After risk car insurance: how does it work?
The Motor Insurance Liability Act (WAM) provides that an insurer must still pay damages to a third party 16 days after the sale of a vehicle if it turns out that the new owner did not purchase valid auto insurance . This is called the after-the-fact risk.
The period of after-risk starts on the day after the suspension or termination of the insurance and lasts for 16 days. The condition is that the insurer cancels the registration within 30 days of the termination or suspension. If the cancellation takes place after 30 days, the 16-day after-risk starts on the day after the cancellation.
Example 1
On 02-03, the customer informs the company that his car has been sold as of 01-03 and that he wants to suspend the car insurance.
If the insurer notifies the National Road Administration (RDW) on 03-03, the 16 days will take effect as of 02-03 (the day after the suspension).
Should the new owner - who, by the way, is required to have insurance - fail to obtain valid car insurance, the old insurance company must pay the damages to the injured party. Depending on the amount, however, the insurance company will try to recover the damages from the new owner.
Example 2
On 02-05, the customer informs the company that his car has been sold as of 01-03 and that he wants to suspend the insurance.
If the insurer passes this on to the National Road Administration (RDW) on 03-05, the 16 days will take effect as of 04-05 (the day after the cancellation).
The old insurance company is not happy with the situation in this example. First, it runs the risk of having to pay a claim for much longer, but it also does not receive a premium for it. Normally, the old company will have the insured pay the premium up to the date of cancellation.
The niche risk ends in any case when the new owner of the motor vehicle has taken out a valid automobile insurance policy for the vehicle himself.
By the way, from the niche risk, the old company will only pay for fault damage to an injured party. Damage to the vehicle itself is not covered.
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