Let's start with an example that will clearly illustrate the situation in which thousands of drivers have found themselves in recent years when trying to obtain compensation from third party liability insurance. The victim of a car accident towed the damaged vehicle to a selected workshop and reported the damage to the perpetrator's liability insurance company. The next day, the insurer ordered a repair cost estimate and informed the injured party that the car could be repaired at a workshop of their choice or in the insurer's partner network. Because the injured party had confidence in his workshop and did not want to waste time transporting the vehicle elsewhere and wait for an available date in the partner network, he decided to repair the car in a place of his choice.
After repairing the vehicle, however, he received a decision from the insurer in which the compensation was reduced by 20% because, according to the insurer, the damage could be repaired cheaper in its partner network.
Can accident victims count on recovering money for repairing a damaged vehicle?
Rules determining compensation
According to the principle of full compensation, third party liability insurance benefits should correspond to the amount of the entire damage, in other words, restore the injured party's property to its pre-accident condition. At the same time, compensation cannot enrich the injured party. The injured party is also obliged to minimize the damage and cooperate with the insurer. Nevertheless, the injured party has the right to choose the method of redressing the damage.
Damage to the vehicle occurs at the moment of the accident, so the obligation to repair it arises at the time of the collision, and not at the time of payment for the repair. You are entitled to compensation even if the injured party decides not to repair the vehicle at all.
Insurers offer the opportunity to use the so-called non-cash loss settlement – the injured party can repair the vehicle in one of the workshops cooperating with the insurer within the partner network or purchase parts from a distributor cooperating with the insurer. Due to the size of its business, the insurer obtains better prices, rebates or discounts from workshops that would not be offered to the injured party if he ordered the repair on his own.
If the injured party decides not to use the insurer's repair shop, the insurer often reduces the compensation by the amount of the discount that would be available in the partner network. Is such action by insurers legal? After all, the injured party has the right to choose the method of repair.
The case law so far has been inconsistent, therefore the Financial Ombudsman, Dr. Bohdan Pretkel, submitted a request to the Supreme Court to decide whether it is permissible to take into account the so-called insurer discounts from partner networks.
Situation one: the vehicle has already been repaired or the injured party has agreed to pay the costs
On May 8, 2024, the Supreme Court, an enlarged panel of seven judges, issued a resolution distinguishing between two types of cases. The first concerns a situation in which the injured party has already incurred the costs of repairing the vehicle or has undertaken to bear them. Then the insurer should pay compensation equal to the costs incurred by the injured party without reducing it by discounts from its partner network. The benefit may be reduced only if the repair costs would be obviously unjustified, e.g. significantly higher than the standard prices available on the market.
The obligation to bear the costs of repairing the vehicle results from the contract. It can also be concluded orally if the parties agree on at least the most important provisions – in this case, the price and scope of repair.
Situation two: compensation before repair and before the obligation to pay
If the injured party has not yet incurred the costs of repairing the vehicle or has not undertaken to bear them, the amount of compensation from third party liability insurance, according to the Supreme Court, should correspond to the average repair costs on the local market, taking into account the reliefs and rebates available to the injured party. However, compensation should not be reduced by the amount of discounts available in the insurer's partner network if such a repair would be opposed to the legitimate interest of the injured party.
The operative part of the resolution does not indicate what the legitimate interest of the injured party may consist in, but it seems that it is possible to point out situations that arise in practice:
– the injured party has a justified desire to repair the vehicle in a trusted, proven workshop,
– a workshop from a partner network does not guarantee proper repair,
– repair in a partner network would be burdensome for the injured party, e.g. due to the considerable distance from his place of residence or long repair deadlines.
Summary
In the opinion of the Financial Ombudsman, the latest resolution of the Supreme Court will have a positive impact on the situation of injured parties, expanding the choice regarding the method of claim settlement and strengthening the position of injured parties towards insurance companies. Victims will be able to rely on its content in disputes with the insurer when the insurer abuses its position by imposing the choice of a repair shop or reducing compensation by the amount of discounts that are unrealistic to obtain.
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