On September 24, 2025, the Supreme Court in its Civil Chamber issued a significant Resolution, file reference III CZP 32/24, which revived the debate on how to determine compensation under third-party liability insurance (OC). This ruling emphasizes the so-called cost estimate method—that is, determining compensation based on hypothetical vehicle repair costs—even when the injured party repaired the car themselves and incurred related expenses.
The dispute over whether third-party liability insurance compensation should be determined based on actual expenses incurred by the injured party or rather as hypothetical repair costs (i.e., a cost estimate) has been ongoing in Polish case law for a long time and has led to divergent judicial practice. Prior to the September 2025 resolution, another Supreme Court ruling (a seven-judge panel) from September 2024 indicated that if a vehicle had already been repaired or sold, determining compensation based on hypothetical repair costs was not justified. This position was widely commented on and criticized as generating uncertainty in claims settlement practice.
The resolution of September 24 responds to the legal questions posed by the District Court in Poznań and contains several key conclusions:
- The Supreme Court ruled that determining the amount of compensation from third-party liability insurance as the equivalent of hypothetical repair costs is permissible even if the injured party has repaired the vehicle. This represents a return to the static concept of damage, according to which damage is "material" in nature and its extent can be measured by cost estimates, not just actual expenses.
- The Supreme Court also ruled that if the injured party failed to pay VAT on the repair (for example, because the service provider failed to calculate and remit the tax), there is no basis for demanding a refund from the insurer. The right to compensation only covers VAT if the cost was actually incurred.
- The resolution’s findings also indicate that taking into account discounts offered by workshops cooperating with the insurer is permissible only if their application does not violate the legitimate interests of the injured party.
Practical consequences for injured parties and the insurance market
The Supreme Court's decision has far-reaching implications for drivers, insurers, and repair shops alike. First, it gives injured parties the ability to pursue compensation based on a cost estimate even after performing repairs themselves, which may increase the benefits paid in settlement and court proceedings.
For insurers, this means they need to be more cautious when refusing to pay based on cost estimates—a practice now confirmed by Poland's highest judicial authority. At the same time, some experts point out that adopting the cost estimate method could lead to higher third-party liability insurance premium costs, as insurers will be required to factor potentially higher compensation into their reserves and tariff calculations.
Although the resolution is binding on common courts, it does not resolve all the controversial interpretation issues that have arisen around motor vehicle claims settlement. The differences between the cost estimate method and the dynamic nature of the claim remain a matter of debate. Many practitioners expect that future resolutions or rulings—including those concerning similar situations in the broader context of compensation—will further define the framework for applying these methods.
In my opinion, the direction taken in Resolution III CZP 32/24 of September 24, 2025, is the right one and better reflects the realities of motor vehicle claims settlement. In practice, not every injured party has the financial resources to immediately and comprehensively repair their vehicle after a loss. Often, vehicles are repaired in stages, on a makeshift basis, or not repaired at all until the due compensation is received. Meanwhile, insurers, by underpaying compensation, often hinder or even prevent the effective restoration of the vehicle to its pre-loss condition, shifting the burden of repair financing to the injured party.
From this perspective, making the amount of compensation dependent on the actual repair of the vehicle would lead to unjustified differentiation of injured parties' situations solely based on their current financial capabilities, rather than the extent of the damage suffered. Therefore, a more appropriate approach seems to be whether the payment of compensation leads to unlawful enrichment for the injured party, rather than whether and how the vehicle has already been repaired.
Resolution III CZP 32/24, by reinstating the cost estimate method as a legitimate method for determining third-party liability insurance compensation, shifts the emphasis from a formal examination of post-damage expenses to the actual economic extent of the pecuniary loss incurred at the time of the event. In this sense, it represents a significant turning point in Polish compensation case law and a step towards more equitable protection for injured parties, although, naturally, controversy surrounding this concept and its economic and legal consequences remains.
This article is for informational purposes only and does not constitute legal advice.
The law is current as of January 7, 2026.
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