Need to establish a mandatory liability insurance in Colombia for private vehicles

The Colombian legislation does not establish the obligation to purchase a liability insurance for private vehicles to cover the damages caused by the driver or the vehicle, leaving the victims of traffic accidents without effective tools to obtain full reparation for the damages suffered. Additionally, the mandatory insurance policies already in place in the country are not sufficient and do not cover all the damages that may be caused to the victims, since they offer a symbolic rather than comprehensive and effective reparation.

The commercial law regulates the liability insurance, the purpose of which is to indemnify the pecuniary damages caused by the insured in case he is declared liable in accordance with the law. Although at the beginning the insurance did not offer any guarantee for the victim, the modification introduced by Law 45 of 1990 to Article 1127 of the commercial law, did not only grant direct action to the victim against the insurer to claim from it the damages caused by its insured, but it was expressly established that the purpose of the insurance would be to compensate the victim. Although there are some insurance companies that offer such a policy to cover the civil liability of a driver of a private vehicle, it is a voluntary insurance, so that if the vehicle that causes the accident and damages to the victim does not have this insurance, the victim is at a disadvantage.

In Colombia, there is only one mandatory insurance for driving private vehicles, called Seguro Obligatorio para Accidentes de Tránsito – SOAT. This insurance is deficient considering the limited coverage it provides which is not enough to achieve full compensation to victims of traffic accidents. The SOAT offers the following coverage (Decree 56 of January 14, 2015 of the Ministry of Health and Social Protection):

• Medical, surgical, pharmaceutical and hospital expenses for injuries: the indemnity for this coverage is paid to the health service provider and the indemnity is limited to 800 minimum daily wages (USD $6,207).
• Compensation for permanent disability: it compensates the victim when he/she suffers a loss of working capacity; however, the compensation is very limited. For example, for a loss of working capacity of more than 50% (state of disability) the compensation is 180 minimum daily wages (USD $1,396), which is the highest compensation.
• Transportation and mobilization expenses to the hospital or clinic: it covers up to 10 minimum daily wages (USD $78).
• Compensation for death and funeral expenses: this compensation is granted to the beneficiaries of the deceased victim and is limited to 750 minimum daily wages (USD $5.819).

As it can be seen, the coverage and its limits are insufficient to achieve full compensation for victims of traffic accidents, without overlooking the fact that damages related to loss of profits and moral damages are totally excluded.

In 2021, the Colombian Congress attempted to establish a mandatory liability insurance for driving private vehicles, however, the law finally enacted did not impose such mandatory nature. On the contrary, Law 2161 of November 26, 2021, contemplates the possibility of contracting a voluntary policy that covers civil liability for material damages to third parties, a policy that may be offered by each insurance company that markets the SOAT line of business.

However, this new regulation is still insufficient to protect the victims of traffic accidents, since the law does not establish a mandatory policy, but leaves it to the discretion of the insurer to offer such a policy, as well as to the policyholders to contract it. In addition, the law only speaks of material damages, limiting them to the repair of the vehicle involved in the traffic accident and leaving aside all other damages caused in a traffic accident to the victim, including non-material damages.

According to the statistical bulletin of August 2021 issued by the Nacional Institute of Legal Medicine, transport events are the second cause of violent deaths in Colombia. This reality shows that it is necessary to impose a mandatory insurance that covers the civil liability of drivers of private vehicles. The country needs an insurance designed for the victims rather than the health service providers or the repair of the damaged vehicle. As stated, the existing regulation does not allow to fulfil one of the purposes of the civil liability insurance which is the effective protection of the victims, according to the purpose of legislator embodied in Article 1127 of commercial law.