POLICE will have the authority to ban from use vehicles that lack valid third-party liability motor insurance, according to a Draft Insurance Code approved by the Cabinet on September 15.

The code also provides for fining drivers and legal persons whose cars do not have this type of insurance.

As of next year, the price of third-party liability policies will be determined solely according to market value. Insurers will set prices themselves, said Ralitsa Again, the deputy chair of the Financial Supervision Commission and head of the Insurance Supervision Department.

The price of insurance will depend solely on the damages to be paid out. The limits of liability will increase. Again said that an increase in the price of such insurance is inevitable as Bulgarian insurers will pay according to limits set by each European Union member state. In Bulgaria, the amount of damages, determined by the court, is substantially less than those in other European countries.

Insurers have already calculated that after the adjustment, the cheapest cover, that for vehicles with engines of up to 1800 cc, will cost about165 leva, up from the current 90 to 95 leva. Motor third party costs for owners of vehicles with engines in the 1800-2500 cc range are estimated at about 233 leva, up from a current 205 leva.

Vehicles with engines of more than 2500 cc will be insured against third-party liability at a cost of 500 leva, up from 440 leva.

The liability limits will also be increased, and will be pegged at 700 000 leva for one injured party and to a million leva for two or more injured parties.

Under the new Insurance Code, the shortest term of validity that motor third party policies will have is one year. Motorists will have the option of paying in instalments. The policy will terminate automatically 15 days after non-payment of the premium.

The display on the windscreen of a sticker as proof of insurance  becomes mandatory in 2006.

The draft code also envisages   that, once Bulgaria joins the EU, one contract of insurance and one insurance premium will cover the liability of a driver insured in Bulgaria in the entire EU and in the countries with which the Union has the relevant agreements.