What if a car or machine is a total loss after an accident? Should depreciation or age still reduce the compensation? Until recently, the answer seemed obvious. But not anymore.
The introduction of Book 6 of the Belgian Civil Code already marked a turning point. And since the judgment of the Belgian Supreme Court (Cour de cassation) on 27 June 2024, the shift is complete. The traditional deduction for depreciation (“vetusteit”) is no longer self-evident — and this has practical implications for claims and compensation strategies.
What is depreciation, and when was it traditionally applied?
In cases of property damage, a distinction is made between:
- Repairable damage: the item (e.g., a vehicle or building) can be restored.
- Irreparable damage: the item is destroyed and must be replaced entirely.
In the past, irreparable damage often led to a deduction for depreciation: the older or more worn the item was, the lower the compensation. The aim was to prevent the injured party from being better off after the incident than before.
This approach was supported by traditional case law from the Belgian Supreme Court and by the Explanatory Memorandum to Article 6.38 of Book 6 Civil Code.
What changed with the Supreme Court’s judgment of 27 June 2024?
In this judgment, the Court took a clear position:
Even in cases of total loss, a deduction for depreciation should generally not be applied.
In other words: the traditional distinction between repairable and irreparable property damage is being reconsidered. Even in total loss situations, full replacement value may be owed — without any reduction for age or wear.
This interpretation disrupts the previously established balance and opens the door to a new approach to compensation in liability law.
What does this mean in practice?
This is an important evolution for claims handlers, insurers and their legal advisors to monitor:
- The deduction for depreciation is no longer a given.
- Even when a property is completely destroyed, it is no longer obvious that compensation can be reduced based on age.
- A tension arises between the Court’s interpretation and the Explanatory Memorandum to Book 6 Civil Code.
Depending on how this jurisprudence develops, it may also influence how claims are assessed and potentially how insurance premiums are calculated.
Questions about this development?
Do you have questions about how this ruling should be interpreted in ongoing or future claims?
Feel free to contact me for further clarification.