Short-term CMTPL insurance policies: price calculation procedure
Short-term CMTPL insurance policies (from one day to three months) cannot be more expensive than annual policies. When calculating their prices, insurers will have to apply a reduction factor based on the validity term of the contract. Insurance companies have the right to set the final price of an insurance policy depending on a specific situation for which such short-term policy is issued as well as the driver’s profile. The Bank of Russia has prepared a relevant draft ordinance.
The Law on a new type of policies will come into force on 2 March 2024. Such contracts may be in demand among motorists who use their cars occasionally, for example, owners of retro-cars, or when vehicles are temporarily let to other persons, and also in other situations.
As the calculation will be made on a case-by-case basis, the policy price will be determined taking into account the risk-profile of the motorist. The price of short-term policies will be also influenced by other currently existing coefficients, which remain unchanged. This concerns the person’s length of driving experience and age, the bonus-malus coefficient, local coefficients, vehicle capacity, etc.
At present, car owners can buy CMTPL insurance policies for a limited period of car use of at least three months a year. In 2022, ordinary car drivers bought 488,000 three-month insurance policies.