LUXEMBOURG (CN) - EU auto insurance laws do dictate compensation amounts, the Court of Justice ruled Thursday, upholding an Italian law that limits what a person can take for nonmaterial damage.
While EU laws aim to ensure that travelers are afforded proper coverage while driving vehicles throughout member states, they are not meant to "harmonize" with national laws, according to the ruling issued Thursday by the highest judicial body in the European Union.
EU laws "guarantee that the victims of accidents caused by those vehicles receive comparable treatment irrespective of where in the European Union the accident occurred," the ruling states.
At the same time, the laws "do not seek to harmonize the rules of the member states governing civil liability," the judges added.
"Member states remain free to determine, in particular, which damage caused by motor vehicles is to be compensated, the extent of such compensation and the persons who are entitled to it," the ruling continues.
The issue reached the court with a case of a 2007 fender-bender in Italy.
After Mauro Recchioni rear-ended him, Enrico Petillo won about $9,000 in damages for his injuries, plus $3,600 for nonmaterial damages, under Recchioni's insurance policy with Unipol Assicurazioni SpA.
Petillo brought proceedings before the Italian Tribunale di Tivoli, however, claiming that he should have been paid about $27,000, most of which would come from a $19,000 award of nonmaterial damages.
Italy's Private Insurance Code is based on a specific scheme to calculate nonmaterial damages suffered in traffic accidents. The scheme limits the court in deciding whether it should increase the amount awarded to one-fifth of the amount calculated under the code.
"The Private Insurance Code does not grant the court any margin of discretion to adapt its assessment to the circumstances of the case, since it is required to carry out a mere calculation, which restricts its ability to adjudicate equitably," the European Court of Justice found.
The Italian tribunal sought the EU's advice on Petillo's case, but the court explained that insurance companies in member states are required to comply with EU directives, but that specific provisions are up to national law.
"Nothing in the documents before the court indicated that the national legislation concerned does not provide for amounts in accordance with the minimum amounts set out in [EU directives]," the ruling states.
Here, Petillo was properly compensated under Italian law, and the Italian court need only decide whether to increase his award based on the country's one-fifth provision.
"It is apparent from these documents, first, that compensation is granted, secondly, that the more restrictive method of calculating that compensation is applicable only to damage arising from minor physical injuries and, lastly, that the amount resulting from that calculation is proportionate, inter alia, to the seriousness of the injuries suffered and the duration of the disability suffered," the panel concluded. "Moreover, that scheme allows the court to adjust the amount of compensation to be granted, by increasing it by up to one fifth of the calculated amount."