After a car theft, the insurance questions come in the wrong order: first casco – if you have it – and only much later “and what happens to the compulsory insurance?”. Yet compulsory motor third-party liability insurance (MTPL) has a fate after a theft too: the contract does not end by itself, the premium remains due, and if the thief causes damage, the injured party will contact your insurer on the basis of your number plate. As a broker, I see that few people know what needs to be done about MTPL after a theft, although the police report, the withdrawal from traffic and the settlement of the contract decide whether you are left with a bonus, premium or uninsured-period problem. This article goes through the MTPL side.
- Compulsory motor third-party liability insurance (MTPL) does not end with the theft: under Section 26 of the MTPL Act (Gfbt.), cover is suspended if the vehicle is temporarily withdrawn from traffic – at the registered keeper’s request or ex officio; the suspension may last for no more than one year, after which the contract ends.
- As long as cover was in force, the insurer settles the damage caused by the thief with the injured party, and then, under Section 34(1)(a) of the Gfbt., it can claim the full amount back from the driver who drove the vehicle without the registered keeper’s permission; for the period after withdrawal, the Compensation Account (Kártalanítási Számla) steps in.
- Your bonus: under Section 3(3) of NGM Decree 21/2011, if the vehicle is taken into use unlawfully and a criminal complaint is filed about it, the damage caused by the unauthorised user does not affect your bonus-malus class.
First step: the police report, because everything starts from it
Once you discover the theft, the police report is needed not only for the investigation: it is the document on which every further strand of the MTPL matter rests. It proves to the insurer that the vehicle has left your possession; the bonus-malus rule expressly makes the filing of a criminal complaint the condition for damage caused by the thief not worsening your class; and the withdrawal from traffic also starts from it. Besides the police report, it is worth informing the insurer of the theft in writing – MTPL policy conditions typically require this as part of the duty to report changes, and under Section 34(1)(g) of the MTPL Act (Gfbt.), an unreported circumstance may later become the basis of a recourse dispute if it affected the insurer’s obligation to pay. If you have casco, reporting the theft there is a separate process.
What happens to the contract: withdrawal from traffic and the premium
MTPL does not end just because the car has disappeared. Under Section 4(2) of the Gfbt., the obligation to insure rests on the registered keeper until the use of the vehicle ends permanently, and the premium remains due as set out in the policy. The way out is the temporary withdrawal of the vehicle from traffic: under Section 26(1), the insurer’s cover is suspended – from here on I use the everyday word “dormancy” (nyugvás) for this – if the vehicle is temporarily withdrawn as a result of proceedings initiated at the registered keeper’s request or ex officio. For a stolen vehicle, the withdrawal takes place under the rules of the road transport administration procedure (Government Decree 326/2011), relying on the police report – whether it starts ex officio or requires an application is worth clarifying at the government office (kormányablak) without waiting. The body that keeps the policy register notifies the insurer of the withdrawal electronically; in the case of an ex officio withdrawal, under Section 26(6), the insurer informs the registered keeper within three working days, and cover stops on the day following the eighth working day after the insurer was notified.
During dormancy, under Section 26(7), there is no obligation to keep the contract in force by paying the premium, and since the vehicle is in withdrawn status, no uninsured-period fee (fedezetlenségi díj) arises either. The limit is important: under Section 26(3)–(4), the suspension may last for no more than one year, and if the vehicle is not put back into traffic within that time, the contract ends on the day following the last day of the one-year period – Section 7(3) treats this as cessation of insurable interest. If the car is found and re-registered, cover resumes from the day it is put back into traffic, and – unless the parties agree otherwise – the next premium instalment falls due on that day (Section 26(5)). What you must not do: simply stop paying the premium after filing the police report without having the car withdrawn. In that case the contract terminates for non-payment, the car continues to appear in the register as being in traffic, and then come the uninsured-period fee and the restrictions on taking out a new contract – details in the article on the uninsured-period fee. The procedure and pitfalls of withdrawal are described in the article on withdrawal from traffic.
Who pays if the thief causes damage with the car?
MTPL covers damage caused by the operation of the vehicle, regardless of who was behind the wheel: under the Gfbt., both the registered keeper and the person driving the vehicle are insured. So if the thief causes damage in the period between the theft and the start of dormancy, the injured party enforces their claim against your insurer, and the insurer is liable towards them. This does not mean that the bill stays with you: under Section 34(1)(a) of the Gfbt., the insurer may claim reimbursement of the compensation it has paid from the driver who drove the vehicle without the permission of the registered keeper or of the otherwise lawful user – and for this case the Act sets no cap, unlike, for example, the HUF 5 million limit for drink-driving or the HUF 1.5 million limit for driving without a licence (Gfbt. Section 34). The recourse claim is therefore directed at the thief, not at you; how it works is described in detail in the recourse article.
If the damage occurs after the withdrawal, i.e. once cover is dormant, the injured party can turn to the Compensation Account (Kártalanítási Számla) managed by MABISZ (the Hungarian insurers’ association) under Section 35(1) of the Gfbt. – which expressly names damage caused during the suspension and damage caused by a vehicle withdrawn from traffic – and the Compensation Account seeks to recover the amount paid out from the person who caused the damage, here the unauthorised driver, under the rules of the Act. The registered keeper’s civil-law liability does not typically arise in this case: under the rules of the Hungarian Civil Code (Ptk.) on liability for hazardous operations, the unauthorised user is liable for damage caused during unauthorised use, and the registered keeper may come into the picture if their own culpable conduct made the unauthorised use possible – the details are in the Ptk.’s chapter on damages. In practice, this is the case of the car left with the key in it: there the dispute is sharper on the MTPL side as well, and on the casco side the exclusions bite harder.
Does your bonus-malus class get worse?
Here the law is clear: under Section 3(3) of Decree 21/2011 (VI. 10.) of the Ministry for National Economy (NGM) on the bonus-malus system, if the vehicle in question is taken into use unlawfully and a criminal complaint is filed in this respect, the damage caused with the vehicle by the unauthorised user does not affect the contract’s bonus-malus class. The condition, therefore, is the criminal complaint – without it, the damage would appear in the claims history as if it had been caused by someone driving with your permission. If the insurer nevertheless applies a downgrade, you can request a correction in writing, enclosing a copy of the police report; in the event of a dispute, the complaints procedure comes next, followed – if you concluded the contract as a consumer, not as a business – by the Financial Arbitration Board (PBT) or the courts. There may, however, be a quieter effect: under Section 4(3) of the Decree, the class moves up one step if the contract was insured for at least 270 days during the insurance period and no liability to pay compensation became known. There is no cover during withdrawal, so these days typically do not count – a longer dormancy may delay the step up, but it does not take away the class already earned.
If the car is not recovered and the contract ends through cessation of insurable interest once the year has passed or upon permanent withdrawal, your class stays yours: under Section 4(4) of the Decree, for two years from termination, the insurer takes it into account on the basis of the claims history register for a contract taken out on a new car in the same vehicle category. The situation is different with a car you have lent to someone – the article on lending your car explains why: there, someone drove with permission; here, without it.
What to do in practice
- A police report without delay, with written confirmation – this is the common basic document for MTPL, casco and your bonus.
- Notify your MTPL insurer in writing of the theft and the police report number; for casco, the claim is reported through the insurer’s claims line.
- Start the withdrawal from traffic at the government office – if it has happened ex officio, you will see this from the insurer’s notification; you can safely stop paying the premium only after the withdrawal.
- If the thief caused damage and the injured party or the insurer contacts you: provide the details of the police report and refer to Section 34(1)(a) of the Gfbt. and to Section 3(3) of NGM Decree 21/2011 – the recourse claim lies against the thief, and the damage does not affect your class.
- One year is the limit: if the car is not recovered, the contract ends; your class can be carried over from the claims history register to a new car of the same category within two years of termination.
As a broker, I can help on the insurance side: if you let me know after the theft, I help where I can in settling the MTPL contract – clarifying its status after the withdrawal and its termination, and the question of your bonus-malus class – and also if a dispute arises with the insurer about your bonus or about damage caused by the thief. The primary route for notifications is the insurer’s claims line and customer service; you have to take the steps with the police and the government office yourself, because they require your signature.
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Sources
- MTPL Act (Gfbt., Act LXII of 2009) Section 4(2), Section 7(3), Section 26 (dormancy of cover on temporary withdrawal), Section 34 (recourse), Section 35 (Compensation Account)
- NGM Decree 21/2011 (VI. 10.) on the bonus-malus system – Section 3(3), Section 4(3), Section 7(2)
- Government Decree 326/2011 – temporary and permanent withdrawal of a vehicle from traffic
- Hungarian Civil Code (Ptk., Act V of 2013) – rules on liability for hazardous operations (unauthorised use)
- MNB – Financial Arbitration Board (Pénzügyi Békéltető Testület): consumer disputes only; binding decision without submission up to HUF 2 million
