EU Insurance Must Pay for Emotional Suffering

(CN) - Auto insurance companies must pay damages for emotional suffering of family members of accident victims, where allowed by member-state law, the European Union's high court ruled Thursday.

European law requires drivers to carry auto insurance; each member state is allowed to decide what damages are covered. Insurance policies carry minimum policy limits of $1.4 million per victim or $6.9 million per claim.

But two cases, from the Czech Republic and Latvia, questioned whether national law can compel insurance companies to cover the nonmaterial, emotional and psychological damages of the families of car crash victims.

The wife and daughter of a man killed in a car accident in the Czech Republic sued a Slovakian car owner's insurance company after it refused their demands for survivor benefits.

The company claimed that while Czech insurance law may cover nonmaterial damages, Slovakian law - and presumably the Slovakian owner's policy - did not.

In Latvia, a 10-year-old whose parents were killed in a car accident sued after an insurance company rejected his guardian's demand for $393,000 for emotional suffering.

Latvian law allows for nonmaterial damages, but it limits the amount to less than $200 per victim.

Both courts asked the Court of Justice of the European Union whether the EU's mandatory auto insurance law, or national law, controls the issue of psychological damages paid to the families of car crash victims.

In ruling on the Czech case, the Luxembourg-based court reiterated that while member states can decide what civil liabilities are covered, EU insurance law requires coverage of personal injury - which can include psychological and emotional injuries - stemming from the death of a spouse and father.

"The notion of 'personal injuries' covers any type of damage, in so far as compensation for such damage is provided for as part of the civil liability of the insured under the national law applicable in the dispute, resulting from an injury to physical integrity, which includes both physical and psychological suffering," the court wrote.

This is the case regardless of whether Czech or Slovakian insurance law is used, according to the justices.

"It cannot be concluded from any part of the three EU directives that the European legislature wished to restrict the protection ensured by those directives exclusively to persons directly involved in an event causing harm," the court wrote. "Consequently, the member states are required to ensure that compensation payable, under their national civil liability law, for nonmaterial harm suffered by the next of kin of victims of road traffic accidents are covered by compulsory insurance of at least the minimum amounts laid down in EU law."

The court reiterated that finding in the Latvian case, adding that minimum policy limits required under EU law superseded the paltry $200 nonmaterial limits called for by Latvian law.

"If the national legislatures were free to lay down through legislation maximum amounts, for each of the specific categories of damage identified, to be guaranteed which are lower than the minimum amounts laid down by EU law, the EU minimum amounts and, consequently, the directive itself would be deprived of their effectiveness," the court concluded.

The court remanded both cases to their national courts for resolution.

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