calculating the cost of a contract with open access to the operation of a vehicle, the maximum value of the coefficient of driving history features (KBM) available to drivers will be taken.
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.
How and when will it be profitable to take out MTPL insurance without limiting the permitted drivers?
Unlimited, or open, insurance is less popular in our country than it deserves due to lack of awareness among drivers about it.
Many are put off by the high price, but open insurance also has a number of advantages.
To decide whether it is right for you, you need to understand its conditions.
What is unlimited insurance?
In cases where the car is used by several drivers, OSAGO provides insurance in two options: you can include several people in the policy or purchase unlimited insurance , which allows an unlimited number of people to drive the car.
If you have taken out unlimited insurance, in paragraph 3 of the policy there will be a checkmark in the column “The agreement is concluded in relation to an unlimited number of persons”, and in the columns “Persons allowed to drive a vehicle” and “Driver’s license” there should be dashes , no one will go there even the owner of the car is included.
Cost of unlimited insurance
Basic rates and coefficients of compulsory motor liability insurance are regulated by regulations of the Russian government, so the cost of insurance does not depend on the insurance company, region and other conditions.
Do you know what the fine is for driving without MTPL insurance?
Find HERE information on insurance compensation payments under MTPL.
The cost of unlimited insurance is affected by a coefficient “depending on the availability of information on the number of persons allowed to drive the vehicle,” as the law defines it. It is equal to 1.8 - thus, the price of the policy will increase by 80%.
The coefficient, determined by age and driving experience, in this case will be equal to 1, i.e. it will not affect the cost in any way .
When is unlimited insurance beneficial?
Unlimited insurance can be convenient in a situation where, due to the age and driving experience (up to 22 years and up to 3 years of experience) of one of the drivers who will be included in the policy, the calculation is already carried out with a maximum coefficient of 1.8 - in this case, by paying the same money , you will have the opportunity, if necessary, to transfer the car to a person not specified in the policy.
If this driver, among other things, does not have a very high class coefficient, then unlimited insurance will most likely be cheaper than limited insurance.
Advantages and disadvantages of unlimited insurance
Perhaps the only drawback of unlimited insurance is its high cost . But, as mentioned above, in some cases it can even be beneficial.
There are other advantages:
How to turn limited insurance into unlimited?
You can change the type of insurance at the request of the car owner from the insurance company where the policy was originally issued. To do this, you can contact the company itself or directly the insurance agent representing it.
In the application you must indicate what changes you want to make to the policy; many insurance companies have ready-made forms; in them you only need to highlight the required point.
The application is written by the policyholder or another person to whom he entrusts this process, but in this case a notarized power of attorney from the policyholder to this person is required.
After the data has been changed, the insurance company takes away the old policy and issues you a new one . Column 8 “Special notes” must indicate the number of the original policy , as well as the reason why you reissued it.
Sometimes insurance representatives offer to simply cross out incorrect data and enter new ones - refuse such an offer and demand the correct re-registration . Otherwise, when an insured event occurs, difficulties may arise, or even payment will be denied.
Corrections are only allowed in the following cases:
- if there are typos or minor inaccuracies - in this case, what is written incorrectly can actually be crossed out, and the correct data is entered next to it, they are certified with the phrase “corrected believe”, the signature of a representative of the insurance company and a seal, and a date is affixed;
- if the vehicle passport or license plates are replaced, new data can be indicated on the back of the policy or in the “Special Notes” column, certified by the insurer’s seal.
If you change your insurance to unlimited, in most cases an additional payment will be required. It will be calculated until the end of the policy period.
After receiving a new policy, check carefully to ensure that the necessary changes have been made correctly and that the old data remains unchanged.
Is KBM taken into account when insuring without restrictions?
KBM, or bonus-malus coefficient , used to calculate the cost of compulsory motor liability insurance, is essentially a discount provided by the insurer for accident-free driving.
The KBM will be taken into account for any insurance option; moreover, the legislation allows for the recalculation of the KBM when switching to insurance without restrictions on the number of drivers.
When insuring with a limited number of drivers, the BMI of the driver for whom it has the greatest value is applied. With unlimited insurance, the car owner’s BMI is taken into account - thus, the cost of insurance in this part recalculated
Read more about KBM and how to calculate it according to MTPL.
Read about the cost of a green card for a car HERE.
You can familiarize yourself with the new edition of the Law on OASGO in this article:
//auto/osago/poslednejj-redakciya.html
To summarize, the following can be said about unlimited insurance:
- it is convenient for families in which several people drive the car;
- it is indispensable for companies that actively use vehicles;
- in most cases more expensive than limited insurance;
- convenient in emergency cases when a driver who is not included in the policy has to get behind the wheel;
- If desired, the type of insurance can be changed without waiting for the expiration of the policy.
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.
