New Zealand insurers will review premiums if the Government passes a law allowing crime victims to seek compensation from offenders, insurance lawyers have warned.

Motor insurers are most likely to feel the impact of the proposed Victims of Crime Reform Bill if cases involving negligence reach the criminal justice system and victims ask for “top-up” compensation.

The lawyers say insured drivers will pass on a victim’s claim to their insurer.

The Accident Compensation Corporation (ACC) runs a no-fault accident system that pays up to 80% of loss of income to injured claimants. When New Zealanders gained the ACC they lost the civil right to sue for damages for personal injury.

The proposed bill will enable them to claim the remaining 20% of lost income if the matter reaches criminal courts.

Apart from motor accidents, the bill could also apply to prosecutions under the Health and Safety in Employment Act.

DLA Phillips Fox Partner Crossley Gates says insurers have not factored the claims into their pricing and will face greater exposures.

“People who are badly injured will go for the kind of damages you can get in Australia,” he told insuranceNEWS.com.au.

Mr Gates says the proposed law makes no distinction between crimes requiring proof of intention and those requiring less than that, such as negligence, and notes that crimes requiring proof of intention are uninsurable.

“A driver charged with reckless driving will have no cover for his victim’s reparation but a driver charged with careless driving may have cover,” he said.

Judges can already make orders for reparation but this has mostly been used for small payments, such as the cost of a new bike when a driver hits a cyclist.

In 2009 the Supreme Court – New Zealand’s highest court – quashed a District Court decision to award $NZ11,555 ($9201) for lost income to a cyclist who was hit by a mattress that fell off a trailer. The driver was convicted of operating a vehicle carelessly and causing injury with an insecure load, and passed the claim onto his insurer.

The Supreme Court decided to go against the philosophy and purpose of the accident compensation scheme to let people injured by an offence get greater compensation than those suffering the same injury when no offence was involved.

The Victims of Crime Reform Bill is still to be debated in parliament.