Attention to those who give and receive power of attorney! - A new rule comes into effect

It is common in practice for a car to be driven by several people based on a power of attorney. In addition, the buying and selling of vehicles based on a power of attorney is not uncommon.

Medianews.az reports that in recent years, it has even been observed that drivers who have caused accidents give the car to other people with a power of attorney so that they insure it on their behalf with compulsory auto insurance to avoid paying a high insurance premium the following year.

However, it seems that from now on, those who give a power of attorney to others or drive a car based on a power of attorney will have to reconsider this matter.

Specifically, according to the relevant amendment by the Central Bank, when an insurance contract is concluded, if there is more than one person legally entitled to drive the vehicle in accordance with the legislation, the Insurance History Coefficient of the person with the highest risk among them will be applied.

That is, if powers of attorney have been issued to others for the car, then when insuring it, not only the insurance history of that person but also the insurance histories of the other persons holding the power of attorney will be taken into account. As a result, even if the insured person has not caused an accident, the insurance premium may be high due to the other persons entitled to drive the vehicle. Also, a person who has caused an accident will not be able to avoid paying a high insurance premium by giving a power of attorney to another person. Thus, the insurance premium will be determined according to the insurance history of the highest risk person among those entitled to drive the vehicle.     

By rule, the existence of the right of two or more persons to drive the vehicle is determined based on documents confirming ownership rights, lease or other contracts related to property rights, as well as powers of attorney related to the use or disposal of the vehicle. This means that in addition to a power of attorney, the above-mentioned other documents also imply that two or more persons have the right to drive the vehicle. This will be taken into account when calculating the insurance premium.

By the way, according to the amendments, the existing "Bonus-Malus" system will be replaced by the Insurance History Coefficient based on individual insurance history. According to this mechanism, when damage is caused to the health or property of third parties, a 30 percent surcharge will be applied to the insurance premiums of the persons causing the damage for each damage-causing incident.

According to the currently effective rule, when calculating the insurance premium, if only one person has the right to drive the motor vehicle, a coefficient of 1 is applied; if two or more persons have the right to drive it, a coefficient of 1.15 is applied. After the amendments enter into force, if the number of vehicle owners is five or more, a coefficient of 1.15 will be applied. If the number is less, a coefficient of 1 will be applied.

It should be noted that the new rule comes into force on June 16, 2026.//Qafqazinfo