Compensation Payments by Insurers
10th April 2025
Insurers cannot control the use of funds in making compensation payments, states the insurance ombudsman.
In a recent case reported by the French insurance ombudsman, the Médiateur de l’Assurance, the victim of a road accident had declared her claim, invoking the civil liability of the driver found responsible for the collision.
The insurer had the vehicle appraised by an expert, who estimated the cost of repairs to be €2,700.
However, to the surprise of the claimant, the insurance company paid compensation of only €1,030, stating that it had taken into account that she was not proposing to carry out the repairs. The insurer advised her that provided she finally decided to restore her car, the indemnity would be paid in full.
The claimant contested the decision using the insurers internal appeal process, but her claim was once again rejected on the grounds that she was not proposing to proceed with the repairs.
She then referred the matter to the insurance ombudsman, who found in her favour, on the grounds that an insurer cannot set any conditions as to the use of the funds. In civil liability, the victim of damage does not have to provide supporting invoices.
In coming to his decision the ombudsman drew on case law which had established that there is no obligation on the insured to repair the damage suffered or to justify it and "the principle of full compensation does not imply control over the use of funds allocated to the victim, who retains their free use.”
The victim "does not have to justify the use of it and can give up repairing or replacing the damaged property, without this being able to reduce their compensation," stated Arnaud Chneiweiss, the ombudsman, before inviting the insurer to pay the additional compensation to the driver who had referred the matter to him.
The insurer accepted the mediator's proposal for a solution and paid the balance of the compensation.
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