What type of auto insurance is required by law? This applies to all drivers

Quick Overview

• Mandatory vehicle insurance is known as “compulsory liability insurance,” or more precisely, motor vehicle liability insurance.
• The obligation to obtain insurance generally falls on the vehicle operator.
• For a registered vehicle, the insurance must generally remain in effect for the entire duration of its registration.
• Comprehensive insurance is voluntary and does not replace liability insurance.
• An uninsured vehicle may result in a fine of up to 50,000 CZK, a daily fee paid to the Czech Insurers’ Bureau for each day the vehicle is uninsured, and, in some cases, a claim for damages.

Have you received a demand for payment due to an uninsured vehicle, or is an insurance company or the Czech Insurers’ Bureau seeking to recover money from you? Let our attorneys assess whether the claim is valid and recommend the next steps.

Imagine you’re driving down the road, taking in the scenery and enjoying a peaceful ride like the doctor from the legendary comedy *Vesničko, má středisková*. But suddenly, the police pull you over. Today, they verify the validity of mandatory liability insurance for domestic vehicles electronically. Therefore, starting October 1, 2024, you will no longer need to present a Green Card when driving in the Czech Republic. The green card continues to serve as international proof of valid motor vehicle liability insurance. This isn’t just another annoying administrative requirement, but a legal necessity that protects all road users.

Perhaps you’re one of those drivers who often wonder whether you need to purchase statutory auto insurance if you already have comprehensive insurance. The answer is simple: yes, you do. Comprehensive insurance covers damage to your own car, whereas statutory motor vehicle liability insurance—or mandatory liability insurance—covers damage you cause to others. If you didn’t have it, you could end up with enormous debts if you damaged someone’s car or even caused them bodily injury.

The rules and obligations under the Motor Vehicle Liability Insurance Act are strictly defined and non-negotiable. If you violate this law, you face substantial fines, high financial compensation, and, in extreme cases, even lawsuits.

The main legal regulation governing mandatory vehicle insurance is the Act on Motor Vehicle Liability Insurance. It is commonly referred to as the “Compulsory Liability Insurance Act.” This Act requires operators of vehicles subject to this obligation to obtain liability insurance and also regulates the scope of coverage and the consequences of failing to comply with this obligation. In addition to this Act, drivers must also comply with other related regulations, such as:

• The Civil Code, which governs liability for damages.
• The Road Traffic Act, which sets forth the obligations of drivers and vehicle operators.
• Implementing regulations, which specify technical details.

So if you’re wondering what type of vehicle insurance you’re required by law to have, for a standard passenger car, it’s primarily liability insurance—that is, mandatory third-party liability coverage. Comprehensive insurance is not mandatory.

Anyone who owns a motor vehicle that is registered and operated on public roads must have valid, legally required auto insurance. And as we’ve already mentioned, the police in the Czech Republic verify the validity of domestic vehicle insurance electronically. Therefore, you do not need to present a Green Card during a routine traffic stop in the Czech Republic.

What obligations does the Motor Vehicle Liability Insurance Act impose on drivers?

If you are the owner or operator of a vehicle, you must comply with several obligations imposed on you by the Motor Vehicle Liability Insurance Act. Specifically, you must:

• Take out insurance before putting the vehicle into service.
• Ensure that your insurance is always valid—there must be no gap between policies if you want to drive the car on the road.
• When traveling abroad, verify whether and in what form you will need a Green Card (in the Czech Republic, you are not required to carry one).
• Report all significant changes—such as a change in the car’s owner or its de-registration.

Which vehicles are exempt from mandatory insurance under the law?

Although most vehicles you intend to drive on public roads must have liability insurance, there are certain exceptions for which it is not necessary to purchase liability insurance.

Legal exceptions include, for example, certain vehicles belonging to the integrated rescue system and government agencies. Under certain legal conditions, some unregistered vehicles operated exclusively on premises inaccessible to the public are also exempt from mandatory liability insurance.

Another exception applies to vehicles used by the armed forces. Vehicles such as tanks, military equipment, armored personnel carriers, and certain specialized police and fire department vehicles are subject to a special insurance regime. Damages involving these vehicles are typically covered by the state budget or through another special liability insurance arrangement.

A third exception may also include vehicles that have been taken out of service. However, simply depositing the license plates is not sufficient. The vehicle must be registered as taken out of service, located outside of any publicly accessible area, and measures must be taken to prevent its operation.

What Are the Consequences of Driving an Uninsured Car?

If a vehicle owner fails to fulfill the obligation to insure the vehicle, the risk isn’t limited to a traffic accident. The owner may face a fine of up to 50,000 CZK for the violation itself. In addition, the Czech Insurers’ Bureau may require the driver to pay a daily fee for each day the vehicle should have been insured but was not, along with a flat fee to cover the costs associated with collecting the debt.

Even more serious consequences may arise if you cause damage with an uninsured vehicle. Provided the legal conditions are met, the Czech Insurers’ Bureau may compensate the injured party from the guarantee fund, after which it may have a claim for reimbursement of the paid benefits against the liable party.

From lawyers’ experience: The problem often does not arise because someone consciously decided to drive without mandatory liability insurance. Typical complications include, for example, a gap between two insurance policies, a change in the vehicle’s operator, or the mistaken belief that a car parked on private property automatically does not need to be insured. That is precisely why it is important not only to consider whether you are actually driving the car but also to verify its status in the vehicle registry.

Is the Czech Insurers’ Bureau demanding that you pay a contribution or compensation for damages, and are you unsure whether it has the right to do so? Send us the relevant documents, and an attorney will review your specific case.

When does mandatory insurance expire?

Mandatory vehicle insurance is not something you take out once and it’s valid forever. There are situations where mandatory car insurance may expire, or where changes need to be made to the insurance policy.

If you do not wish to operate the vehicle, you can temporarily take it off the road. However, the insurance requirement does not apply only if the legal conditions are met—the vehicle is registered as decommissioned, is located outside a publicly accessible area, and measures have been taken to prevent its operation. During the period of de-registration, you are not required to pay for mandatory auto insurance. However, if you were to use this vehicle illegally on the road, you would face severe penalties. In this case, the insurance does not automatically lapse; you must cancel it yourself with the insurance company.

The second option is permanent deregistration, where you no longer wish to use your car and have it sent for eco-friendly disposal. Once the car is permanently deregistered, the mandatory vehicle insurance automatically ends. If you paid the premium for a longer period in advance, you may be entitled to a refund of a proportional portion of the premium. Specific conditions vary depending on the insurance company.

What to Do When Switching Insurance Companies?

If you’re not satisfied with your insurance company, you can cancel your liability insurance policy and switch to another insurer.

If you wish to terminate your regularly paid insurance at the end of the current insurance period, your notice of termination must be received by the insurance company at least six weeks before the end of that period. If the notice is received later, the policy will generally remain in effect until the end of the following insurance period. Furthermore, the notice of termination must be submitted in writing. Some insurance companies also offer more favorable rates for new clients, so it pays to compare offers regularly. However, there must never be a gap between the original and new policies during which you would be driving your car without insurance.

Mandatory auto insurance is a fundamental element of safety and financial protection for all drivers. If you decide to ignore the obligation to pay for mandatory liability insurance, you risk receiving a hefty fine; however, the consequences—such as lawsuits and serious financial problems—are far worse if you cause an accident and have to compensate the other driver. That is why we recommend always keeping your insurance in good standing and regularly checking its validity.

Summary

Most vehicles are required by law to have mandatory vehicle insurance, also known as motor vehicle liability insurance or compulsory liability insurance. The obligation to obtain insurance generally falls on the vehicle operator, and for a registered vehicle, the insurance must typically remain in effect for the duration of its registration. Comprehensive insurance, on the other hand, is voluntary and does not replace compulsory liability insurance. If the operator fails to fulfill the obligation to insure the car, they may face a fine, a fee payable to the Czech Insurers’ Bureau for the period without insurance, and, in the event of damage caused, the obligation to reimburse the insurance benefits paid out. The police in the Czech Republic verify the validity of a domestic vehicle’s compulsory liability insurance electronically, so it is not necessary to present a green card during a routine traffic stop in the Czech Republic. Exceptions to mandatory insurance are established by law and apply only to specific cases; therefore, simply taking a car off the road or not using it does not necessarily mean that the insurance obligation ceases to apply.