Gift under the tree: Drivers warned of increased car insurance costs starting January 1.

The cost of policies will increase.

This is reported by the press service of the NBU.

Cost of Policies

As noted by the press service, the information that starting from the beginning of the year, car insurance policies will immediately increase in price by 2-2.5 times is not accurate.

According to the NBU, the new law indeed provides certain freedom for insurers in determining the cost of the policy, which will depend on the driver's personal history. Consequently, the price increase will primarily affect clients with a negative history of being involved in accidents or those categorized as drivers who are more likely to be involved in accidents (for example, drivers with minimal driving experience or those in large cities).

“The scale of such an increase, according to preliminary estimates, in the context of high competition in this market, will be around 25-30%,” the statement says.

The NBU also reminded that the new law does not terminate the validity of existing policies but only applies to new ones. For privileged categories, there remains the possibility to obtain a policy for 50% of its cost.

Paper Policies

The regulator also debunked another myth that paper policies will become invalid at the beginning of the year.

“No. The transition to an electronic format for ‘car insurance’ agreements will occur gradually. Only after one year, on January 1, 2026, the final transition from paper to electronic policies is expected, with mandatory entry into the electronic centralized database of the Motor (Transport) Insurance Bureau of Ukraine,” the NBU stated.

The central bank believes that this will definitively leave behind the practice of concluding paper contracts in “vans” and numerous cases of fraud.

Sale of Policies

The NBU refutes the information that the new law will significantly complicate the sale of policies.

“No. We are indeed determined to end the semi-legal trade of policies at prices below market rates, which has distorted competition for many years, and fundamentally change the regulation of the activities of insurance intermediaries. However, according to the NBU, most companies in the market are capable of meeting the new requirements, particularly regarding consumer rights protection, and are ready to increase the number of clients by ousting unscrupulous players from the market,” the statement says.

As noted by the NBU, the new law should transform the popular insurance product from a formal piece of paper for the police into an effective tool for covering the risks of vehicle owners, as it contains such innovations:

• abolition of the depreciation coefficient and introduction of the principle that insurance compensation should restore the vehicle to its condition prior to the accident;


• introduction of direct settlement of damages to the vehicle as a result of an accident, or the possibility for the victim to apply for insurance payment to their insurer;


• limitation of the maximum decision-making period for insurance payments to 90 days and introduction of penalties for insurers for violating this period;


• abolition of the limit on the maximum amount of insurance compensation under the European protocol;


• payments by the MTSBU instead of the insurer, whose license has been revoked, even before the completion of the relevant bankruptcy court case and final liquidation.

Norms of the Law

In May 2024, the Verkhovna Rada adopted a new law on mandatory insurance of civil liability of owners of land vehicles, replacing the law that had been in effect since 2005.

The new law provides for a gradual increase in the maximum amounts of insurance compensation:

from January 2025:

• for harm to life and health - from 320 thousand hryvnias to 500 thousand hryvnias;


• for property damage - from 160 thousand hryvnias to 250 thousand hryvnias;

from January 2026, but after the end of martial law:

• for harm to life and health - up to 1 million hryvnias;


• for property damage - up to 2 million hryvnias;

within four years from the moment Ukraine joins the European Union:

• for harm to life and health - up to the equivalent of 1.3 million euros per injured person and 6.45 million euros per insurance case;


• for property damage - up to the equivalent of 1.3 million euros per insurance case.

In the event of the revocation of the insurer's license, payments will be made by the MTSBU without waiting for the completion of the bankruptcy court case and final liquidation.

It should be noted that the increase in compensation amounts for accidents previously led to an increase in the cost of car insurance policies. In 2022, the National Bank of Ukraine changed the conditions for mandatory insurance of civil liability of owners of land vehicles, which resulted in price increases.