The new motor insurance law in Lebanon

In Lebanon, the legislation relative to motor insurance has existed since 1977. However, it was never enforced due to socio-economic tensions and the absence of a decree. In 2002, less than 30% of the vehicles were insured. To correct the situation, a decree promulgated in January 2003 made the Third Party motor insurance mandatory.

Risk coverage

The contract covers bodily injury caused to a third party by a ground motor vehicle, regardless of who drives it. Material damages are excluded.

Third party” means any person other than the vehicle owner and driver. Likewise, are not considered “third party” and are therefore excluded from mandatory Third Party coverage the spouses of the deceased (owner or driver), their ascendants and descendants, and their partners and legal representatives.

Delay of application of the law

The law on mandatory motor insurance came into effect on April 5, 2003. However, to simplify administrative procedures, car owners are allowed to postpone underwriting until the payment date of their tax sticker.

No legal action can be taken prior to this delay.

Premiums

Taking into account the obligatory character of the new law, the volume of the corresponding premiums should record an increase estimated at 50 million USD.

The motor insurance premiums represented 14% of the total written premiums in 2002 (motor premiums: 65.4 million USD, total written premiums: 467.2 million USD).

Rates and guarantee limits

The premium relative to mandatory motor insurance varies from 65 000 LBP (43 USD) to 90 000 LBP (60 USD). The bracket was fixed by the Ministry of the Economy and the Association of the Insurance Companies in Lebanon (ACAL).

As for guarantee limits, the new code on the mandatory motor insurance provides that bodily injury be covered up to 750 million LBP (500 000 USD).

For contracts previous to the decree, whose guarantee limits are inferior to those provided by the law (750 million LBP), a premium complement will be required. It is equal to 1/24^th of the amount of the premium imposed for mandatory insurance.

Means of control and sanctions

In order to ensure the sound application of the new law, the Lebanese authorities require the apposition of a sticker on the windshield (similar to the tax sticker). The sticker is given to insurers at the time of the contract signature.

The driver who does not have a mandatory motor insurance contract is liable to one or two of the following sanctions: 

• A fine (35 USD and up)
• A 2-to-6 month prison sentence

In case of a second offense:

• The initial sanction is doubled
• The vehicle is seized
• The driver's license is confiscated for 6 months