On September 11, 2024, a seven-judge panel of the Supreme Court of Poland issued a significant resolution in case no. III CZP 65/23 regarding the settlement of claims within the motor insurance market. The ruling addresses whether an injured party can demand compensation from the provider of third-party liability insurance of motor vehicle owners using the costing method when it’s no longer possible to repair the vehicle.
Background of the Issue
For several years, discrepancies had arisen in the case law between the Supreme Court and lower courts regarding the method of calculating compensation when a vehicle could no longer be repaired. The costing method, which estimates hypothetical repair costs, was controversial when the vehicle had been sold or repaired before compensation was obtained.
The Supreme Court’s Ruling
The Supreme Court rejected the Financial Ombudsman’s request to allow the use of the costing method in such cases. The court held that if repair is impossible, particularly if the vehicle has been sold or repaired, determining compensation based on hypothetical repair costs is not warranted. The ruling marked a departure from the prevailing line of jurisprudence, citing that using the costing method in these cases could enrich the injured party beyond what they actually lost.
Key Points of the Ruling
- The court ruled that injured parties who sell or repair their vehicle before obtaining compensation can only expect compensation calculated according to actual costs incurred.
- The differential method, comparing the vehicle’s state before and after the accident, is to be used instead of the costing method when repair is not possible.
- The decision is considered positive for motor insurers as it may reduce claims under third-party liability insurance.
Impact on the Motor Insurance Market
This resolution represents a significant change in jurisprudence and practice regarding compensation settlements. While it may make the motor insurance market more attractive to insurers, it could potentially impact claimants who previously benefited from the costing method. The ruling aligns with the principle of not enriching the injured party beyond their actual loss, as stated in the Civil Code.
Expert Commentary
According to Mateusz Kosiorowski and Anna Szczęsna from Wardyński & Partners, this resolution clarifies the discrepancies in case law and may reduce claims under third-party liability insurance, benefiting insurers. The authors note that while the Financial Ombudsman had concerns about the impact on claimants, the Supreme Court’s decision prevents potential enrichment of claimants at the expense of insurers.
