Is motor insurance mandatory?
Yes: it's mandatory — every vehicle that can circulate must carry third-party liability insurance. The basis is DL 291/2007, reformed by DL 26/2025 (transposing the EU directive). The insurance covers damage caused to third parties, with minimum cover of €6,450,000 for bodily injury and €1,300,000 for property per accident. The obligation now extends to new categories (certain micromobility vehicles). When the responsible party is uninsured or unidentified, the Motor Guarantee Fund (FGA) pays the victim and then recovers from the responsible party. The ASF supervises. There's no "occasional use" exemption. In short: yes, always mandatory.
📋 The rules
- Mandatory for every vehicle that can circulate
- Minimum cover: €6.45M (bodily) / €1.3M (property)
- Covers third-party damage (civil liability)
- Uninsured/unidentified responsible: the FGA pays
- ASF supervises; no occasional-use exemption
🔓 Exceptions
- State/public-entity vehicles may be self-insured
- The FGA pays the victim, but recovers from the uninsured driver
- Foreign vehicles: covered by the green-card system
⚠️ Penalties & fines
Driving uninsured is a serious offence: a fine of €500 to €2,500, with seizure of the vehicle and its document and a possible driving ban. Beyond the fine, an uninsured driver responsible for an accident pays out of pocket all third-party damage and also reimburses the FGA. Beware a myth from Brazil: in Portugal there's no state insurance paid via tax (like the former DPVAT). You must buy a private policy; the IUC (tax) doesn't include insurance, and the FGA is a fallback fund, not a policy. To stay compliant: take out and keep active the liability policy before putting the vehicle on the road.
📎 Official sources
❓ Frequently asked
Is motor insurance really mandatory?
Yes. In Portugal, every motor vehicle that can circulate must have valid liability insurance before use, even if it's rarely driven. There's no occasional-use exemption. The insurance is meant to cover damage caused to third parties in an accident, and its absence is a serious offence.
What's the minimum cover?
The mandatory minimum cover is €6,450,000 for bodily injury and €1,300,000 for property damage, per accident, regardless of the number of victims. These figures come from the 2025 reform and are periodically reviewed. Insurers may offer higher and additional cover, such as own damage.
What happens if I drive uninsured?
Driving uninsured is a serious offence, fined €500 to €2,500, with seizure of the vehicle and its document, and there can be a driving ban. In addition, if you cause an accident, you personally pay the third-party damage and also reimburse the Motor Guarantee Fund.
Who pays if the other driver is uninsured?
If the person responsible for the accident is uninsured, unidentified or their insurer is insolvent, the Motor Guarantee Fund compensates the victim. Then the Fund exercises its right of recovery, charging the amount to the uninsured driver. So going uninsured doesn't avoid liability, it only worsens it.
Does the car tax already include insurance?
No. Contrary to what many think, the Single Circulation Tax doesn't include any insurance. Liability insurance is a private policy you must take out separately, with an insurer. The idea of a state insurance paid via tax corresponds to Brazil's former DPVAT, which doesn't exist in Portugal.
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