Guarantee Fund for Compulsory Damage Insurance (FGAO, France)
A fund that compensates victims when the person responsible for damage falling under compulsory insurance is uninsured, unidentified or whose insurer has failed, the safety net of compulsory insurance.
The guarantee fund for compulsory damage insurance is the successor to the motor guarantee fund created in 1951, whose mission was broadened and name changed in 2003. It compensates victims of road accidents caused by an uninsured or unidentified driver, and certain victims of hunting accidents or accidents caused by wild animals. It also steps in when an insurer writing compulsory damage insurance fails, so that insureds and victims do not lose their compensation, a role that proved decisive after the failure of several foreign construction insurers operating in France under freedom of services. It is funded mainly by a levy on motor insurance contracts and by contributions from insurers and from uninsured wrongdoers, against whom it exercises recourse. For the market, the fund is a second-tier pooling mechanism: it makes all policyholders bear the cost of individual failures, whether fraud on compulsory insurance or an insurer's bankruptcy, and thereby underpins the credibility of the insurance obligation itself.
Textbook case: a pedestrian is seriously injured by a hit-and-run driver who is never identified. With no insurer to turn to, the victim is compensated for bodily injury by the fund, under the same rules as if the driver had been insured.
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