The motor insurance provider indemnifies the victim for the damage caused in an insured event on behalf of the person who caused the damage. The general bases for indemnification for damage are stipulated in the Law of Obligations Act, and the obligations of the insurer are specified in the Motor Insurance Act.
In which cases is damage indemnified?
A motor insurance event means causing damage to a third party if all of the above circumstances are present:
- the damage was caused with a vehicle that must be insured;
For example, damage caused with an ATV registered as an off-road vehicle is not a motor insurance event, as this vehicle must not be covered by motor insurance.
- the damage was caused because the vehicle was used in traffic or because of the movement or location of the vehicle;
For example, the following are not deemed to be motor insurance events:
- a crane truck is in working position (the truck’s wheels lifted from the ground and it stands on supports) and the panel hoisted with the crane becomes unfastened and falls on a passing car
- a car with its motor turned off catches fire and the fire spreads to the car next to it
- a ladder placed against a standing vehicle falls on the car next to it because goods are being loaded into the vehicle
- the damage was caused on the road or another area used for ordinary vehicle traffic;
For example, the following are not deemed to be motor insurance events if they occur:
- on a forest road where vehicle traffic is rare
- in a field used as a car park during an event
- in a fenced-off territory, e.g. in the yard of a house, the territory of a company, etc., that can be driven into after opening a gate
For example, the following are not deemed to be motor insurance events:
- events that occur in a bog where people ordinarily don’t drive
- events that occur on a frozen lake where no ice road has been opened
Irrespective of the above, the following are not deemed to be insurance events if the damage is caused:
- in the vehicle, including an aircraft or vessel, except for driving on or off a ferry providing regular service;
- in a place closed and separated for a competition, training or similar event;
For example, an event where a vehicle taking part in a race runs off the road and causes damage to someone.
Irrespective of the above, the following situations are considered insured events:
- damage is caused by a racing car driving on a public road from one race to another
- damage is caused with a service vehicle in the racing area
- damage is caused with a learning vehicle in the practice area
- in the territory of an airfield closed to public traffic;
- on a road or in another area used for ordinary vehicle traffic at a time when the area is closed to public traffic and when the vehicle with which the damage was caused is used for forestry, field or construction works or for other similar purposes and the damage is caused directly in the course of the work;
For example, when a vehicle that delivered firewood to the yard of a house drives into the house and fence when the wood is unloaded, it is deemed to be an insured event.
An event in the case of which the insurer is not required to indemnify the damage because it is precluded in the Motor Insurance Act is not deemed to be an insured event.
For example, the damage caused by a pebble on the road or another item hitting the vehicle is not indemnified. Damage is also not indemnified if it is not damage characteristic of damage caused by a vehicle as a major source of danger. See the example in the paragraph ‘What kind of damage is subject to indemnification?
If damage was caused with a vehicle and the event is not deemed to be a motor insurance event, then the person who caused the damage must indemnify the damage themselves.
What kind of damage is subject to indemnification?
For example, a motor insurance provider will indemnify:
- the destruction and damage of the victim’s vehicle;
- the restoration or replacement of a damaged building, fence, traffic sign or other thing;
- the costs incurred to prevent or reduce damage;
- the costs incurred to obtain the indemnity or determine the damage if getting the indemnity without incurring such costs would have been impossible;
- the medical expenses of the victim, incl. nursing care and cost of medicines;
- the decrease in income caused by the victim’s incapacity for work;
- the loss of maintenance support by a person dependent on the victim who was killed;
- the damage caused by an increase in the needs of the victim, such as the expenses of medical aids (glasses, prostheses, wheelchair, etc.), carers, etc.
- non-material damage;
For example, the insurer indemnified non-material damage if a person sustained a serious bodily injury as a result of an insurance event.
- decrease in the value of the vehicle.
The decrease in the value of the vehicle is indemnified as an exception only if the damage sustained by the vehicle is significant.
In addition to the above, the insurer indemnifies for the cost of treatment of the driver who caused the insurance event in a medical establishment.
Irrespective of the above, the insurer will not indemnify the following:
- damage that exceeds the sum insured;
- damage caused by a pebble on the road or another item hitting the vehicle;
- loss arising from damage or destruction of cash, securities, works of art and items of precious metal, except for personal commodities;
- damage caused by the deterioration of the quality of the environment, except for the reasonable costs associated with primary rescue operations for the elimination of primary damage and preventing the damage from increasing;
- loss of income, except for income lost due to causing death, damage to health or a bodily injury to the extent set out in the Motor Insurance Act;
- the cost of using an equivalent item during the time the damaged item is being repaired or a new one is being acquired;
The damage specified in subsection 132 (4) of the Law of Obligations Act.
- damage caused to oneself;
- material damage caused to the owner of the vehicle driven by the possessor of the vehicle;
For example, the insurer will not indemnify the owner of the vehicle for the damage caused by the owner’s friend driving the care into a ditch, thereby damaging the vehicle.
- damage is also not indemnified if it is not damage characteristic of damage caused by a vehicle as a major source of danger, except for the damage caused to another vehicle with the vehicle’s door;
For example, damage is not indemnified if a load on a standing vehicle slips off the vehicle and causes damage to a bystander – in this case, the damage was not caused by the vehicle as a major source of danger.
- damage caused by the deterioration of future economic opportunities;
- damage caused by the decrease in the value of the damaged item, except for the decrease in the value of the vehicle;
The value of the damaged item has decreased, but irrespective of the fact that it has been well restored, its value is smaller than it would have been if the insurance event had not occurred.
- damage the prevention of which is not the objective of compliance with traffic rules, e.g. damage caused by the fact that as a result of the insurance event the person who suffered the damage is unable to perform a contract entered into with a person who was not involved in the insurance event.
The objective of compliance with traffic rules is to guarantee traffic that is undisturbed, fluent, as fast as possible, safe and causes minimal damage to the environment. In this context, protecting the health of people and preventing damage to property must be considered the objective of compliance with traffic rules.
For example, the insurer will not indemnify damage sustained by a transport company involved in the accident due to the fact that the cargo is late as a result of the insurance event and the transport company must pay the recipient of the cargo a fine because of the delay.
Only the damage caused by the insurance event is indemnified, e.g. the repair of the damage sustained by the item before the event will not be indemnified.
The insurer may reduce the indemnity considering the role of the person who suffered the damage in the occurrence of the damage or impact on the amount of the damage.
For example, when the driver breaches traffic rules and therefore causes a motor insurance event, then the insurer of the other vehicle reduces the indemnity to the person who caused the damage to zero.
For example, an insurer may reduce the indemnity if:
- the passengers does not fasten the seatbelt and as a result, sustains more injuries that they would have sustained if the seatbelt had been fastened
- a pedestrian steps on the road when the red light is on and therefore causes an insurance accident
- a bus passenger is injured because they did not hold on to the pipe and fell over when the bus braked
The person who suffered the damage can claim the damage not indemnified by the insurer from the person who caused the damage.