Degree of car wear not to be included in OSAGO repairs
A bill on prioritising in-kind insurance indemnity over cash payments under OSAGO insurance contracts has been passed today by the State Duma at the second reading.
‘The novations in this sphere are primarily aimed at improving the quality of OSAGO loss resolution services for customers, and at making this type of insurance more accessible across problem regions with low profitability levels,’ noted Vladimir Chistyukhin, Deputy Governor of the Bank of Russia.
Repair as a priority form of insurance indemnity will only be introduced with regard to motor cars owned by individuals. When signing the OSAGO contract, car owners will be able to select a potential auto repair shop (ARS) from a list proposed by the insurer to have his/her car fixed in case of a road-traffic accident (RTA). Subject to agreement with the insurer, the insured party will be free to repair the car at any ARS at his/her choice.
The cost of repairing the damaged car will not include the degree of wear of its parts and units. Another significant novation is a ban on using second-hand parts in repair works.
The quality of repair will be the insurer’s responsibility. Repair works are to be conducted either at an ARS located within a 50-km distance from the location of the RTA or from the insured person’s place of residence. The maximum duration of these works is set at 30 days. New cars (less than two years old) are to be fixed at the ARS of official car dealers.
In case of recurrent violations of these requirements, the Bank of Russia may introduce a ban on insurers providing in-kind indemnity under OSAGO contracts.
In certain instances, described by the document, insurance indemnity may be paid out in cash. For example, this occurs should the car be completely written off or if the insurer is unable to arrange proper repair works. In this case, cash payments will continue to be made with due regard to the degree of wear of spare parts.
It is supposed that the bill shall come into force throughout the Russian Federation 30 days following its publication (as expected in early May), and will apply to new OSAGO contracts.