The Law on Compulsory Traffic Insurance (2009) has a lot of deficiencies. However, the major problem relates to the functioning of the Guarantee Fund. The complete legal fulfilment of the Guarantee Fund’s obligations is not possible under these circumstances, regardless of the fact where they are executed, in the Guarantee Fund or within the Association of the Serbian Insurers. It is necessary to set up the Guarantee Fund as a separated legal entity in line with the legal provisions as soon as possible in order to solve this situation which basically blocks the functioning of the Guarantee Fund. It is also necessary to amend the Law and Bylaws of the Association, bearing in mind that there are no legal assumptions for the Association to perform the function of the Guarantee Fund as currently until the new one is being founded. The largest problem is related to the contradiction of the transitional and final provisions which on one hand defi ne the application of the provisions eff ective up to the adoption of this Law and on the other hand abolish all legal provisions eff ective up to the adoption of this Law. In order to provide the continuity of the fulfilment of the obligations of the Guarantee Fund, the suggested solutions mostly eliminate the existing problems and provide the smooth functioning of the Guarantee Fund which has a long and successful tradition in our country.