Compulsory third-party liability motor insurance (KGFB)

Key information on taking out compulsory third-party liability motor insurance (KGFB)

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Compulsory third-party liability motor insurance (KGFB) must be taken out for vehicles with an official registration certificate and for mopeds. It is the responsibility of the keeper of the vehicle, rather than the owner, to make sure that a vehicle has valid compulsory third-party liability motor insurance.

The obligation to insure against liability applies to:

the keepers of motor vehicles based in Hungary,

the owners of motor vehicles based in another Member State if the Member State the vehicle is destined for is Hungary.

The customer is responsible for taking out an insurance policy with the insurer after selecting the most appropriate insurance premium from all the insurance premium options on offer. Customers are advised to find out about the variety of insurance premium options available from different insurance companies before concluding the contract:

• on the website of the Magyar Nemzeti Bank (MNB), in the section on insurance premium rates for compulsory third-party liability motor insurance,

• on the website of the Association of Hungarian Insurance Companies (MABISZ),

• on insurance companies’ own websites

• from insurance brokers.

Policies for compulsory third-party liability motor insurance may be taken out with insurance companies or insurance brokers in person or online, and online with any service providers that offer the option.

Compulsory third-party liability motor insurance is normally valid for one year from the start date of contract. However, if the customer fails to terminate the contract with sufficient notice before the end date (due to a change in insurer), the insurance will be automatically renewed for another year. This means that if the customer does not want to change insurance company (and the insurance company does not terminate the contract on the anniversary of the day the policy was taken out), then in practice the contract is of an indefinite duration, and upon payment of the insurance premium payable in the relevant period, it will remain continuously in force.

By entering into the contract, the customer undertakes to pay the insurance premium at the frequency stipulated in the contract. If the customer fails to pay the insurance premium, the insurer shall send them a default notice within 30 days of the premium due date. The service provider will cancel the policy upon expiry of the 60-day grace period from the premium due date and inform the customer of this within 15 days.

If the contract was terminated by the service provider due to non-payment of the premium, and the customer later wishes to take out a new compulsory third-party liability motor insurance policy, he or she can only take out such a policy with the same insurance company and is not allowed to enter into a contract with another service provider. The terms of the new contract will include new, higher premiums, and customers must also pay the insurance premium applicable to the period in which they did not have a valid compulsory third-party liability motor insurance due to the termination of the previous contract. This is called a non-coverage premium.

The insured party shall pay an insurance premium at the rate and frequency stipulated in the insurance policy documents. The insurance premium shall be paid to the insurer in advance during the period of risk coverage.

The ‘Search of market participants’ section on the Magyar Nemzeti Bank (MNB) website contains details of insurance service providers licensed or registered by the MNB as well as a list of providers whose license has been revoked.

Magyar Nemzeti Bank (MNB)

Applications for remedy can only be submitted to the Magyar Nemzeti Bank by consumers, i.e. natural persons acting for a purpose outside of their independent professional and economic activity. Such applications can be submitted to the MNB if the insurance company has violated financial consumer protection provisions. The application must include:

Financial Arbitration Board

The Financial Arbitration Board is an out-of-court alternative dispute resolution entity operated by the Magyar Nemzeti Bank, available to consumers only, i.e. natural persons acting for a purpose outside of their independent professional and economic activity. The Board’s services are free of charge: neither the consumer or the financial service provider pays any procedural fee or costs, and it is not mandatory for the parties to have legal representation.

The proceedings are always initiated by the consumers; financial service providers are not entitled to bring proceedings before the Board. The request for initiating proceedings must be submitted using the duly completed dedicated petition form.

The petition must include:

Court of Justice

The customer may apply to a court for the settlement of their legal dispute relating to the conclusion, validity, legal effects and termination of the contract as well as breach of contract and the legal effects thereof. Generally, the action shall be filed at the court with jurisdiction at the place where the defendant has their registered address, office or place of residence. The action is brought by means of a statement of claim, which must include:

a) the acting court;

b) the personal data of the litigants (in the case of a non-natural person, the details needed for identification); in the case of a person acting as a legal representative or a representative of an entity, the relevant section must also be filled in;

c) the telephone number and email address of the claimant;

d) the exact claim, i.e. the court decision desired;

e) the right to be enforced, possibly with a reference to the relevant legislative provision (it is not required to refer to a specific section of the relevant legislation, but the exact basis of the claim must be stated clearly);

f) the evidence supporting the claim.

The following documents must be attached to the statement of claim:

a) the documents proving the veracity of the details referred to in points a) and b) of the previous list,

b) the required number of copies of the documentary evidence. 

If the proceedings are subject to the payment of a fee, it is advisable to include proof of payment of the fee stipulated in the applicable legislation in the statement of claim. If the statement of claim is submitted using an official form, the fee stamp must be put on the front page, in the dedicated box; if it is submitted electronically, the fee payable for the proceedings must be paid by bank transfer.

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Act LXII of 2009 on Insurance against Civil Liability in Respect of the Use of Motor Vehicles

Decree No 21/2011 (VI. 10.) NGM of the Minister for National Economy on the bonus-malus system and being rated in it, and on the rules for issuing loss history certificates

Act CXXXIX of 2013 on the Magyar Nemzeti Bank (Central Bank of Hungary)

Act CXXX of 2016 on the Code of Civil Procedure