Understanding Compulsory Traffic Insurance: Key Differences Between Recourse and Subrogation in Traffic Accident Claims

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In the complex world of traffic accident claims, understanding the nuances of compulsory traffic insurance is essential for both legal professionals and policyholders. This article delves into the critical distinctions between recourse and subrogation, providing a comprehensive overview of the legal framework governing compensation for damages arising from traffic accidents. By exploring current issues, potential plaintiffs and defendants, and the intricacies of litigation, we aim to shed light on the often-confusing landscape of motor third-party liability insurance.

Compensation for Damage in Traffic Accidents: Understanding the Legal Framework

Difference between Recourse and Subrogation Explained

This article stems from the need to address current issues related to compensation claims arising from the realization of an insured event from motor third-party liability insurance, about which jurisprudence does not have a unanimous stance. The offered answers as solutions to the posed legal dilemmas aim to highlight possible perspectives in resolving current problems in litigation with the asserted legal protection compensation claims, as well as recourse lawsuits from motor third-party liability insurance.

Defining Parties in Traffic Accident Compensation Claims

When damage occurs, both material and non-material, in a traffic accident most often due to the use of two moving motor vehicles, the first question that arises is the definition of the parties to the litigation, i.e., who can be actively and passively legitimized, then it is necessary to clearly determine the subject matter of the dispute, where compensation claims and recourse lawsuits are most often involved, and then it is necessary to apply the rules on the burden of proof when evidence proposals are highlighted and it is decided which evidence will be presented during the proceedings, which greatly affects the principle of economy, but also the substantive decision. In addition, during the entire process, it is necessary to ensure that the boundaries of legal protection set by the petitum are respected, i.e., that the court does not exceed the claim.

Litigation Arising from Insured Events: Potential Plaintiffs and Defendants

In litigation arising from the realization of an insured event from motor third-party liability insurance, the potential plaintiff can be the insurers of the policyholders who participated in the accident as holders of dangerous things, and often there can also be a third injured party whose material or personal property was damaged in the harmful event, and who has filed a lawsuit seeking adequate compensation.

Determining the Subject Matter of Traffic Accident Lawsuits

The subject matter of the dispute that needs to be determined in the content of the lawsuit varies depending on the factual description of the event in the lawsuit report and the legal basis set, which the court is not bound by. In other words, the nature of the factual situation and its fitting into an adequate legal norm determines what will be discussed before the court, what the evidence will focus on, and which evidence proposals the court will adopt.

Understanding Recourse Claims in Traffic Accident Insurance

Thus, in recourse lawsuits, the plaintiff is usually the insurance company suing its policyholder, and its recourse claim will be based on the loss of the policyholder’s right to insurance coverage, which is why the insurer has the right to recover the previously paid compensation amount from its policyholder precisely due to the loss of insurance coverage by his fault. Therefore, recourse involves the right of the insurance company to claim from its policyholder what it has paid to the third injured party as compensation for the incurred damage.

Causes of Loss of Insurance Coverage Rights

The loss of the policyholder’s right to insurance coverage primarily occurs due to certain omissions by the policyholder or the driver of the insured vehicle, such as leaving the scene after the occurrence of a traffic accident and not leaving personal data and insurance information, driving under the influence of alcohol or drugs, and not possessing an adequate driving license. All these cases of loss of insurance rights do not affect the right of the third injured party to compensation for damage, and they are regulated by Article 29 of the Law on Compulsory Traffic Insurance (“Official Gazette of RS”, No. 51/2009, 78/2011, 101/2011, 93/2012, and 7/2013 – Constitutional Court decision). However, it should be noted that these statutory conditions for the loss of policyholder rights from insurance are often also part of the insurance conditions prescribed by insurance companies and are, therefore, part of the insurance policy, which the policyholder has accepted by signing the policy as evidence of the existence of a compulsory motor third-party liability insurance contract.

Contractual Liability in Recourse Lawsuits

Therefore, in such a recourse lawsuit, if the defendant is the policyholder of the insurance company as the plaintiff, it is a matter of contractual liability, arising from the non-compliance with the prescribed and accepted insurance conditions for the validity of insurance coverage by the policyholder, and considering the legal nature of contractual liability, it is a matter of subjective liability based on presumed fault. The existence of the policyholder’s fault, given the above, is assessed according to whether the policyholder has complied with the insurance conditions or not, i.e., whether the policyholder acted in accordance with the insurance conditions he accepted. If the policyholder acted contrary to the insurance conditions, such as leaving the scene, driving under the influence of intoxicants, or not having a driving license, which are the most frequent cases, the insurance company has the right to recover the previously paid amount of (non-)material damage to the injured party in the traffic accident in which its policyholder participated, which also represents the loss of insurance rights.

Proving Absence of Fault in Traffic Accident Recourse Lawsuits

Therefore, the policyholder proves that he is not at fault, but only in relation to his insurance, which, in the context of the relationship between the insurance and the policyholder, given the previously defined presumption of fault, means that the policyholder must prove that he remained at the scene, considering that the most common reason for leaving the scene is to avoid an alcohol test, that he was sober, etc. In practice, it is most often proposed by the defendant policyholder in recourse lawsuits in the relationship between the insurance company and the policyholder to conduct a traffic technical expertise on the circumstances of the participants’ behavior in the traffic accident, their omissions, and contributions, which practically means questioning the lawsuit allegations about leaving the scene, potential intoxication, as well as whether alcohol was the cause of the accident.

Addressing Specifics of Recourse Lawsuits and Compensation Claims

At this point, it can be questioned whether this is doubtful if we take into account the previously mentioned specifics of recourse lawsuits, where it is true that recourse arises from the previously paid damage by the policyholder’s insurance to the third injured party, when a compensation claim was directly filed with the insurance usually in an out-of-court dispute, considering that in this case it is not a matter of non-contractual liability directly to the injured party because here the plaintiff is the policyholder’s insurance, and the basis for the success of the recourse lawsuit is the loss of the right to insurance coverage due to the policyholder’s fault. In such a situation, the issue of the policyholder’s liability to the insurance company according to the general rules of civil liability for damage compensation has already been considered in relation to the relationship between the third injured party and the policyholder’s insurance company, which would not have paid the damage to the injured party if its policyholder was not responsible for the subject accident, and therefore the issue of recourse would not arise. In other words, the issue of the policyholder’s liability has already been resolved in the out-of-court proceedings when the insurance, considering that its policyholder is responsible according to the general rules of damage compensation law for the damage caused to the third injured party.

Non-Contractual Liability and Personal Subrogation in Insurance Claims

Non-contractual liability, in the context of this discussion, is inherent in lawsuits initiated by the lawsuits of third injured parties against the insurance of the policyholder who caused the damage – caused the accident by his fault, and the insurance defends itself by proving the absence of fault, i.e., omissions of its policyholder, as the obligation to pay such damage to the third party rests with the insurance only if its policyholder is responsible for the incurred accident, which will be proved precisely by traffic technical expertise and then the subject matter of the dispute is defined as damage compensation. Truth be told, it is not uncommon in such lawsuits to jointly sue the insurance company and the policyholder. Also, the rules of non-contractual liability for damage are applied in cases of statutory personal subrogation when the insurance has paid the damage to its policyholder who was damaged in a traffic accident caused by a third party, and by the force of law, all the rights of the policyholder towards the party responsible for the damage transfer to the insurer, which is regulated by Article 939 of the Law on Obligations (“Official Gazette of SFRY”, No. 29/78, 39/85, 45/89 – USJ decision and 57/89, “Official Gazette of FRY”, No. 31/93, “Official Gazette of SCG”, No. 1/2003 – Constitutional Charter and “Official Gazette of RS”, No. 18/2020), and this is the only case of statutory personal subrogation in our insurance matters, where the subject matter of the dispute is also defined as damage. In such situations, the third party proves that it is not responsible for the accident, which in the case of objective liability, in the case of damage caused by the use of dangerous things, is proved by the existence of conditions from Article 177 of the Law on Obligations, and it is most often a matter of proving the existence of damage caused exclusively by the actions of the injured party or a third party, which again indicates the need for traffic technical expertise.

Key Differences Between Recourse and Personal Subrogation

Therefore, the difference between recourse and personal subrogation lies in the different definitions of these two institutes, as well as the basis from which they originate. In other words, personal subrogation is a change of creditors in an obligation relationship, which means that all the creditor’s rights towards the debtor transfer to the payer of the claim, while recourse should be narrowly viewed as the right to recover what was previously paid, and the recovery itself refers to the reimbursement of the paid damage under the highlighted conditions. Also, personal subrogation is based on the law here, and our legislator only mentions the aforementioned case from Article 939 of the Law on Obligations as a case of statutory personal subrogation in the context of insurance, and it should not extend to cases of personal subrogation that are not legally defined in this matter, while the recourse right is a derived right and is usually based on a contract.

Burden of Proof in Recourse Lawsuits: Practical Implications

Given the above, and in terms of the burden of proof, in recourse lawsuits, the proof of absence of fault would imply staying at the scene or neuropsychiatric expertise on the degree of intoxication, and whether it was above the legally allowed limit, while, of course, the amount of previously paid damage by the insurance could also be disputed, which would be done by proposing mechanical expertise if it is a matter of material damage or medical expertise if it is a matter of non-material damage. The determination of the policyholder’s liability for the damage from which the recourse claim arose, as if it were a matter of non-contractual liability, should generally be resolved as a preliminary issue in the dispute from the relationship between the insurance and the third injured party. Considering the policyholder’s liability for the damage he caused to the third party in the recourse lawsuit as a preliminary issue is questionable from the standpoint of the definition and effect of the decision on resolving the same, as it must relate to resolving the existence or non-existence of some right or legal relationship that has not yet been decided, but logically this legal relationship should encompass the relationship between the specific parties in the dispute, not third parties who are not participants in the recourse lawsuit. If the policyholder’s liability is determined in the recourse lawsuit according to the general rules of civil law, it would also concern the third injured party to whom the policyholder’s liability is favorable, but who is not a party in the recourse lawsuit. On the other hand, it also raises a new issue of exceeding the lawsuit claim and potentially going beyond the boundaries of legal protection set by the petitum.

Legal Distinctions and Litigation Challenges in Traffic Accident Claims

The purpose of the above is to highlight the distinction between seemingly similar institutes of recourse and subrogation, as well as to address the specifics of recourse lawsuits and those where compensation claims from motor third-party liability insurance are asserted, and to problematize the above situations from different angles of view, on which practice does not have a uniform view and unanimous answer. What the solution to the existing problems will be and whether a unanimous stance will be formed remains an open question that will be answered by the practice of both first-instance and second-instance courts in further decision-making.

In conclusion, navigating the complexities of compulsory traffic insurance requires a clear understanding of the differences between recourse and subrogation, as well as the various legal implications of each. As courts continue to address these issues, the need for a consistent approach to resolving compensation claims remains paramount. By grasping the fundamental principles outlined in this article, legal professionals and policyholders alike can better navigate the challenges of traffic accident claims, ensuring a fair and just outcome for all parties involved.

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