Judgment of District Court in Cracow, IV Economic Department

30 November 2007

Case No. GC 687/06/S

Insurance contract concering liability for injuries suffered by a third party

1. As a result from insuranace contract covering liability for injuries and property damage done to others, insurance company is obliged to cover damages done to third party by the driver (art. 822 of Civil Code). According to art. 4 of Compulsory Insurance, Guarantee Fund Insurance and Polish Office of Car Insurance Companies Act insurance against liability for injuries and property damages done to others covers losses incurred as a result of traffic accidents.

Right of an injured party to claim for damages

2. If the loss arises from the fact, that the third party incurred costs of repair, third party is entitled to claim for recovery of the costs.

Lessee's claim against the tortfeasor

3. If the possessor of the car is a lessee, he is entitled to use the car and keep it in good state in particular by proper maintenance and ordering repairs. As the possessor as a lessee is obliged to order repairs and incurs the costs, he is entitled to claim and sustain other's claim for damages.

Damages and VAT

4. According to VAT regulations business is entitled to recover input VAT to the extent that the input VAT is attributable to (that is, used to make) its taxable outputs.

Damages for loss incurred by VAT payer as a result from damage to the property, assessed according to the price, do not cover the input VAT included in the price in the extent that the input VAT is attributable to (that is, used to make) its taxable outputs. That is, if the input VAT may be lowered by the output VAT, tax-payer may recover only net price.

In case of the injured is not the VAT payer, damages shall cover the gross price.