What does direct settlement within the frame of third party liability insurance (OSAGO) mean?

30.05 2019

Direct settlement means a possibility for the injured to get the insurance indemnity from his/her Insurer according to OSAGO policy.

The instances of direct settlement application.

  1. A road accident has taken place with a participation of two transport vehicles only and there was a contact damage (there are traces of a collision), irrespective of a presence or absence of the injured whose life and health were harmed.
  2. An OSAGO contract is valid for both transport vehicles and the Insurers of both participants of the accident are the participants of the System of direct settlement of damages.
  3. The driver of one of the transport vehicles is absolutely guilty of the accident (a guilt of one of the participants only was established).
  4. The information available with the Insurer concerning the participants’ policies.

An accident is not contradictory as regards the data which makes the basis for identification of the transport vehicle (make, type, nameplate) and there is a possibility to determine availability of the insurance coverage as of the accident date, the amount of the deductible and insurance amounts.

Special features of direct settlement:

  1. In direct settlement the damage is indemnified as regards the property of the injured only.
  2. In order to indemnify the damage inflicted to life and health, it is necessary to apply to the Insurer of the party at fault of the accident.
  3. Damages are settled in compliance with OSAGO contract concluded by the party at fault of the accident with his/her insurance company.
  4. The Insured who has suffered in the accident and who applied, first, for indemnity to “his/her” Insurer, has also the right to apply to the Insurer of the party in fault of the accident. The Insured who has suffered in the accident and who applied, first, for the indemnity to the Insurer of the party in fault of the accident forfeits the right to apply in this case to “his/her” Insurer.


See the list of Insurers who are participants of the Direct Settlement Agreement:

From the author’s viewpoint a possibility of direct settlement presents a great step forward in the development of the insurance institute, such as OSAGO, in Ukraine.

The direct settlement advantages are:

  1. A client selects the company where he/she may get indemnity: he/she may apply either in his/her own company or to the insurance company of the accident party in fault of the accident.
  2. The period of damage settlement becomes shorter – the Insurer stands for its client, therefore he is eager to pay the indemnity to his client at the shortest time possible.
  3. Better service provided to the client.
  4. Reduction of the number of insolvent Insurers who are unable to meet their obligations will lead to a loss of their clientele because every client wants to cooperate with the most stable and reliable companies.
  5. Purification of the insurance service market due to elimination of non-reliable insurers will make it possible to accumulate bigger portfolios of the reliable insurers making their profits larger and their financial standing more stable. Consequentially, the level of trust in the insurance market will be higher.

Finally, irrespective of whether you are going to resort to the direct settlement services, pay attention to quality and timely fulfilment of the obligations according to OSAGO policy.

This information can be found in: