Indemnity Account

Indemnity Account

The contractual system of the compulsory motor liability insurance was introduced on 1st July 1991 . The respective law (Gov. Dec. No. 58/1991. IV. 13.) assigned the Association of the Hungarian Insurance Companies to handle an isolated account of funds for those losses, that – in spite of the obligation to conclude an insurance contract – were caused by an uninsured or under some circumstances, by an unknown user of a vehicle, and to indemnify the respective claimants. From 1st July 1991 until 31st December 1995, in accordance with the insurers having started writing compulsory motor liability insurance, this duty of the Association (MABISZ) was administered via the Hungaria Insurance Company. In line with a further decision of the member companies, the Motor Claims Office of the Association of Hungarian Insurance Companies (Hungarian abbreviation: ESZE, former MABISZ GKI) was set up, starting its activity on 1st January 1996. One of the main tasks of this organization would be the settlement of the above-mentioned losses.

Although the wording of the law has been repeatedly amended, and as a consequence, the addressee of the obligation to fulfill this task has been changed, our office is steadily conducting this activity. Currently we are acting as the trustee of the Indemnity Account stipulated by the Gov. Dec. No. 171/2000 (X. 13.).

When should the trustee of the Indemnity Account settle the loss of a claimant?

1. When the loss was caused by using the motor vehicle of a registered user, who – despite the legal obligation to conclude an insurance contract – was uninsured, regardless to whether or not the motor vehicle was driven by the user or by anybody else with his/her approval or knowledge, or even in an unlawful manner.

2. When the loss was caused by the motor vehicle of an unknown user, however, with due consideration to the limitations and exclusions specified in the respective law.

3. In addition, the trustee of the Indemnity Account is obliged to settle the loss of the non-liable party, in case it is disputed whether the Indemnity Account or an insurance company is legally obliged to indemnify the claimant.

4. Finally, the trustee of the Indemnity Account has to advance the amount of indemnity to the non-liable party, not being the insured of those insurance companies, who are disputing which one of them is obliged to settle the claim of the innocent claimant in lieu of their insured client.

The amount of indemnity to be paid by the Indemnity Account

In case the loss was caused by the use of a motor vehicle of an uninsured user who had been obliged to conclude an insurance contract, the claimant is entitled to the same amount of indemnity – up to the coverage limits set by the law – as if any of the liability insurers would have to settle the loss on the basis of a valid insurance contract.

When the losses are caused by unknown users, the trustee of the Indemnity Account is not obliged to indemnify the claimant in the cases detailed below:

1. when the claimant is in a position to claim indemnity from social security or property insurance or liability insurance (though motor hull insurance is not to be taken into account),

2. the obligation of the trustee of the Indemnity Account shall not be extended to indemnify for damage to the motor vehicle, furthermore losses caused to the road, or to structures attached thereto, to the electric and communication equipment, or to other utilities and their fixtures, as well as to public means of advertising(eg: giant posters, electronic billboard).

3. Needless to say, the trustee of the Indemnity Account shall not be obliged to settle the loss in those cases, which are listed in the Article 8. Sub-sections a) – k) of Annex 1. (The general conditions of the motor liability insurance) of the Government Decree No. 171/2000. (X. 13.).

Therefore, no indemnity shall be paid for

1. losses of any property items in the motor vehicle causing the loss, other than the personal belongings of the passengers of the said motor vehicle

2. damage to the motor vehicle causing the loss

3. material damage or loss of profit claimed by an insured person of the motor vehicle causing the loss from another insured person of the same vehicle

4. ……..

5. ……..

6. losses occurring while using the motor vehicle as mobile machinery

7. losses occurring in the course of loading or unloading of a stationary motor vehicle, etc.

The trustee of the Indemnity Account shall not settle losses suffered by foreign claimants, unless at the time of accident, Hungarian citizens could have expected an indemnity in similar cases in the country of the claimant. (reciprocity)

* The Indemnity Account corresponds to the institution of a Guarantee Fund in other countries