MTPL with restrictions: what is it and how does it work in practice?

Limited motor third-party liability insurance helps reduce the cost of the policy, but requires strict compliance with conditions regarding the age of drivers, mileage and use of the vehicle. Find out how a standard policy differs from a limited one and what pitfalls await drivers

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Motor vehicle insurance in Ukraine (OSAGO) is compulsory insurance that protects road users from financial risks in the event of an accident. However, not all contracts are the same: sometimes insurance companies offer policies with additional restrictions. Such conditions allow you to reduce the cost of insurance, but impose certain rules that are important to know and follow. With reference to the MTIBU, we will explain what MTSBU with restrictions is, how it is specified in the contract, and what the consequences of violating the rules are.

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What restrictions can be included in an MTPL policy?

An insurance company may offer to insure a car on more favourable terms if the owner agrees to certain restrictions. Most often, there are three main points:

▪️ Prohibition on the use of the car for commercial transport. The car cannot be used as a taxi or for paid transport of passengers and luggage.

▪️ Age restrictions for drivers. For example, only persons between the ages of 25 and 60 may drive the car.

▪️ Mileage limit. The policy may set a maximum mileage for the entire term of the contract, for example, 10,000 km.

All this information is specified in section 13 of the contract, and the key point is in section 14, where the policyholder and insurer indicate whether each condition is mandatory. If the mark ‘set’ is indicated, the restriction comes into force.

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What happens if the restrictions are violated?

If an accident occurs and it turns out that the car was used in violation of the terms of the contract, the consequences will be different for the participants in the accident:

❗️ For the victims — nothing changes. The insurance company will pay compensation in full.

❗️ For the person responsible for the accident or the policyholder — the insurer will impose a fine. The amount is ten times the cost of the motor third-party liability insurance, but not more than 50% of the amount paid by the insurance company to the victim.

In other words, the financial responsibility ultimately falls on the policyholder.

How to avoid problems?

To avoid sanctions, it is important to ensure that the use of the car complies with the terms of the contract. However, if circumstances change (for example, if you decide to work as a taxi driver or lend your car to your son who is under 25), you must notify the insurance company in advance and change the terms of the policy.

How does this work in practice?

Let's imagine that your contract states:

1. the car is not used as a taxi;

2. only drivers aged 25 to 60 may drive the car;

3. the maximum mileage during the term of the contract is 10,000 km.

If your 23-year-old son or 70-year-old grandfather gets behind the wheel, or you exceed the mileage limit, the terms will be violated. However, the information in section 13 does not impose any obligations until ‘established’ is indicated opposite each restriction in section 14. If a restriction is not established, its violation does not result in a fine.

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Reminder! It is not uncommon for unscrupulous drivers who have caused an accident on the road to flee the scene. Find out more about what to do if the person responsible for the accident has left the scene and how to obtain insurance compensation in such a case.

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