After a traffic accident, the injured party’s first counterpart is often the other party’s compulsory motor third-party liability (traffic) insurer. Highway Traffic Law No. 2918 subjects this relationship to special rules intended to enable the injured party to obtain compensation quickly.

Mandatory prior application to the insurer

An injured party relying on compulsory motor third-party liability insurance must apply in writing to the relevant insurance company before bringing an action or applying for arbitration. If the insurer fails to respond within fifteen days of the application, or rejects the claim in whole or in part, the injured party may proceed to litigation or arbitration.

It is important that the application be complete: the accident report, the vehicle registration certificate and driving licence, photographs of the damage, the expert appraisal report and, in the case of bodily injury, medical documents should be attached to the application.

Litigation or arbitration?

The injured party may bring an action against the insurance company before the ordinary courts or apply to the Insurance Arbitration Commission. As a rule, arbitration makes it possible to obtain a result in a shorter time. In disputes below a certain amount, the decisions of the arbitral panel are final; decisions above that threshold are open to objection and appeal. As the monetary thresholds are updated every year, the amounts applicable on the date of application should be checked.

Compensable losses

The heads of loss most frequently encountered in practice are as follows:

• Vehicle damage: The cost of repair or, in the case of a total loss, the market value of the vehicle.
• Diminution in value: The loss in value suffered by the repaired vehicle on the second-hand market.
• Loss of earnings and replacement vehicle costs: Losses incurred during the period in which the vehicle is under repair. Whether these heads of loss fall within the cover of traffic insurance should be assessed separately.
• Bodily injury: Medical expenses, compensation for temporary and permanent incapacity for work and, in the event of death, compensation for loss of support.

The insurer’s liability is limited to the policy limits. For losses exceeding the limit, a separate claim may be made against the driver at fault and the keeper of the vehicle. Compensation for non-pecuniary damage, however, falls outside the cover of traffic insurance and is claimed directly from those liable.

Limitation periods

Compensation claims arising from motor vehicle accidents become time-barred two years from the date on which the injured party learns of the damage and of the person liable to pay compensation and, in any event, ten years from the date of the accident. If the compensation arises from a punishable act and criminal law provides for a longer limitation period, that longer period applies.

Assessment

In traffic accident compensation, most losses of rights stem from incomplete prior applications and missed time limits. Filling in the accident report correctly at the time of the accident and gathering evidence in good time form the basis of every subsequent stage.