Freeway Trailer Breakaway: Apportioned Fault, Cash Settlement and a Lapsed Motorcycle Policy
A compulsory third-party motor policy issued to a haulage company covers a Volvo FH tractor unit. On the Tehran–Qom freeway the trailer coupling failed, the trailer crossed the median and struck a motorcycle carrying two people. The traffic police report apportions fault 80% to the truck driver (defective coupling, not inspected before departure) and 20% to the motorcyclist (riding at night without a rear light). The motorcyclist, aged 34, sustained a comminuted tibia fracture; after 14 months a medical board assessed permanent disability at 25%. The pillion passenger, aged 19, sustained a head injury requiring two craniotomies and remains under treatment. The policy's compulsory third-party limits are 3.2 billion IRR per person for bodily injury and 6 billion IRR per accident. The motorcycle's own third-party policy had lapsed nine days before the accident. The truck owner paid the motorcyclist 500 million IRR in cash 'to settle things' and now asks the insurer to reimburse him. The pillion passenger's family has also claimed from the Social Security Organisation, which has paid 1.4 billion IRR in treatment costs.
1. How do you apply the 80/20 fault apportionment to each claimant, and what difference does the motorcycle's lapsed policy make?
Read the worked answer
Start from the insurance obligation. The compulsory third-party cover indemnifies the insured against the legal liability established against the driver/owner. The adjuster does not re-try fault; the police report (and any court judgment) is the evidential basis, and it should only be departed from where it is manifestly unsupported.
Motorcyclist. His own 20% contributory negligence reduces his recoverable damages: full damages × 0.80, then capped at the 3.2bn per-person limit. The reduction applies to every head – treatment, loss of earnings and the diyeh assessed on the 25% permanent disability.
Pillion passenger. He is not contributorily negligent and his claim is not reduced by the rider's 20%. As against the victim, the tortfeasors are jointly and severally liable, so he may recover the whole of his loss from the truck's insurer, which then has recourse against the rider for the rider's share. Reserve his claim in full, subject to the 3.2bn per-person limit, and do not net it down for the rider's fault.
Lapsed motorcycle policy. It does not diminish the truck insurer's obligation to either victim. It may, however, engage the statutory mechanism for accidents caused by uninsured or unidentified vehicles (the Central Insurance of Iran fund); confirm the current regulation and the conditions attached before assuming the fund will absorb the rider's share.
Limits. 3.2bn per person gives a theoretical 6.4bn for two claimants against a 6bn per-accident limit. Flag the aggregate now, reserve the whole 6bn, and apply the policy's (or the regulation's) allocation rule – usually pro rata across the established claims – before paying anyone in full.
2. The truck owner wants the 500 million IRR cash payment reimbursed. The pillion's family has also received 1.4 billion from Social Security. How do you deal with both?
Read the worked answer
The 500m cash payment.
Compulsory third-party wordings typically require the insured not to admit liability or make any payment without the insurer's written consent. The payment was made voluntarily and after the event, so it is not automatically recoverable. The practical approach is to ask: did the payment genuinely discharge a liability the policy would have covered, and did it prejudice the insurer (for example by fixing liability, destroying evidence or inflating the claim)? If it merely satisfied part of a liability that is admitted anyway, the insurer should credit it against the total indemnity – that is, treat it as part-payment of the sum it owes, not as an additional item. If it was an admission of liability in a disputed case, the insurer may refuse to be bound by it and reserve its position. In either case it never increases the limit.
The Social Security payment.
Medical costs already met by the Social Security Organisation cannot be recovered twice; to that extent the insured/claimant has suffered no loss. Obtain the SSO settlement statement and receipts, establish whether the SSO has a statutory right of recovery against the liable party, and deduct the 1.4bn from the treatment head before applying the 80/20 split and the limit. Do not deduct it from heads that SSO did not pay (loss of earnings, diyeh).
Record the logic. Show the claimant a schedule: gross heads, less SSO recovery, less contributory negligence, less any cash already received, capped at 3.2bn. Keep the correspondence clear so that a later court award does not produce double recovery.
3. Set out your method for quantifying the motorcyclist's compensation, and explain what you will do about the per-accident limit while the pillion passenger is still under treatment.
Read the worked answer
Quantification method.
- Obtain the medical board's report, the hospital records and the diyeh rate applicable at the date of the loss (the rate is fixed annually; use the correct year).
- Build the heads: actual treatment costs, future treatment, loss of earnings (documented by tax returns or an employer certificate), and the diyeh for 25% permanent disability.
- Apply the 80% fault reduction to each head.
- Compare the result with the 3.2bn per-person limit. Illustratively, if full damages are 4.4bn, 80% = 3.52bn, which exceeds the limit, so pay 3.2bn and note that the 0.32bn balance is the insured's own exposure unless the compulsory scheme provides otherwise.
- Deduct any cash already paid by the owner and any SSO recovery on treatment.
The aggregate limit.
With two claimants and a 6bn per-accident cap, the risk of exhausting the limit on the motorcyclist is real once the pillion's brain injury is quantified. Do not finalise the motorcyclist until you have a reserve for the pillion. Open a reserve for the full 6bn, make only an interim payment to the motorcyclist (his disability is already established), and state in writing that further settlement will depend on how the per-accident limit is allocated.
The pillion.
Make provisional payments for treatment as invoices arrive, obtain interim medical reports, and avoid a final discharge while he remains under treatment. If, when both claims are quantified, they exceed 6bn, apply the allocation rule in the policy or regulation (pro rata is usual) and inform both claimants before paying, so that neither is left with an expectation the limit cannot meet.