In a case initiated by traffic accident with an underage driver and resulted in years of litigation, the Court of Appeal put a definitive end to the claims of an insurance company to recover compensation it paid out of court, ruling that without a court decision on liability and without clear contractual terms, the cost cannot be passed on to the insured. In particular, the Court of Appeal unanimously rejected an appeal by an insurance company, validating the first instance decision that rejected a lawsuit to recover compensation amounting to €18,521.
The case goes back to September 21, 2010, when underage he drove his mother’s motorcycle in Paralimni without a license and was involved in a traffic accident, also injuring a minor pedestrian. The motorcycle was insured for third party liability, however the driver was not included among the authorized users.
OR insurance companyciting a legal obligation to cover the injured party’s claim under the Motor Vehicles Act, settled out of court, paying compensation. At the same time, he maintained the position that was entitled to recover the amount from the insured mother of the minorwhich however denied both responsibility and payment of any amount.
Subsequently, the company filed a lawsuit in the District Court of Famagusta, which was rejected in 2019. The court of first instance ruled that a basic condition for the application of the relevant law was not met, as there had not been a previous court decision determining responsibility for the accident.
Furthermore, it was found that crucial terms of the insurance policy, relied upon by the company, were not shown to have been delivered or communicated to the insured and therefore did not form part of the contract. Even if they were considered valid, the court held that they did not give the company the right to unilaterally impose an out-of-court settlement and pass on the cost to the insured.
The Court of Appeal, considering nine grounds of appeal, dismissed all of the company’s claims. He held that there was no error in the evaluation of the testimony nor in the interpretation of the terms of the insurance policy. Particular importance was attached to the fact that the insured had categorically denied any responsibility from the beginningcompletely differentiated from the attitude of the company.
The court emphasized that an insurance company cannot act as a “judge” on issues of liability and compensation when there is a dispute with the insured, stressing that such disputes must be resolved judicially. At the same time, he reiterated that the obligation to compensate a third party under the law requires the existence of a court decision.
Allegations of erroneous interim rulings were also rejected, with the Court of Appeals agreeing that testimony regarding the circumstances of the accident and the physical injuries of the injured person was irrelevant to the subject matter of the action, which was limited to the recovery of an amount already paid.
Ultimately, the Court of Appeal fully upheld the first instance decision, awarding costs of €2,400 plus VAT in favor of the appellant.
