According to the Act governing motor liability insurance, a motor liability insurance company licensed to issue policies cannot refuse to issue and keep in force a policy that has been applied for. In certain cases, however, the company may require the advance payment of the insurance premium for the first insurance period, pursuant to the terms and conditions of its motor liability insurance. In such a case, the insurance company's liability only begins when the insurance premium has been paid. To take out insurance in someone else's name requires that person's authority: in practice this means a written power of attorney.
New motor liability insurance must be taken immediately when a vehicle has been procured or its keeper has changed, however no later than seven (7) days if the vehicle was bought from its registered owner. If the vehicle is uninsured at when it ownership or right of possession changes, the insurance must be taken out on the day of purchase.
The basic principle is that the policyholder takes out the insurance policy and, when doing so, ensures that the vehicle has valid motor liability insurance and that it has not been withdrawn from use.
The motor liability insurance policy held by the registered owner or keeper of the vehicle will compensate for any damage caused by the vehicle for seven days from the transfer of ownership unless the new owner or keeper has taken out motor liability insurance.
The policy holder can terminate the insurance and transfer it to another insurance company at any time during the insurance period. If the terminated insurance concerns a vehicle that is subject to registration, the insurance is terminated by taking a new insurance.
Motor liability insurance can be terminated when a vehicle has been stolen and this has been reported to the police and the insurance company.
Also, the motor liability insurance for a vehicle has been withdrawn from use can be terminated by notifying the insurance company. The insurance company will notify the vehicle register of the termination. If the motor liability insurance for a vehicle that has been withdrawn from use has been terminated, a new insurance policy has to be taken out for the vehicle before the vehicle is taken into use again.
Also, the insurance policy is deemed to have been terminated when the policyholder notifies Traficom, the Finnish Motor Insurers' Centre or another insurance company that:
- the vehicle has been withdrawn from use for good;
- the vehicle has changed owner or keeper due to legal proceedings, for example, to the policyholder's estate on death or bankruptcy;
- the policyholder is no longer the owner or keeper of the vehicle;
- the insurance policy has been taken out at a different insurance company.
In the above-mentioned cases, the validity of the insurance ends on the date specified in the notification.
Each insurance company uses its own basis for calculating the motor liability insurance premiums. According to the Act governing motor liability insurance, all policyholders are to be treated equally when determining the insurance premium. The price of motor liability insurance is affected by factors relating to both the driver and the vehicle. The most common factors affecting the premium are:
- type of vehicle
- make and model of the vehicle
- size of the engine
- intended use of the vehicle
- the domicile of the vehicle's keeper or the vehicle's main place of use
- policyholders age and driving experience
- insurance and claims history
The insurance premium also includes insurance tax (24 %), road safety fee (1 %) and other collectively borne claims costs.
The payment bases of insurance companies must show how accident-free years and how compensated accidents affect the insurance premium for the policyholder's vehicle, or for a vehicle of comparable type or use. The above applies to the insurance policies of private persons.
In addition, the fact that the claims histories of the policyholder's other vehicles affects the premium or that the claims history of one vehicle is used as the basis for insuring a number of vehicles can be defined in the basis for payment.