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A SIGNIFICANT BREAKTHROUGH IN TRAFFIC LAW IN SPAIN. THE NEW SCALE OF INDEMNITY

After 4 years of preparatory works, a Commission of experts made up by representatives of the insurance sector and associations of victims of road accidents, agreed on a new system for the evaluation of damages.

Comunication Bureau

Date 11/05/2015

The new system, presented as a bill by the Spanish Government on the 10th of April 2015, is going to be passed by the Parliament during this legislature. The key idea is to guarantee the basic principle of legal liability: the principle of integral repair.

The Spanish Minister of Justice has declared that on average the compensation for death will be increased by 50% and for permanent injuries by 35%. This means that convergence towards European indemnity levels will be achieved at last.

In Spain, from 1995, the evaluation of the indemnity for damages suffered by the victims of traffic accidents has to be quantified in accordance with the "System for the Evaluation of Damages caused to Persons in Traffic Accidents" published in the Annex of the Law on Legal Liability and Insurance for the Use of Motor Vehicles (approved by Royal Decree 8/2004, of 29th October) and commonly known as the scale of indemnity ("Baremo").

This evaluation system is articulated by means of tables which show the concepts and amounts to be awarded.

However, after 20 years, it became apparent that such a regulation does not comply with the overarching objective of integral compensation.

The main characteristics of the new system are as follows:

1) The reform updates the previous scale of indemnity to the current social and economic reality to promote more out-of-court settlements.

2) The list of the lifetime effect of the injuries ("secuelas") has been adapted to the current scientific discoveries.

3) Severe injured people who become dependant on others get a more substantial compensation, which includes future costs, for instance, expenses to be incurred to replace prosthetics beyond their useful life.

4) When it comes to temporary injuries, the new system distinguishes between medical expenses (health assistance) and other expenses susceptible of compensation, such as attendant care expenses or travel expenses (to attend rehabilitation care, for instance), to name just two.

5) The indemnity scale includes a new and more objective formula to evaluate financial loss. It includes not only loss of income by the victim but also those circumstances in which the victim does not receive monetary reward by his or her activity (minors, students, housewives, ...).

6) Different from the current "Baremo", the new system sets out five categories of victims (spouse, parents, children, siblings and close friends) that are not mutually exclusive. Besides, any member of these categories can lose his or her condition if it is proved that there has not been family connection with the deceased. By the same token, the new system includes a new possible case of victim by analogy: those people who in fact and in a constant way have assumed a family role in cases of absence or negligence from family members.

Certainly, greater protection for the victim will probably mean higher claims settlement costs for insurers and, consequently, higher premiums for all policyholders. However, it is undeniable that this reform satisfies a much needed protection for victims of road accidents and considering that this new scale of indemnity can be used by way of analogy to other personal injury claims, greater protection of personal injury claimants means good news for all.

Juan E. Montenegro - Balms Abogados Marbella

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