1. Book 6 of the Civil Code: The New Non-Contractual Liability Law
The law of February 7, 2024, introducing Book 6 “Non-Contractual Liability,” gives liability law a new look. Book 6 comes into effect on January 1, 2025, and heralds the new non-contractual liability law.
Book 6 aims to modernize non-contractual liability law. The new non-contractual liability law has a significant impact on the insurance sector.
Here you can read more about one of the innovations of the new non-contractual liability law (Book 6 of the CIvil Code) that impact the insurance sector.
2. Distinction between Repairable and Irreparable Property Damage
The extracontractual liability law (Book 6 of the Civil Code) provides specific rules regarding the compensation for property damage. Article 6.38 of the Civil Code distinguishes between repairable and irreparable property damage. The question of whether depreciation should be taken into account is answered based on the case law of the Court of Cassation.
- Repairable Property Damage
In the case of damage to a property, the injured party is entitled to compensation for the repair costs. However, the compensation is limited to the amount required to replace the property with one of the same characteristics if the repair costs exceed that amount. In addition to compensation for repair costs, the injured party may also claim compensation for the depreciation of the property if the repair does not restore the property to the condition it would have been in without the fault. When determining the repair costs of the damaged property, depreciation should not be taken into account. Therefore, there is no depreciation deduction.
- Irreparable Property Damage
In the case of the destruction of the property or when repair is not possible, the injured party is entitled to compensation for the costs necessary to replace the property with one of the same characteristics that performs the same functions. When determining this compensation, depreciation must be taken into account. Therefore, there is a depreciation deduction.
3. Recent Case Law of the Court of Cassation
Article 6.38 of the Civil Code does not contain an explicit provision on depreciation deduction. In the Explanatory Memorandum, a distinction is made between repairable and irreparable property damage with reference to the case law of the Court of Cassation regarding depreciation deduction.
In a judgment of June 27, 2024, the Court of Cassation ruled that even in the case of the destruction of a property, depreciation should generally not be taken into account. However, the judgment of the Court of Cassation is framed within the old regulations regarding compensation for property damage.
The judgment of the Court of Cassation deviates from the view of the legislator when drafting Book 6 of the Civil Code. It is not excluded that the aforementioned judgment of the Court of Cassation will also retain its relevance under Article 6.38 of the Civil Code.
Liability insurers who must compensate property damage under general extracontractual liability law may now need to consider the new value for both repairable and irreparable property damage. This does not preclude property damage insurers from conventionally deviating from these compensation principles.
Amankwah Law can assist you with the settlement of claims. Amankwah Law provides legal assistance in insurance disputes and offers legal advice for insurance claims.
Contact Jeffrey Amankwah, a lawyer specializing in insurance law and liability law.