Important Updates on Motor Insurance Legislation

January 21, 2025

The Road Traffic (Amendment) Act, 2024, which came into effect on 1 January 2025, introduces critical changes to existing road traffic laws aimed at stipulating vehicle insurance renewal timelines, setting limitations on policy cancellations, detailing the steps required for policy cancellation, and expanding the authority of law enforcement to impound vehicles.

Your coverage is our highest priority, and we want to ensure that you are well-informed about the new motor insurance regulations introduced by the government and their potential impact on your coverage and responsibilities.

Taking the time to understand these changes will help you maintain uninterrupted coverage and stay compliant with the updated requirements.  Like you, we too are adjusting and will guide you on any changes to our policy process due to the new requirements,

Learn more about the new legislation below or speak with your agent about details regarding your specific policy.

Insurance Requirements for Vehicle Licensing

When applying for a vehicle license, you must provide the Road Traffic Department with proof that:

• Insurance Coverage: You will have the necessary insurance when the license begins. This insurance should cover you and anyone else using the vehicle with your permission.

Note: An insurance policy expiring within 6 months from the application date cannot be used for licensing.

Insurance Policy Renewal Timeline

Renew your insurance policy annually and make sure it doesn’t expire within 6 months of your birth month to ensure compliance with the law. This is mandatory.

Cancelling an Insurance Policy

Insurance policies can only be cancelled within the first 6 months if:

• The vehicle is no longer in use due to mechanical failure.
• The vehicle is sold to a new owner; or
• You are transferring the insurance policy to another vehicle you own.

Steps to Take When Cancelling Your Policy

Your Responsibilities

• Surrender the certificate: Return the insurance certificate to your insurer upon cancellation.
• Report the cancellation: Inform the Road Traffic Department within 5 days, providing written evidence for the cancellation.

Insurer’s Responsibilities

• Notify Authorities: The insurer must notify the Road Traffic Department within 48 hours of cancellation, including your details and cancellation reason.

Handling Lost or Destroyed Insurance Certificates

You must return the certificate of insurance to your insurer as soon as it is cancelled. If your insurance certificate is lost or destroyed, inform your insurer and provide a sworn declaration. Failure to provide proof of cancellation within 5 days will result in a police report. Penalties for non-compliance or false statements include fines or imprisonment.

Penalties

• Insurer: Minimum fine of $5,000.
• Insured: Minimum fine of $2,500 or up to 3 months in jail, or both.

Police Powers to Impound Vehicles

If you cannot produce a valid insurance certificate or if your vehicle isn’t licensed, police may impound your vehicle. To retrieve it, you’ll need to pay a $300 fee and show proof of payment and provide a current insurance certificate or vehicle license. If your vehicle is impounded for over a year, the police have the right to sell it to cover expenses related to taking and storing the vehicle.

No Insurance Coverage During Impoundment

If your vehicle is impounded, insurance will not cover accidents, losses, damage, or liabilities related to that situation.

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Frequently Asked Questions about Motor Insurance Legislation Updates

General Information

What are the key updates in the Road Traffic (Amendment) Act, 2024?

• Revised Insurance Renewal Timeline: The Amendment Act stipulates that vehicle insurance must now be renewed annually during the insured individual’s birth month. However, subsequent communication to the public on 8 January 2025 from the Ministry of Transport & Energy provides a concession for the year 2025 (only) that, “once the existing policy expires, the owner must ensure that they possess a valid insurance policy with a minimum coverage of 6 months.” This statement implies that the effect of the requirement for the insurance policy to expire during the birth month is deferred for the current year.
• Policy Cancellation Restrictions: The amendments introduce stringent conditions under which insurance policies can be cancelled:
  • A policy can only be cancelled within the first 6 months if the vehicle is irreparable, has been sold to another party, or if the insurance is intended for transfer to another vehicle owned by the insured.
  • Upon cancellation within this period, the insurance certificate must be returned to the Insurer, and the Road Traffic Department (RTD) must be notified within 5 days, with a valid explanation for the cancellation. Additionally, the Insurer will also notify the RTD.
• Mandatory Cancellation Procedures: The Act specifies that when cancelling a policy, the insured must surrender the insurance certificate and notify the relevant authorities, providing appropriate evidence:
  • If the insurance certificate is lost or destroyed, the insured must inform their insurer and provide a sworn declaration. Failure to provide proof of cancellation within 5 days will result in a report to the police, with potential penalties including fines or imprisonment for non-compliance or false declarations.
• Enhanced Law Enforcement Powers: The amendments grant law enforcement increased authority to impound vehicles when drivers are unable to present a valid insurance certificate or if the vehicle is unlicensed.

When did the new amendments come into effect?

• The amendments came into effect on January 1, 2025.

Are these amendments merely a ploy for insurance companies to make more money?

• The amendments introduced in the Road Traffic (Amendment) Act, 2024 are primarily focused on improving road safety and regulatory compliance. The ownership of these changes rests with the government. While insurance companies will be compliant with the law, the intent is not to serve financial interests but to create a safer and more efficient environment for drivers and the public.

What penalties exist for driving without valid insurance under the new rules?

• Penalties payable to the government include fines and potential vehicle impoundment.

How will these legislative changes affect my insurance premiums?

• The legislative changes do not impact insurance policy premiums; however, if you make any adjustments to your policy coverage period, you will be charged a proportional premium for the insurance period that aligns with those changes.

Insurance Requirements for Vehicle Licensing

What is required to license a vehicle under the new amendments?

• You must provide proof of insurance coverage that will be valid when the license begins, ensuring it covers you and anyone else using the vehicle with your permission. Talk to your agent about coverage options for drivers other than the policyholder, including Named Driver coverage or types of Open Driver coverage.

Can a policy expiring within 6 months be used for licensing?

• No, a policy expiring within 6 months from the application date cannot be used for licensing.

Insurance Policy Renewal Timeline

What is the new timeline for renewing vehicle insurance policies?

• Insurance policies must now be renewed annually within the policyowners’ birth month to ensure continuous coverage.

What should I do if my policy is due for renewal before or after my birth month?

• You should speak with your agent about the specific details of your policy to uninterrupted coverage and compliance.

What if I fail to renew my insurance policy in time?

• Failing to renew on time may result in a lapse of coverage, potential fines, and inability to legally operate the vehicle until insurance is reinstated.

Cancelling an Insurance Policy

Can I cancel my vehicle insurance policy within the first 6 months?

• You can only cancel if the vehicle has an irreparable mechanical issue, is sold to a new owner, or if you plan to transfer the insurance to another vehicle you own.

How long does it take for a cancellation to become effective?

• Cancellations typically become effective within 5 to 10 business days after all required documents are submitted.

Can I cancel my policy online?

• Please speak with your insurance agent to confirm their online cancellation capabilities

What happens to the premium if I cancel my policy early?

• If you decide to cancel your policy early and have not made a claim, you will receive a credit for the portion of the premium corresponding to the unused insurance period, as outlined in the policy’s cancellation terms.

What steps should I take to cancel my insurance policy?

• Return the insurance certificate to your insurer and report the cancellation to the Road Traffic Department within 5 days, providing written evidence for the cancellation. Your insurer also has an obligation to notify the Road Traffic Department within 48 hours of cancellation, including your details and the cancellation reason.

What is the process for cancelling a policy due to vehicle sale?

• The insured must notify the insurer of the sale, provide proof of sale, and formally request cancellation of the policy.

Are there fees associated with cancelling an insurance policy?

• Please contact your agent or broker to find out if a fee applies.

Can a policy be cancelled if the vehicle is temporarily not in use?

• According to the new amendments, the policy cannot be cancelled within the initial 6 months if the vehicle is simply not in use temporarily; however, it can be cancelled if the vehicle is no longer in use due to mechanical failure or once the 6-month period has passed.

Handling Lost or Destroyed Insurance Certificates

What should I do if I want to cancel my policy and my insurance certificate is lost or destroyed?

• Inform your insurer immediately, provide a sworn declaration, and ensure you provide proof of cancellation within 5 days to avoid penalties.

What are the penalties for non-compliance or false statements regarding insurance certificates?

• For insurers, the minimum fine is $5,000. For the insured, the minimum fine is $2,500 or up to 3 months in jail, or both.

Police Powers to Impound Vehicles

What does it mean to have a vehicle impounded?

• Vehicle impounding is when the police or other authorities take a vehicle and keep it in a special location, called an impound lot, where it is held until certain conditions are met for its release.

In what circumstances can law enforcement impound a vehicle?

• Vehicles can be impounded if they are found to be uninsured, unlicensed, or involved in illegal activities.

What evidence is required to prevent vehicle impoundment?

• Drivers must provide a valid certificate of insurance and a current vehicle license to avoid impoundment.

Can law enforcement impound a vehicle without prior notice?

• Yes, vehicles can be impounded without prior notice if they are deemed to be in violation of insurance regulations.

What are the requirements to retrieve my impounded vehicle?

• The owner of the vehicle must pay a $300 fee, show proof of payment, and provide a current insurance certificate or vehicle license.

Can the police sell my impounded vehicle?

• The police have the right to sell the vehicle after it has been impounded for 1 year to cover expenses related to taking and storing it.

Does my insurance cover any incidents while my vehicle is impounded?

• No, insurance will not cover accidents, losses, damage, or liabilities related to the impoundment situation.

Additional Questions

How can I ensure my coverage remains uninterrupted under the new legislation?

• Review your policy with your agent to ensure it meets all current legal requirements and renewal timelines.

What should I do if my insurer fails to update my policy according to the new rules?

• Contact your agent immediately to resolve discrepancies and ensure compliance. If unresolved, report the issue to the regulatory authority, the Insurance Commission of The Bahamas.