Motor Third-Party Liability insurance expires:

1.      upon notification of a change of the owner to the respective insurance company,

2.      upon a vehicle ceased physically to exist as a vehicle,

3.      upon the withdrawal of a vehicle from the Vehicles Register,

4.      upon the theft of a vehicle,

5.      upon the non-payment of the overdue premium even after a reminder,

6.      upon cancellation,

7.      by mutual agreement,

8.      upon expiry of the period contracted in insurance policy.

1.   Change of the owner of a vehicle

Motorists often wrongly believe that liability insurance expires following a change of owner upon the sale of a vehicle. However according to the valid legislation it occurs at the moment the policyholder, his heir, legal successor, or vehicle owner, if he is a person different from the policyholder, notifies the respective insurance company of this fact. Therefore it is important for the seller to inform not only the district office in whose Road Vehicles Register the sold vehicle is registered, but also the respective insurance company, of the change in ownership of the vehicle.

It is necessary to highlight that upon a change of ownership of a vehicle the Motor Third-Party Liability insurance is not transferred to a new owner. Whilst the previous owner’s liability insurance still exists the new owner can take advantage of the insurance in the event of damage, but the original insurance policy is not transferred to him. The new owner is, however, obliged to conclude his own insurance policy. The original owner should not want his own liability insurance to continue in favour of somebody else, as he loses the opportunity to ask his insurance company to return remaining portion of insurance premiums and exposes himself to the risk that in the case of damage caused by the new owner he will lose his no claims bonus.

Summary of the duties the law imposes on the original and the new owner of a vehicle:

· The original and the new owner must fulfil their reporting duty to the Road Vehicles Register (within 10 working-days of the change in ownership, but the sooner the better).

·     In his own interest the original owner notifies with dispatch his insurance company of the change of the vehicle’s owner and hand over the liability insurance certificate and the green card.

· Not later than 14 days, but preferably immediately after expiration of liability insurance the new owner concludes an insurance policy on liability insurance with an insurance company of his choosing. Without the concluded insurance policy the vehicle may not be operated on the roads.

·    If the new owner does not intend to operate the vehicle, within 14 days after expiration of liability insurance he must hand over the vehicle registration (plate) number and the vehicle registration certificate to the Road Vehicles Register administrated by the respective vehicle registration body. In this respect the vehicle owner can request the temporary withdrawal of the vehicle from the Road Vehicles Register for an unlimited period.

2.   Vehicle ceased physically to exist as a vehicle

If Vehicle ceased physically to exist as a vehicle (in case of compulsory registration of this vehicle), the   liability insurance expires on the effective date, when the respective vehicle registration body withdraws the vehicle from the Road Vehicles Register.

If Vehicle ceased physically to exist as a vehicle (only vehicle exempt of compulsory registration), the liability insurance expires on the day when a vehicle ceased physically to exist.

The termination of the physical existence of a vehicle can be proved, for example, by a confirmation of the examination of the place where the vehicle’s service life ended, issued by the competent entity, a confirmation of the scrapping or taking apart of the vehicle or, if such document is not available, a statutory declaration of the vehicle owner.

The vehicle owner must hand over the green card to his insurance company without undue delay.

3.   Withdrawal of a vehicle from the Road Vehicles Register

If the respective vehicle registration body withdraws the vehicle from the Road Vehicles Register, liability insurance expires on the effective date of such decision. Also in this case the vehicle owner must hand over the green card to his insurance company without undue delay.

4.   Theft of a vehicle

Theft of a vehicle, as set out in the Penal Act, is understood to mean the permanent removal of the vehicle from its owner’s use.

Liability insurance expires when a vehicle is stolen, whereas, if it is impossible to determine the exact date of the theft, the moment the Police of the Czech Republic was notified of the theft of the vehicle is decisive. It is insufficient to communicate for example with the municipal Police, but it is necessary the theft of the vehicle to notify the Police of the Czech Republic.

However in such case the Police of the Czech Republic does not have any reporting duty to the insurance company and it is again up to the policyholder, owner or operator to notify the respective insurance company of the theft of the vehicle without undue delay.

Theft of a vehicle is also in case when the perpetrator uses a vehicle of another, which took with the intention of using it temporarily, in the way that it is permanently taken from the injured party, that he can no longer use it or that it is significantly more difficult for him to use.

5.   Non-payment of the overdue premium

If the policyholder does not pay the overdue premium within the minimal time limit of 1 month as from delivery of the insurance company’s reminder for payment of the premium, the liability insurance expires on the day following the expiry of the time limit. The time limit set forth by the insurance company in a reminder may be extended by mutual agreement prior to expiry of this time limit.

When operating an uninsured vehicle on terrestrial communications the motorist exposes to the following risks:

·  fines up to CZK 40.000,- ,

·    permanent withdrawal of the vehicle from the Road Vehicles Register,

·   action by the Czech Insurers’ Bureau for the amounts of benefits paid out from the guarantee fund in the case damage is caused to someone else.

It is therefore in the own interest of every motorist to pay insurance premium on time and in full or, in case of expiration of liability insurance, either to conclude a new insurance in time or to hand over the vehicle registration (plate) number and vehicle registration certificate to the respective vehicle registration body in whose Road Vehicles Register the vehicle is registered.

Also in case of expiration of liability insurance due to non-payment of the overdue premium the policyholder is obliged to return the liability insurance certificate and the green card to the respective insurance company.

6.   Notice of cancellation of the insurance contract by a Party

The Insurance Contract Act states that liability insurance, for which standard premium (i.e. premium which is paid for the relevant insurance periods) is contracted, expires upon cancellation notice at the end of the insurance period. It is important that cancellation notice should be given by the policyholder or by insurance company not later than 6 weeks before its termination.

7.   Mutual agreement of insurance contract’s parties

Insurance expires if both parties, i.e. the policyholder and the insurer, agree so.

8.   Expiry of the period contracted in insurance policy

If the content of the insurance contract states that it is for a specified time, i.e. its end is determinated by a specific date, insurance expires on the determined date.

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In all last 3 cases, of which the policyholder and the insurance company learn either from mutual communication or from the content of the insurance policy, the policyholder is obliged to return the liability insurance certificate and the green card to the insurance company, but, especially, either to conclude new liability insurance policy or to temporarily withdraw the vehicle from the Road Vehicles Register administrated by the respective vehicle registration body, to which he should hand over the vehicle registration (plate) number and the vehicle registration certificate, within 14 days after expiration of liability insurance. If he does not do so the vehicle registration body is under an official duty to „permanently“ withdraw the vehicle from the Road Vehicles Register within 14 days after the expiration of insurance.

Last we can summarize a motorist’s obligation in the case of expiration of liability insurance as follows:

§    It is always necessary to communicate with the insurance company as soon as possible (this obligation is specified both by the law, and by some provisions of general insurance terms).

§ Within 14 days after expiration of liability insurance it is necessary either to conclude the new liability insurance or, within the same period, to hand over the vehicle registration (plate) number and vehicle registration certificate to the respective vehicle registration body.

§   It is necessary to return the green card to the insurance company.