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. Last Updated: 07/27/2016

Mandatory Car Insurance Delays Seen

A law requiring all drivers to have third-party insurance may miss its July 1 start date unless the Cabinet adopts a legal framework to define how the system will work.

According to Andrei Slepnev, the general director of the Russian Union of Insurers, the Transport Ministry is waiting for Cabinet approval for guidelines in assessing damage on vehicles involved in accidents, Interfax reported.

The ministry's document, which was submitted to the Cabinet on Friday, defines how decisions on insurance claims will be made and the timing of payouts. Insurers will have 15 days to decide whether the third party is eligible for compensation. The company will have to issue payments within three days after the decision is made, Vera Balakireva, the head of the Finance Ministry's insurance department, was quoted by Interfax as saying Friday.

Once the law takes effect, uninsured drivers will face an 800 ruble ($25.50) penalty, effective as of the next calendar year.

President Vladimir Putin in April signed a law forcing all drivers to have insurance for third party damage by July 1, 2003.

Third-party insurance covers vehicle owners and drivers who are liable for personal injury to victims in the event of an accident.

Disagreements on premium rates between the government and insurance companies must also be ironed out before the law can be implemented.

Despite the fact that Russian roads rank among the deadliest in the world -- over 30,000 people die in road accidents in Russia every year -- compulsory automobile insurance has never been required. Automobile insurance was not mandatory during the Soviet Union.

The government launched a campaign in 2000 to introduce compulsory automobile insurance.

According to current plans, drivers are to pay an average of $66 per year for third-party car insurance, although this figure is only a base tariff. In Moscow, the rate would be doubled or even quadrupled if the driver is a novice.

There are about 27 million privately owned cars in Russia with about 3 million of them registered in Moscow.

The proposal currently being discussed in the Transport Ministry would limit liability to 400,000 rubles ($12,750). Maximum payout for injury would be 240,000 rubles, while damage to property would be 160,000 rubles.