Car Accident Aftermath: Insured's Right to Loss of Use Compensation
An auto accident not only damaging your set of wheels but also causing a disruption to your daily activities. The big question is, are you entitled to receive financial aid for the time your vehicle is out of commission? This sum is often referred to as loss of use compensation. Unraveling the length of the payout period, however, is another debate altogether. A landmark court ruling shed some light on these matters.
When a car crashes, the insurance might bear the cost of fixing it or provide a rental vehicle while repairs are underway.
A court case heard by the Higher Regional Court (OLG) in Oldenburg, Germany, further clarified these aspects. The court verdict indicated that the insurer should pay for the loss of use, specifically for 148 days, even if the driver initially opted for a rental car from the insurer and later returned it voluntarily (Case No.: 1 U 173/22).
The Nuts and Bolts of the Case
In this incident, a driver involved in an accident that wasn't their fault found their insurer reluctant to provide loss of use compensation for 148 days. The reasons provided by the insurer: They had covered rental car expenses initially, but since the aggravated party willingly returned the vehicle, the intent to use it wasn't evident. The matter landed in court.
The Argument for Insurance Coverage
The OLG Oldenburg ruled in favor of the plaintiff. The driver faced numerous challenges while using the rental car, from harassment by the rental company during work hours to the absence of a trailer hitch. Consequently, he had to resort to borrowing vehicles from family members.
After seeking legal counsel, he learned that he could receive a flat-rate compensation for loss of use instead. As a result, he returned the rental car. The plaintiff provided documented evidence to show that he still required a vehicle and had been borrowing one from relatives.
Moreover, he submitted the repair order immediately after getting the go-ahead. This demonstrated that the plaintiff had the intent to use the vehicle. Since the plaintiff had intended to use the vehicle, the insurer was obligated to pay for the complete loss of use, regardless of the driver returning the rental car later.
The insurer's decision to stop providing loss of use compensation for 148 days was challenged due to the driver renting but needing to return the rental car due to inconvenience. Despite returning the rental car, the driver continued to require a vehicle and proved it by borrowing from relatives. Ultimately, the court ruled that the insurance company must cover the expenses incurred due to the car being unavailable for use during the repair period. The driver's car, a vital means of transportation, was in the workshop due to the accident.
Further Reads:
Additional Insights:
- The specifics of insurance obligations for loss of use compensation after a car accident, as decided by the Higher Regional Court (OLG) in Oldenburg, Germany, in case no. 1 U 173/22, aren't addressed in the given sources. Nevertheless, basic principles of German insurance law and compensation for car accidents can be inferred.
- For comprehensive understanding of the court's ruling, it's essential to consult the court's decision directly or seek legal advice from an attorney specializing in German insurance law.
- German Insurance System: Accident claims in Germany are governed by the statutory accident insurance system, outlined in Book VII of the German Social Code (SGB VII).
- Liability Insurance: Liability insurance in Germany covers damages inflicted on third parties, including property damage and financial losses, but does not cover damage to the insured's own property or damages related to work, workplace, or company activities.
- Loss of Use Compensation: Loss of use compensation is usually covered under liability insurance policies and is intended to reimburse the victim for the loss of use of their vehicle due to the accident. The amount of compensation depends on the specific circumstances of the accident and the policy terms.
