There are two kinds of loss that condominium managers of buildings with underground garages encounter sooner or later: a parked car catches fire, and the smoke, soot and firefighting water ruin half a level; or a driver in a hurry drives into the garage gate, and the building is left open for days. As a broker, I see the same mistake repeated in both cases: the condominium calls the MTPL insurer, the motorist expects compensation from the condominium's policy, and the owners of the neighbouring cars expect it from the condominium manager – and meanwhile the days go by, days that count when it comes to reporting deadlines and evidence. This article sets out the roles of the three policies that may come into play – MTPL (compulsory motor third-party liability insurance), casco and the condominium's insurance – in the two typical losses. The general risks of garages are covered in the article on garages and storage rooms.
- MTPL (compulsory motor third-party liability insurance) is the liability insurance of the keeper of the vehicle that causes the damage: under the Gfbt. (the MTPL Act) it pays for damage caused to others in the use of the vehicle, and the injured party – the condominium included – can claim directly from the insurer; for damage to one's own car, however, it is never MTPL but casco that applies.
- Under EU case law and the Gfbt.'s concept of use, a fire in a parked car caused by its own technical fault is part of the use of the vehicle, so the damage it causes in the garage falls under MTPL; if the fire was not caused by the vehicle, the condominium can turn to its own fire cover and – if it is at fault – to its liability insurance.
- The condominium's policy pays for damage to the commonly owned garage and gate (fire, natural perils, typically vehicle impact), and the insurer can reclaim the amount paid from the insurer of the party that caused the damage; residents' parked cars can be covered against fire and natural perils only by a separate add-on that varies by insurer.
Three policies, three roles
Compulsory motor third-party liability insurance (MTPL, kgfb in Hungarian) is the liability insurance of the keeper of the vehicle that causes the damage. Under Section 12 of the Gfbt. (Act LXII of 2009, the MTPL Act), it covers well-founded compensation claims for damage caused to others in the use of the vehicle named in the contract, and Section 28(1) states that the injured party can enforce their claim directly against the insurer of the vehicle that caused the damage. MTPL can therefore pay for damage to the building, a neighbouring car or a passer-by – but never for damage to the at-fault party's own car. That is what casco is for: the owner's own property insurance, which pays for fire or collision damage to the vehicle regardless of fault, subject to a deductible and at the value set in the conditions; for anyone without casco, damage to their own car is their own loss, unless someone else is liable for it.
The condominium's policy is the third player, with two faces. As property insurance, it covers the structure of the commonly owned garage, the gate, the lighting, the ventilation and the other common equipment against fire, explosion and natural perils, and Hungarian condominium insurance conditions typically also treat vehicle impact as an insured event – whether this means impact only by an unknown vehicle or by any third-party vehicle varies by insurer. As liability insurance, it responds if the damage was caused by the condominium: for example, if the garage's outdated electrical wiring started the fire, or a badly fixed gate fell onto a car. Residents' parked cars, however, are not the condominium's property, so by default the condominium's policy does not pay for them.
A car fire: whose loss, whose liability?
The burnt-out car belongs to its owner: the damage to it is paid by the owner's casco, and without casco the owner receives compensation only if someone else is liable for the fire – the manufacturer, the workshop that serviced it or the condominium. The harder question is the other damage: the garage structure, the cables, the neighbouring cars. If the fire started in the vehicle's own systems – an electrical short circuit, the battery – liability lies on the vehicle's side. In case C-100/18 (Línea Directa), the Court of Justice of the European Union ruled in 2019 that a fire starting in the electrical system of a car that had been parked in a private garage for more than 24 hours also falls within the use of the vehicle, because parking is part of the normal use of a means of transport. The concept of use of a vehicle in Section 3 of the Gfbt. now says the same: any use of the vehicle that is consistent with its function as a means of transport. In other words, damage caused by the fire of a car standing in the garage falls under MTPL, and the condominium and the owners of the neighbouring cars can report their claims directly to the MTPL insurer of the vehicle that caught fire.
If, however, the fire was not caused by the vehicle – arson, the garage's electrical wiring, a can stored there – MTPL does not apply. The condominium claims the damage to the garage under the fire cover of its own policy, while residents' cars are left to their own casco, unless the condominium is at fault for the fire: in that case, under the general liability rule of the Hungarian Civil Code (Ptk., Section 6:519), the condominium is liable, and its building liability insurance may step in. With an unknown arsonist, everyone is left with their own property insurance. Some conditions on the market provide additional cover under the condominium's policy for fire and natural-perils damage to vehicles kept in the garage – this is typically limited per vehicle, does not cover collision or theft, and its content varies by insurer; for a building with an underground garage, it is worth asking whether the policy includes such cover and with what limit. Battery fires in electric cars and charging points are a separate question, covered in the article on EV chargers.
A car drove into the gate: a simple case – as long as the driver is known
A collision is the classic MTPL case. Under Section 28(1) of the Gfbt., the condominium reports its claim directly to the insurer of the vehicle that caused the damage; under Section 31 of the Gfbt., the insurer must provide a reasoned offer of compensation or a reasoned reply within 15 days of receiving the documents needed to settle the claim, but no later than three months after the claim was submitted. For this, the condominium needs the registration number, the driver's details, witnesses and the camera footage; whether the vehicle has valid MTPL cover can be checked by registration number in the public lookup service of MABISZ (the Hungarian insurers' association). If the gate was smashed by one of the building's own residents, from the community's point of view their car is just as much the vehicle that caused the damage, and the claim goes to their MTPL insurer.
The other route is the condominium's own policy: if the conditions cover vehicle impact, the condominium can also report the loss to its own insurer, which pays according to its conditions – subject to the deductible and the policy's valuation rules – and then, under Section 6:468 of the Civil Code, itself pursues the amount paid as a recourse claim against the party that caused the damage – in practice, against that party's MTPL insurer. The advantage is that the condominium does not have to prove liability; the disadvantage is the deductible and any depreciation deduction, which the condominium can afterwards claim from the at-fault party's MTPL insurer – this is discussed in the article on why compensation can be less than the invoice. If the driver drove off and the vehicle is unknown, the Compensation Account (Kártalanítási Számla) may step in under Sections 35–36 of the Gfbt., but its rules for property damage caused by an unknown vehicle are narrower – in such cases, the cover in the condominium's own policy for impact by an unknown vehicle is the tangible route, and the camera footage is the most important evidence.
What should the condominium manager do in the first hours and afterwards?
In the event of a fire, after notifying the fire brigade and, where necessary, the police, the most important thing is the evidence: photos of the whole level, saving the camera footage before the system overwrites it, the registration number of the burnt-out car and the owner's details, and requesting the fire brigade's certificate or the fire investigation report. The condominium should report the loss to its own insurer within the deadline in the conditions even if it expects MTPL to pay: the two routes do not exclude each other, and a delay may count against the condominium under its own policy. It is worth informing residents that they should report damage to their own cars to their casco insurer and the MTPL claim to the insurer of the vehicle that caught fire – the condominium's policy does not pay for their cars. In a collision, the order is the same: details, witnesses, footage, and reporting to the MTPL insurer and to the condominium's insurer. Before the inspection, the gate should only be secured temporarily – this is loss mitigation, which the insurer expects – and the condominium should order the permanent repair only after the inspection or with the insurer's consent. Lost income and the cost of renting replacement parking are typically not covered under Hungarian conditions, so it is worth preparing for this in advance. For all three policies, the primary route for reporting is the insurer's claims line; if the insurers point at each other, or the MTPL insurer disputes liability, I help where I can.
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Sources
- Gfbt. (Act LXII of 2009 on compulsory motor third-party liability insurance) – Section 3 definition of use of a vehicle, Section 12 scope of the insurance, Section 28(1) direct claims against the insurer, Section 31 claims settlement deadlines, Section 35 Compensation Account (Kártalanítási Számla)
- Hungarian Civil Code (Ptk., Act V of 2013) – Section 6:468 the insurer's recourse claim, Section 6:519 general liability for damage
- Court of Justice of the European Union – judgment in Case C-100/18 Línea Directa Aseguradora v Segurcaixa (20 June 2019), press release: the fire of a vehicle parked in a garage is part of the use of the vehicle
- Colonnade Atlasz Társasház Biztosítás (condominium insurance) – policy conditions (fire and natural perils insurance for vehicles kept in the garage as additional cover) – an example of a market policy wording
