Canceling Compulsory Auto Insurance: When and How to Cancel It?

Quick Overview:

When can you cancel your auto liability insurance?

• At the end of the insurance period: The insurance company must receive notice of termination no later than 6 weeks before the end of the period.
• Within 2 months of signing the contract: You may cancel with an 8-day notice period.
• After an insured event: Notice of termination may be given within 3 months of reporting the insured event, and a one-month notice period applies.
• Upon sale, disposal, or scrapping of the vehicle: The insurance may also terminate for specific reasons related to the vehicle.
• Upon a change in the premium: Under certain conditions, you may refuse the increase and terminate the insurance.

There is no single universal deadline for canceling compulsory auto liability insurance. Most often, the policy is canceled at the end of the coverage period; in that case, notice of cancellation must be delivered at least 6 weeks in advance. Different rules apply, for example, when terminating the policy within 2 months of signing the contract or following an insured event. That is why it is always important to first determine the reason for terminating the insurance and then calculate the correct notice period based on that reason.

Not sure if you can cancel your auto liability insurance right now? The terms vary depending on the reason for cancellation and the specific policy. Our attorneys will review your policy and the terms and conditions and advise you on how to proceed so that you don’t miss the required deadline.

What Is Compulsory Auto Liability Insurance?

Compulsory auto liability insurance, also known as motor vehicle liability insurance, is insurance required by law for owners of motor vehicles. It covers situations where you cause property damage or bodily injury to third parties with your vehicle.

This requirement makes sense because traffic accidents are not uncommon, and car accidents are usually associated with damage to property or injury. If you were not insured, you would have to cover all repair and medical costs yourself. These costs can amount to millions. Most of us don’t have that kind of money sitting in our bank accounts, so it could easily happen that people who caused the damage would have to go into debt, or that the injured parties wouldn’t receive compensation, leading to protracted and intractable disputes.

Who Is Required to Purchase Compulsory Auto Liability Insurance

Under the Act on Motor Vehicle Liability Insurance, every operator of a domestic vehicle is required to obtain compulsory motor vehicle liability insurance. The operator does not necessarily have to be the same person as the vehicle owner. For a registered vehicle, insurance must be in effect for the duration of its registration, unless the law provides for an exception.

However, there are exceptions. The first of these applies to vehicles insured abroad. In this case, however, you must provide proof of the Green Card (you do not need to have it with you; the police will verify your insurance online). Vehicles belonging to the Ministry of the Interior and the Ministry of Defense, as well as police vehicles, volunteer fire department vehicles, and emergency services vehicles, are exempt from mandatory liability insurance.

What Does Compulsory Liability Insurance Cover?

The insurance covers damages that you cause to someone else. Therefore, it does not cover damage to your own property or health, but rather damage to the property or health of a third party. It thus covers damage to property, health, and, where applicable, lost profits. In addition, the insurance also covers costs associated with legal representation.

However, damages are covered only up to a certain limit. By law, the mandatory minimum limit is 50 million crowns. You can also purchase insurance with a higher limit of up to 250 million crowns.

Cost of Mandatory Auto Liability Insurance

Although auto liability insurance is mandatory, you can purchase it from the insurance company of your choice. That is why prices for auto liability insurance vary. The price is also influenced by the type of car and the type of person purchasing the insurance. The following factors play a key role:

• Vehicle type: The size and type of vehicle significantly affect the insurance price. Generally speaking, heavier and more powerful vehicles can cause greater damage, which naturally leads to higher compensation costs and a higher insurance price.
• Purpose of use (personal/business): Business vehicles will have higher premiums because they are on the road more often and therefore carry a higher risk of accidents.
• Miles Driven: The frequency of vehicle use and annual mileage can also affect insurance premiums. Vehicles that cover a lot of miles each year are naturally on the road more often and are more frequently exposed to potential accidents. For this reason, their insurance premiums are higher.
• Fuel type: Vehicles that run on different types of fuel have different insurance rates. For example, electric vehicles have lower insurance premiums due to lower operating costs and a reduced risk of fire.
• Age of the insured: Younger drivers pay higher premiums because they are statistically more likely to be involved in accidents. As they age and gain experience, premiums typically decrease.
• Insured’sPermanent Residence: The location where the driver lives and where the vehicle is primarily used also affects the premium. In areas with higher traffic density (especially in large cities), premiums are higher.
• Bonuses and Penalties: The bonus and penalty system reflects your claims history. Drivers who drive accident-free receive discounts (bonuses), while those with a history of accidents will face surcharges (penalties) on their premiums.

Termination of a Compulsory Liability Insurance Policy

Termination of compulsory motor vehicle liability insurance is governed primarily by the Civil Code and the Act on Motor Vehicle Liability Insurance. The Civil Code governs the general procedures for terminating an insurance policy and the applicable notice periods, while the Act on Motor Vehicle Liability Insurance establishes specific rules for compulsory motor vehicle liability insurance.

You may wish to cancel your compulsory motor vehicle liability insurance for various reasons. So let’s take a look at how to do it.

When Can You Cancel Compulsory Liability Insurance

You can cancel your compulsory motor vehicle liability insurance if you sell your car or dispose of it in another way (such as by scrapping it or donating it). However, you can also cancel it if you are not satisfied with a specific compulsory motor vehicle liability insurance policy from your insurance company. Of course, you must immediately arrange for compulsory motor vehicle liability insurance with another insurer.

The notice period for canceling liability insurance depends on the reason for terminating the policy. If you’re switching insurers at the end of the insurance period, the notice of cancellation must be delivered no later than 6 weeks before the end of that period. If the insurance company receives the notice later, the coverage will generally not end until the end of the following insurance period. Different deadlines apply, for example, when terminating the policy shortly after it is issued or following an insured event.

In practice, we also recommend keeping proof of delivery of the notice of termination. If a dispute later arises over whether the notice period for compulsory auto liability insurance was met, the date of delivery is often the key factor.

A notice of termination delivered a few days later may mean that the insurance does not end until the next insurance period. If you are unsure about how to calculate the deadline or the insurance company’s procedure, have our attorneys review your case and advise you on the correct course of action.

How to Cancel Compulsory Auto Liability Insurance

If you are disposing of a vehicle—whether by selling, scrapping, or donating it—you must cancel your auto liability insurance. Otherwise, the policy will remain in effect, and you will continue to be liable for the premiums. You must therefore send your insurance company a cancellation form for your auto liability insurance and attach a document proving that you are no longer the owner of the vehicle (e.g., a sales contract, a gift deed, or a record of the vehicle’s deregistration). To avoid unnecessary delays, it is advisable to send the cancellation notice for your compulsory auto liability insurance to the insurance company via certified mail. Before terminating the insurance, you must take into account the notice period for compulsory auto liability insurance, which affects the effective date of the policy’s termination.

Tip: If you’re unsure how to properly write a cancellation notice for mandatory auto liability insurance, you can use an available template, which will simplify the entire process. Some insurance companies have their own form for canceling liability insurance. If your insurance company offers one, you can use that directly; you’ll usually need at least the insurance policy number, the vehicle’s license plate number, the date, and your signature.

Do you need to be sure that the cancellation notice includes everything necessary? Contact us, and we’ll draft or review the legal document to ensure it aligns with your specific situation and the insurance company’s terms and conditions.

However, if you retain ownership of the car and wish to cancel your liability insurance for other reasons, you have several options:

• Within two months of signing the insurance policy, you can cancel the insurance without giving a reason. In this case, the notice period is 8 days and begins upon delivery of the notice of cancellation to the insurance company.
• It is also possible to cancel the insurance policy if the end of the insurance period is approaching. However, the notice of termination must be sent at least 6 weeks before the end of the insurance period (you can find the end date of the insurance period in your insurance policy or on your Green Card).
• You may also terminate your compulsory auto liability insurance by mutual agreement with your insurance company. However, this is not a very common situation.
• If your premium increases, you have the right to terminate the policy within one month of being notified of the change in the premium amount. However, this does not apply to changes based on your no-claims and accident-related bonuses and penalties.
• You can also cancel your insurance after an insured event. You must submit your notice of cancellation within three months of the date you were notified of the insured event. A one-month notice period begins upon delivery of the notice of cancellation, after which the insurance coverage terminates.

Real-life example: A driver wanted to switch to a cheaper insurance company and sent the notice of cancellation several weeks before the policy anniversary. However, the insurance company did not receive it until after the six-week deadline had passed. As a result, the insurance was not terminated immediately but continued into the next coverage period. That is precisely why it’s a good idea to calculate the deadline based on the date of delivery, not the date you send the notice of cancellation.

Summary

Canceling compulsory auto liability insurance is possible in several situations, and different rules apply to each. For a standard change of insurance company, the notice of cancellation must be delivered no later than 6 weeks before the end of the insurance period. Within 2 months of signing the contract, the policy can be canceled with an 8-day notice period, and following an insured event, the notice of cancellation can be submitted within 3 months of its notification.How to cancel compulsory auto liability insurance therefore depends mainly on the reason for terminating the contract. The notice of cancellation should clearly identify the policyholder, the contract, and the vehicle, and it is advisable to also have proof of delivery.