Sec. III of the Court of Cassation, with n. 15534 decree dated 22.06.2017, remitted to the United Sections the solution of the jurisprudential conflict arisen on the following question: “if, in the settlement of the damage resulting from an unlawful act, should be taken into account the benefit deduction in the form of insurance compensation by the injured person as a result of that event”

As a matter of fact, there was a jurisprudential contrast regarding the settlement of damages caused by unlawful acts: are compensation and indemnification cumulative?

The Court of Cassation in plenary session, in its judgment of 22 May 2018, n. 12565, resolved the disputed question thus involving a more general subject concerning the identification of the current significance of the tenet compensatio lucri cum damno.

For the sake of expediency, compensatio lucri cum damno refers to the principle by which in case the unlawful act (contractual or extra-contractual) produced advantages for the injured party to be considered when determining the amount of compensation. ¹

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Compensatio is not subject of case-law disputes, since it is based on the idea of” refundable damage as a result of an overall assessment of the effects produced by the harmful act“.

On the contrary, the range and the scope of operation of the position itself, or the limits within compensatio may be applied, were of a controversial nature, especially when the advantage acquired to the injured party’s asset in connection with the unlawful act derives from a different title with two obliged entities, precisely based on two different sources.

Take, for example, the hypothesis of a connection between the damaged person and a different entity, such as the insurer, or where the numerous provisions of law can be applied providing for special grants or compensation the State pays for solidarity to victims of disasters or tragedies and victims of organised crime and terrorism. In such cases, the third party is liable for damage caused by an accident for which the injured party insured themselves, arising a twofold bilateral relationship involving, on the one hand, civil liability from an unlawful act, and, on the other hand, the relation deriving from the insurance contract.

The debatable issue was whether, in those circumstances, the increased capital resulted from the collateral benefit with a different entity, contractually or legally required to provide that benefit, should be combined with damage compensation to the injured person or should be considered to reduce the amount of redress.

The judgment in analysis identifies the element of connection between the different plans on which the compensation (unlawful fact) and indemnification (the insurance contract) in the institution of subrogation pursuant to art. 1916 of the Civil Code are constituted.

In fact, even the prevailing teaching recognizes that art. 1916 c.c. acts as a simplifying deed of the issue with a dual and concurrent purpose, namely:

• On the one hand, the safeguarding of the indemnification, where the insurance benefit can never become an enrichment source for the insured party and therefore determine, in their behalf, an economic situation much more advantageous than the one they would experience if the damaging act had not occurred;
• Per contra, the maintenance of the liability tenet (Art. 1218 and 2043 of the Civil Code), where the perpetrator is, in any case, obliged to pay compensation; without the amount of the related benefit would be eliminated or reduced by the effect of an insurance not stipulated by them or for them.

This approach is shared by the Court of Cassation, which stresses that, “by virtue of that principle, an accident cannot become a source of profit for the person who suffers it, even when compensation is due on two counts and by different entities, namely the insurer and the person responsible for the damage where possibility of the double compensation for the same damage is precisely avoided by the legal subrogation of the insurer that paid the indemnity, up to the amount of it, in the rights of the insured towards the responsible third party”

In fact, the automatic subentry of the insurer who paid in the standing of the injured person, allows on the one hand the retrieve of the paid amounts from the lawyer – thus avoiding the prohibition of cumulation benefits the latter – and, at the same time, to avoid that the tort turns into a source of profit.

Regarding the subrogation, the United Sections considered that, as deduced from the standard of the provision in art. 1916 paragraph 1 c.c, the code conditions the subentry to the payment of compensation for that damage caused by the third party without requiring, for that purpose, prior notification by the insurer of their intention to succeed in the policyholder’s rights towards the responsible third party.

This interpretation, according to the United Sections, would be confirmed by the analysis of art. 1203 of the Civil Code, which, through the wide postponement of No. 5 (“in the other statutory cases “), is likely to include in the legal subrogation, acting by law, also this peculiar succession in lending where the insurer’s benefit is intended to extinguish a different relation from the surrogated one.

We are witnessing a solution more in line with the ratio of the insurer’s surrogacy, being reasonable to believe that, automatically, the legislator, in accordance with the indemnity principle, wanted to prevent the possibility for the insured-damaged person once received compensation from the insurer to take action. This principle would be undermined if the insurer’s passiveness were sufficient to determine the permanence, in the  indemnified policyholder, of the claim ownership against the third party also for the part corresponding to the payments received, allowing them to demand a compensation greater than the damage actually suffered.

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In conclusion, the United Chambers, in their judgment of 22 May 2018, n. 12565, have set out the following legal principle: “the wrongful damage must be settled by subtracting from compensation the amount of the insurance benefit resulting from the non-life insurance the aggrieved-party collected as a result of that fact”.

A principle based on the following arguments, as summarized here below:

• In case of accident for which a third party is liable, the injured-insured one shall be entitled to two separate credit rights that, although having different sources and titles, aim at the same goal: compensation for damages caused by the accident to the insured-injured party.
• These rights are, however, concurrent, since – as observed in doctrine – each of them represents, from a functional point of view, a suitable expedient for the realization of the same interest, that is, the elimination of the damage caused in the assets of the insured-damaged person for the occurrence of the accident so that the injured party cannot claim from the  liable third party and the insurer a compensation that, in total, outweigh the damage experienced by their property.
• In fact, given the subsidiary nature of the insurance obligation, when the victim, before receiving the indemnification, obtains full compensation from the perpetretor, the insurer’s obligation to indemnify ceases (Cass., Sec. 2, 25 October 1966, No. 2595) if the insurer is the first who indemnifies the insured person, when the compensation by the responsible third party has not yet assigned, then, pursuant to art. 1916 c.c., the insurer is surrogated, up to the amount of the paid indemnity, in the right of the insured to the liable third party.
• Although the insurance relation arising from the contract and the damage relation resulting from the tort are placed on different levels, however, regarding them, subrogation ex art. 1916 c.c. acts as a link establishing ex novo a direct relationship between the insurer who paid the indemnity and the perpretator, although the former is unrelated to the civil liability arising from the non-contractual tort and the second is unrelated to the insurance contract. Subrogation, indeed, while allowing the insurer to recover aliunde the amount paid to the insured-damaged victim, prevents them to cumulate, for the same damage, the sum already collected as insurance compensation with the one still owed to them by the responsible third party as compensation and, therefore, to achieve twice the reparation. Without subrogation, the injured-insured person would retain the claim for compensation against the liable third party for the unlawful act also for the amount corresponding to the received indemnification: however, art. 1916 removed it since it is  transmitted  to the insurer. However, compensation remains due by the tortfeasor in full, as the latter is obliged to reimburse the insurer for the indemnity and to compensate the victim for any greater damage: therefore, the collection of the indemnity by the insured-injured person as a result of the harmful act does not have any impact on the performance of the responsible third party that must refund, in any case, the entire damage.
• According to art. 1916 co. 1 c.c., the code conditions the subentry to the simple fact of the indemnification for that damage caused by the third party, without requiring for this purpose, prior notification by the insurer of their intention to succeed in the policyholder’s rights towards the responsible third party.
• The takeover is not subject to the appreciation of the insurer solvens. The right loss towards the liable third party by the insured person and the purchase by the insurer are – as found in doctrine – interdependent and contemporary effects based on the same legal fact provided by law: the payment of the insurance allowance.

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Last but not least, it seems appropriate to point out that the Court of Cassation also addressed the question about “Who are the ” responsible third parties” to whom, pursuant to Article 1916 of the Civil Code, the insurer may exercise their right of subrogation”, asking, in particular, whether the notion of “responsible third parties” shall include or not include the so-called “obligated third parties” (category in which the perpetrator’s insurer should be included).

The Court of Cassation, with judgment n. 20740/2016, identifies the following principle of law: “the insurer against damages that in the contract performance indemnified their insured, victim of a road accident, has the right to subrogate themselves ex art. 1916 c.c., not only towards the perpetrator, but also towards their motor vehicle liability.

At the same time, the Judges states that “As a rule, the insurer of the injured party is not entitled to subrogate against the insurer of the responsible person, since the injured party itself cannot claim rights to the latter, thus failing to have the right to be transferred“.

While the law may be “another legitimate cause of obligation“, the judges have no doubts in acknowledging that, whether is the law to give the victim a right to claim directly against the insurer of the tortfeasor (as it is in the case of damages deriving from the traffic of vehicles or boats according to art. 144, d.lgs. n. 209/2005), the perpetrator’s insurer is no longer subject to the mandatory relationship, becoming one of the subjects who must compensate the victim, that is, a debtor of the latter. 

It follows that, because of subrogation, with the transfer of the victim’s credits to their insurer, the insurer of the liable person becomes the debtor of the insurer of the injured party (Cassation judgment no. 20740/2016).

For further information, please contact:

Lawyer Alessandro Alonzi

Phone: +390697996050

m.alessandroalonzi@gmail.com