Anyone who types ‘when does compulsory motor insurance not pay’ into a search engine is typically in one of two situations: either they caused damage and fear they will have to pay out of their own pocket, or they are the injured party and have found a sentence of rejection in the insurer’s letter. There is so much misunderstanding around MTPL (compulsory motor third-party liability insurance) because everyday language mixes up three legally different things: a genuine exclusion, a payment made to the injured party but reclaimed from the driver, and the absence of a policy. As a broker, I see that most disappointments stem from this blurring. This article provides a map: what MTPL does not cover under the law, what is not an exclusion but a recourse claim, and when the insurer does pay, but less than expected.
- MTPL (compulsory motor third-party liability insurance) pays for damage caused to others: under Section 15 of the Gfbt., damage to the at-fault vehicle itself, the cargo carried in it and the property claims of the insured persons against each other are excluded – these are matters for casco or other insurance.
- Drink-driving, driving without a licence or causing damage deliberately is not an exclusion: the injured party receives compensation from the insurer, and the insurer can claim it back from the driver or the keeper within the limits laid down in Section 34 of the Gfbt.
- Sometimes cover is in place but the amount is reduced: the injured party’s contributory fault, a failure to mitigate the loss and the statutory limit of liability mean not a rejection but an apportionment of the loss or an upper cap.
Three kinds of ‘won’t pay’ – and only one is a genuine exclusion
Under Section 12 of the Gfbt. (Act LXII of 2009 on compulsory motor third-party liability insurance), MTPL covers the examination of the question of liability and the settlement of well-founded compensation claims brought against the insured persons – the keeper and the driver – for damage caused in the course of using the vehicle. The first ‘won’t pay’ is an exclusion: Section 15 of the Act lists the types of damage that the insurance does not cover in the first place – the insurer does not pay for these even when liability is clear. The second is a recourse claim: the injured party receives the money, but the insurer later claims it back from the driver or the keeper – for the injured party this means ‘pays’, for the person who caused the damage it very much means ‘won’t pay’. The third is lack of cover: if the vehicle that caused the damage had no valid MTPL policy, there is no insurer to pay; in that case the Compensation Account managed by MABISZ (the Hungarian insurers’ association) compensates the injured party under Section 35 of the Gfbt., and it can claim the amount paid back from the uninsured keeper. This is described in the article on the Compensation Account. The fourth category – it pays, but less – comes at the end of the article.
The backbone of the statutory exclusions: own damage, cargo, claims between insured persons
The first three points of Section 15 of the Gfbt. account for most everyday rejections. The insurance does not cover damage sustained by the vehicle that caused the damage – MTPL is liability insurance, not property insurance; damage to your own car is the territory of casco (comprehensive motor insurance), as the MTPL-versus-casco mirror article shows. The same applies if you were not the one driving: a car you lent to a friend who then crashed it is the vehicle that caused the damage, and the damage to it is excluded.
The second point – marked with the letter a) in the Act – is cargo: damage to items placed in the vehicle that caused the damage is excluded, unless they are items for the personal use of those travelling in the vehicle. A passenger’s bag, phone or laptop therefore falls within personal use, but parcels carried in a courier van or building materials carried on a flatbed do not – these call for cargo insurance or the carrier’s liability insurance. The cargo of the not-at-fault vehicle is a different case: that is the injured party’s loss, and the MTPL of the party who caused the damage pays for it.
The third point is claims of the insured persons against each other: property-damage claims and claims for loss of profit by the insured persons of the vehicle that caused the damage – the keeper and the driver – against each other are excluded. Here the Act mentions only property damage and loss of profit: if the keeper is sitting in their own car as a passenger and the driver causes an accident, the keeper’s personal injury does not fall under the exclusion. The particular features of personal injury claims are detailed in the article on personal injury claims.
The less familiar rules: working machinery, road surface, workshop, motorsport
The further points of Section 15 come up less often, but when they do, they cause surprises. The text of the Act, translated into everyday language:
- Use as working machinery. If the vehicle is working not as a means of transport or haulage but as a machine – a crane truck lifting, an excavator digging a trench – damage caused in the process is not an MTPL claim but a matter for the business’s liability insurance. If the machine causes damage as a vehicle in traffic, MTPL applies again.
- Damage to the road surface without an accident involving the vehicle. Asphalt broken up by a heavy vehicle is not an MTPL claim; if the carriageway or the crash barrier is damaged in an accident, it is.
- Workplace accidents during repair and maintenance. If a mechanic is injured in the workshop, that is a workplace accident, not a matter for MTPL.
- Motorsport events. Damage caused during a race is excluded – organisers typically take out separate insurance for this, and participants would do well to ask about it in advance.
- Pollution without an accident and gradual deterioration. Slowly leaking oil or a wall cracked by vibration over the years is not accidental damage.
- Radioactive and toxic substances, war, acts of terrorism. These are excluded in almost every line of insurance, MTPL included.
The common logic: MTPL is for damage caused to others, accidentally, through the use of the vehicle in traffic. Anything that is not an accident, not traffic use or not someone else’s loss stays outside – even if liability otherwise exists.
What is not an exclusion, although many people think so: drink-driving, no licence, intent
The sentence ‘the insurer won’t pay if the driver was drunk’ is the most common MTPL myth, and as far as the injured party is concerned it is simply untrue. The Gfbt. is built on protecting the injured party: the insurer is liable to the injured party even if the driver was drunk, had no driving licence or caused the damage deliberately. What the Act gives the insurer in such cases is a recourse claim: under Section 34 it can claim the amount paid from a driver who drove the vehicle without authorisation; from the insured person in the case of deliberate damage; from a driver under the influence of alcohol or drugs (and from whoever handed the wheel to such a person); from a driver without a driving licence (and here too from whoever handed the vehicle over to them); from the keeper of a vehicle in seriously neglected technical condition; from a driver who failed to render assistance; and from anyone who breached their duty of disclosure, duty to report changes or duty to report a claim. The Act also sets limits: up to HUF 5 million per event for drink-driving and failure to render assistance, up to HUF 1.5 million for driving without a licence and neglected technical condition, and up to HUF 500,000 for an unintentional breach of a reporting duty – but for unauthorised driving and deliberate damage there is no such upper limit. The details are set out in the article on recourse claims.
In other types of insurance this works differently: in casco or home insurance the insurer may be released from paying – an exemption of the insurer – by citing gross negligence, and there the burden of proof is on the insurer; in MTPL there is no exemption of the insurer towards the injured party, only a subsequent claim against the person who caused the damage.
When it pays, but less: contributory fault, mitigation, the limit of liability
Many injured parties receive not a rejection but a smaller amount than expected, and experience this as ‘the insurer won’t pay’. There are three typical reasons. Contributory fault: if the injured party also contributed to the accident – did not keep a safe following distance, did not wear a seat belt, stopped in breach of the rules – the loss must be apportioned in proportion to the parties’ fault under Section 6:525 of the Hungarian Civil Code (Ptk.); in that case the insurer of the party who caused the damage pays only the share attributable to that party, and the rest is borne by the injured party’s casco or by the injured party themselves. Failure to mitigate the loss: the same section places a duty to mitigate the loss on the injured party, so an unjustifiably long use of a hire car is not reimbursed. The limit of liability: under Section 13 of the Gfbt., the insurer is liable per loss event up to the forint equivalent of EUR 1,300,000 for property damage and EUR 6,450,000 for personal injury – in an everyday accident this ceiling cannot be reached, but in a multi-vehicle pile-up it could in theory matter. Disputes about depreciation deductions, the insurer’s calculation and total losses are not exclusions but questions of how the loss is calculated; separate articles in the knowledge base deal with them.
What to do in practice
As an injured party, work on your own claim: it is reported on the claims line of the insurer of the party who caused the damage, and the driver’s drunkenness or lack of a licence does not affect your claim. If the insurer rejects the claim, ask in writing which point of the Gfbt. it relies on – an exclusion and ‘liability cannot be established’ are two different answers, with different routes forward. If you caused the damage, the question is whether a recourse claim is a risk: if it is, the insurer will notify you in writing, and knowing the limits matters a great deal. If your loss falls within the excluded scope – your own vehicle, cargo, working machinery – check whether your casco, your cargo insurance or your business’s liability insurance comes into play; as a broker I can help you fit these covers together. In a disputed or stuck case I help where I can – I act on the client’s behalf and do not provide legal representation; as a consumer, the final forum for a dispute is the Financial Arbitration Board (PBT) or the courts.
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Sources
- Gfbt. (Act LXII of 2009 on compulsory motor third-party liability insurance) Sections 12, 13, 15 and 34–35 – scope of cover, limits of liability, exclusions, recourse claims, the Compensation Account (MABISZ)
- Hungarian Civil Code (Ptk., Act V of 2013) Section 6:525 – contributory fault of the injured party, duty to mitigate the loss
- MNB – Financial Arbitration Board (PBT)
