Private Law Research

The Challenges of Compensation of Faulting Drivers with Emphasis on Judicial Judgment

Document Type : Research Paper

Authors

hmyon mafi 1
vahid Ahmadvand 2

1 Professor, Department of Private Law, Faculty of Law, University of Judicial Sciences, Tehran, Iran

2 Ph.D. student in Private Law, Faculty of Law, University of Judicial Sciences, Tehran, Iran

https://doi.org/10.22054/jplr.2025.88132.2959
Abstract
The growing number of traffic accidents in recent decades has significantly increased the number of individuals affected by such incidents, both as direct victims and as at-fault drivers. Traditional legal and insurance frameworks in Iran, as in many jurisdictions, have long excluded the at-fault driver from the scope of compensation, treating them as the culpable party rather than as a potential victim. From the standpoint of social and distributive justice, however, this exclusion appears illogical and inconsistent with the principles of equality and social solidarity. The central purpose of this study is to examine the legal foundation, scope, and limitations of the insurer’s liability for bodily injuries sustained by the at-fault driver under Iranian law. In particular, the research investigates whether the Law on Mandatory Insurance of Losses Incurred on Third Parties Resulting from Motor Vehicle Accidents (2016) effectively transformed the position of the at-fault driver from a liable party into a protected insured person within a collective compensation system.
Methodology:
This research adopts a qualitative and analytical-legal approach, employing both descriptive and doctrinal methods. First, it reviews the historical evolution of Iranian legislation concerning compulsory motor vehicle insurance and examines how the coverage of the at-fault driver has emerged within the broader framework of social protection law. Second, the study conducts a comparative analysis of relevant legal instruments, including paragraph (b) of Article 115 of the Fifth Five-Year Development Plan Act (2010), which first introduced the concept of insurance coverage for at-fault drivers. The research also explores the interpretive challenges posed by the 2016 Insurance Law, particularly concerning the meaning and limits of the insurer’s obligation: Judicial decisions issued by Iranian courts, especially appellate rulings interpreting Articles 3, 4, and 6 of the 2016 Act, are systematically analyzed to identify prevailing judicial trends. The methodology combines statutory interpretation, case law analysis, and theoretical reasoning to evaluate the extent of the insurer’s liability toward the at-fault driver. Additionally, the study employs principles of economic analysis of law to assess the broader social and financial implications of extending insurance coverage to at-fault drivers.
Findings:
The analysis reveals that the Iranian legislature has gradually shifted from a purely fault-based liability system to a more solidarity-oriented compensatory framework. Paragraph (b) of Article 115 of the Fifth Five-Year Development Plan Act (2010) was the first legal step toward recognizing the at-fault driver as a potential beneficiary of insurance protection. This policy was later solidified by the Law on Mandatory Insurance of 2016, which explicitly mandated that all motor vehicle insurance policies include personal accident coverage for the driver at fault.
However, judicial interpretation of the scope of this coverage has not been entirely consistent. Some courts have adopted a restrictive interpretation, limiting the insurer’s liability to the precise terms stipulated in the insurance policy, arguing that extending coverage beyond explicit contractual limits may destabilize the insurance market. Conversely, other courts have taken a broad and purposive approach, interpreting the law in light of its social protection objectives, thereby affirming the insurer’s liability even in cases of partial or contributory fault.
From the perspective of policy analysis, the inclusion of the at-fault driver within the framework of compulsory insurance serves multiple social and economic functions: it prevents uncompensated injuries, reduces reliance on public welfare resources, and enhances public trust in the insurance system. Nonetheless, such expansion also raises concerns regarding moral hazard, potential premium inflation, and the financial equilibrium of insurers.
Innovation and Contribution:
The innovative aspect of this study lies in its integrative analysis of statutory provisions, judicial rulings, and theoretical justifications related to the insurance coverage of at-fault drivers in Iran. Unlike prior research that has either focused solely on the doctrinal dimensions or on the economic rationale of insurance, this paper bridges both perspectives to provide a comprehensive understanding of the insurer’s liability.
Furthermore, the study introduces a balanced interpretive model that reconciles social justice considerations with the economic sustainability of the insurance industry. It argues that the insurer’s liability should be neither strictly limited to contractual wording nor unboundedly expansive; instead, it must be interpreted in harmony with the social protection goals of the 2016 Insurance Law. This model contributes to ongoing debates in Iranian legal scholarship concerning the boundaries of social insurance and the role of private insurers in public welfare mechanisms.
Conclusion:
The research concludes that the inclusion of at-fault drivers within the scope of compulsory insurance reflects a paradigm shift in Iranian legal policy—from an individualistic, fault-based model toward a collective and solidarity-based system of risk distribution. The Law on Mandatory Insurance of 2016 aims to treat the at-fault driver as a secondary victim deserving of protection rather than exclusion. Nevertheless, the stability and effectiveness of this legal framework depend on adopting a measured interpretation of the insurer’s obligations—one that maintains the financial integrity of insurance institutions while ensuring comprehensive victim compensation.
In summary, the insurer’s liability for bodily injuries sustained by at-fault drivers should be interpreted in light of three guiding principles: (1) the principle of social solidarity, which supports collective risk sharing; (2) the principle of legal security, which requires predictable and stable insurance obligations; and (3) the principle of economic efficiency, which preserves the financial sustainability of the insurance system.
Through this balanced approach, Iranian law can achieve a fair equilibrium between justice for victims and the economic viability of insurers, thereby promoting a more coherent and humane system of compensation for all participants in road traffic accidents.

Keywords

driver
at-fault driver
damage
insurer’s liability
Subjects

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    Books

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    Ahmadi, K. (2017). Major innovations of the 2016 Compulsory Insurance Law for Third-Party Damages Caused by Motor Vehicle Accidents. Insurance Research Journal, 32(3).

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    Theses and Dissertations

    Izanloo, M. (2004). Compensation System in Civil Liability Insurance (PhD dissertation, University of Tehran, Faculty of Law and Political Science).

    Bahramipour, A. (2018). Jurisprudential and Legal Analysis of Compensation for Third Parties through the Bodily Injury Compensation Fund with Emphasis on the 2016 Law (Master’s thesis, University of Judicial Sciences, Tehran).

    Pudineh Pir, M. (2016). Evolution of the 2016 Compulsory Insurance Law for Third-Party Damages Caused by Motor Vehicles (Master’s thesis, University of Mazandaran, Faculty of Law and Political Science).

    Khakshoor Qara-Su, V. (2017). Innovations and Challenges of the 2016 Compulsory Insurance Law for Third-Party Damages (Master’s thesis, University of Mashhad, Faculty of Law and  Political Science).

    Farahani, A. (2015). Civil Liability Arising from Motor Vehicle Accidents and Its Insurance under the Compulsory Insurance Law and Judicial Practice (PhD dissertation, Kharazmi University, Faculty of Law and Political Science).

    Nadi, M. T. (2019). Compensation System for the At-Fault Driver with Emphasis on Judicial Precedents (Master’s thesis, University of Mashhad, Faculty of Law and Political Science).

    Judicial Decisions

    • Tehran Court of Appeal, Branch 80. (2024, May 20). Case No. 140368390002668747.
    • Tehran Court of Appeal, Branch 17. (2020, Nov 18). Case No. 9909970221701950.
    • Mashhad General Court, Branch 4. (2016, Aug 15). Case No. 9509977575400642.
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    Laws and Regulations

    • Constitution of the Islamic Republic of Iran.
    • Fifth Five-Year Development Plan Act (2010).
    • Compulsory Civil Liability Insurance Law for Motor Vehicle Owners against Third Parties (1968).
    • Amendment to the Compulsory Civil Liability Insurance Law (2008).
    • Compulsory Insurance Law for Third-Party Damages (2016).
    • Islamic Penal Code (2013).
    • Executive Bylaw of Article 3 of the Compulsory Insurance Law for Third-Party Damages (2017, amended 2017).
    • Transport Safety Management and Traffic Accidents Regulation (2022).
    • Regulation No. 67 (2011, last amended 2015).

     

     

Private Law Research
Volume 14, Issue 53
Winter 2025
Pages 91-134

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