Document Type : Original Research Paper
Authors
1 Faculty member and assistant professor, Department of Private and Islamic Law, Shiraz University
2 Insurance Research Center (IRC)
Abstract
BACKGROUND AND OBJECTIVES: Third-party liability insurance in the domain of traffic accidents represents one of the main protective mechanisms in modern societies. The increasing number of vehicles and the financial and social consequences arising from road accidents highlight the necessity of a reliable framework for compensating victims. Compulsory third-party insurance, as a primary and mandatory instrument, plays a vital role in this regard.
Lawmakers in different legal systems have established various frameworks and limits concerning the liability of third-party insurers, usually defining the minimum scope and responsibilities of the insurer.
The main objective of this research is to examine and compare the extent of third-party insurer liability in the legal systems of Iran, France, and the United States, focusing on the scope of financial and bodily commitments. Based on this comparative analysis, the study ultimately provides recommendations for improving the Iranian legal framework.
METHODS: This study adopts a descriptive-analytical approach combined with a comparative legal method, examining and contrasting the selected legal systems. The core basis of analysis includes statutes, regulations, and legal doctrines related to third-party liability insurance in the legal systems of Iran, France, and the United States (with an emphasis on prominent state models).
FINDINGS: The comparative analysis of the legal systems of Iran, France, and the United States reveals significant differences in determining the scope of third-party insurers’ financial and bodily obligations:
Iran:
The Compulsory Insurance Act (2016) has extended the insurer’s commitments up to a specified limit. However, in the case of bodily damages, legal caps (such as the fixed Diyah—blood money) and restrictions on covering certain medical and non-material costs result in a persistent gap between the actual damage suffered by victims and the indemnity paid. In the area of property damage, fixed coverage limits are often insufficient in the face of widespread losses and inflation.
United States:
Diversity across states is a defining feature. In no-fault liability states, the victim’s own insurer compensates bodily injuries up to a predetermined limit without requiring proof of fault—an arrangement that expedites compensation and reduces litigation delays but may increase overall premium costs. Conversely, in fault-based states, the insurer is obligated to pay only after the at-fault party’s liability is proven, which aligns more closely with the principle of individual justice but complicates and prolongs the compensation process.
France:
The French legal system emphasizes the principle of “full compensation for damages.” The third-party insurer is typically obliged to cover all bodily injuries suffered by the victim, including medical expenses, disability, moral damages, and financial losses due to income reduction. Additionally, the financial coverage limits are relatively high and are periodically adjusted in line with European inflation indices. This approach ensures the highest level of protection for victims.
Overall, the French legal system provides the widest scope of financial and bodily liability for third-party insurers. The Iranian system, despite notable progress, still faces restrictions in both areas. The American system, with its state-specific diversity, adopts variable coverage approaches depending on regional requirements.
CONCLUSION: A comparative analysis of the third-party liability insurance limits in the legal systems of Iran, France, and the United States reveals that determining these limits is the result of a complex balancing act between two fundamental goals: achieving compensatory justice for victims and ensuring the economic stability of the insurance industry. Each system, considering its cultural, economic, and legal context, has adopted a different approach. The French legal system, by prioritizing the full compensation of damages, aligns most closely with the idea of justice; however, this approach imposes a significant financial burden on the insurance industry, necessitating special support mechanisms. The American legal system, acknowledging the fundamental differences among states and adapting its approaches to the specific regional needs of each, has strived to establish an efficient balance between the requirements of economic efficiency and the necessity of protecting victims. This federal approach provides high flexibility but may lead to disparities in the level of protection. The Iranian system, while extending the scope of the insurer’s obligations to a certain ceiling, still faces challenges in fully covering damages, making legal reforms and increasing public awareness essential for addressing them. Ultimately, finding an ideal solution that simultaneously serves the interests of all stakeholders remains a fundamental challenge in the law of civil liability insurance.
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