Compensation for damage in Bosnia and Herzegovina: types of damage, liability, time limits and procedure

Author: Azur Prnjavorac, attorney at law and mediator · Last updated: 5 September 2026 · Field of law: law of obligations, compensation for damage

Compensation for damage is the legal mechanism by which an injured person obtains fair compensation for the damage suffered. The essence of that right is to mitigate the consequences of the harmful event as far as possible and to restore the state that existed before the damage occurred. This right to compensation is a key element of justice in society: it ensures that the victim of a harmful event is not left without protection, while the person responsible bears the consequences of its conduct. This page explains what can be claimed, who is liable, how the claim against an insurer works, the four steps of the procedure, the limitation periods and how the courts in Bosnia and Herzegovina determine the amount.

The right to compensation

In Bosnia and Herzegovina the field of compensation for damage is governed by the Law on Obligations, which both entities took over from the former state and amended (in the Federation of BiH: Official Gazette of SFRY, nos. 29/78, 39/85 and 57/89, Official Gazette of RBiH, nos. 2/92 and 13/93, and Official Gazette of the FBiH, nos. 29/03 and 42/11; in Republika Srpska: Official Gazette of SFRY, nos. 29/78, 39/85 and 57/89, and Official Gazette of RS, nos. 17/93, 3/96, 39/03 and 74/04). The law provides that whoever causes damage to another is obliged to compensate it. The person responsible must restore the state that existed before the harmful event, and where that is not fully possible, the remaining part of the damage must be compensated in money (Article 185). In that way the injured party is placed in the position closest to the one it was in before the damage occurred. Damage is the diminution of a person’s property (actual damage) and the prevention of its increase (lost profit), as well as the infliction of physical or mental pain or fear on another (Article 155).

Types of damage

As a rule two types of damage can be claimed: material and non-material. Material (pecuniary) damage covers all financial and physical losses: it is the diminution of the property of the injured person or the prevention of its increase. Examples of material damage include:

• Damage to or destruction of property: for example damage to a vehicle in a traffic accident, damage to a house or to other property.
• Costs and expenses: for example the costs of the treatment of injuries, rehabilitation, medicines, the repair of damaged things, and other expenses caused by the harmful event.
• Lost profit (lost earnings): the income the injured party lost because it could not work for some time because of the harmful event, or because its business venture was not realised. In the case of bodily injury or impairment of health, the compensation also covers the lost earnings and, where the injured person has lost earning capacity, a monetary annuity (Article 195).

Non-material (non-pecuniary) damage concerns intangible injuries to personality rights and the suffering inflicted, which have no direct material value. Although money cannot undo pain or impaired health, the courts award fair monetary compensation to give the injured party satisfaction for the hardship suffered (Article 200). Examples of non-material damage are:

• Physical and mental suffering: physical pain and mental suffering because of the injury (for example pain from a fracture, post-traumatic stress).
• Fear: intense fear or lasting trauma that the injured party experienced during or after the harmful event (for example fear for one’s own life in a traffic accident).
• Impairment of life functions: permanent disability or disfigurement that reduces the quality of life and the ability of the injured party to carry on usual activities.
• Mental anguish over the loss of a close person: the non-material damage suffered by family members because of the death of a close relative or because of that relative’s serious disability caused by the harmful event. The law grants this right to the spouse, the children and the parents of the deceased, to brothers and sisters where they lived in a lasting household with the deceased, and to a common-law spouse where a lasting union existed (Article 201).

Who is liable: fault and strict liability

Liability for damage exists either on the basis of fault or as strict liability, depending on the circumstances of the case. The general rule is liability for fault, but the fault is presumed: the person who caused the damage is liable unless it proves that the damage arose without its fault. For damage from dangerous things and dangerous activities (motor vehicles, machines, construction works, explosive and inflammable materials), liability exists regardless of fault, and the law presumes that the damage originates from the dangerous thing. The table shows the rules that apply to the situations we meet most often.

The claim against the insurer after a traffic accident

Most claims for compensation in practice arise from traffic accidents, and in those cases the claim is directed primarily at the insurer of the vehicle that caused the damage. In the Federation of BiH the Law on Compulsory Insurance in Traffic (Official Gazette of the FBiH, nos. 57/20 and 103/21) gives the injured party the right to submit the claim directly to the responsible insurer (Article 12). The insurer must establish the legal basis and the amount of the claim within 30 days of the completion of the claim and deliver a reasoned offer, and pay the compensation established within a further 14 days (Article 13). If the liability or the amount is disputed, the insurer must send a reasoned reply within 60 days of the filing of the claim, and it must pay the undisputed part of the compensation as an advance within the same time limit (Article 14). The injured party may lodge an objection against the offer or the reply within a time limit that may not be shorter than 15 days, and the insurer decides on the objection within 15 days; an action filed before the expiry of the time limit for the insurer’s decision is premature. From the first day after the expiry of the time limit for payment the injured party is entitled to statutory default interest. Where the damage was caused by an uninsured or an unknown vehicle, the claim is directed at the Protection Fund of the Federation of BiH. Republika Srpska has its own law on compulsory insurance in traffic with comparable rules, and the office conducts claims under both.

The procedure in four steps

In order to enforce the right to compensation, the injured party has to initiate the appropriate procedure. Law Office Prnjavorac represents clients through all stages, from the initial consultation and the submission of the claim to the insurer or the person responsible, to the conclusion of the court dispute where necessary. The usual course of the procedure includes several steps:

1. Collecting the evidence and the documentation. The first step is the detailed collection of all relevant documentation on the harmful event: the medical documentation on the injuries, the police record or the record of the inspection of the scene of the accident, photographs of the damage, statements of witnesses, invoices and other evidence supporting the amount of the damage suffered.
2. Submitting the claim (out-of-court procedure). In many cases a formal claim for compensation is sent to the person responsible or to that person’s insurer. The claim describes the damage precisely, the basis of liability and the amount of compensation sought, with all the evidence attached. Our team drafts such claims professionally, so that your rights are protected and you have a strong negotiating position.
3. Negotiations and out-of-court settlement. A settlement is often reached without a lengthy trial. The insurer or the other responsible party may offer a settlement. We represent the client in the negotiations with the aim of achieving the best amount of compensation out of court. The advantage of an out-of-court settlement is faster payment and lower costs of the procedure, but we make sure that the compensation offered is fair and in line with the case law.
4. Court proceedings. If the negotiations do not result in a satisfactory offer, we initiate the court dispute by filing an action with the competent court. In the civil proceedings the attorney prepares the action, represents the injured party during the trial and proves the amount and the basis of the damage through expert evidence and other evidence. The court then renders a judgment determining the amount of compensation on the basis of the law and the rules of fairness. When deciding on non-material damage, the courts in BiH apply the legal standard of fairness and regularly take into account earlier case law in similar cases, so that the amount awarded is consistent and justified.

Statutory time limits (limitation of claims)

The rights of the injured party are not unlimited in time: the law prescribes the time limits within which the claim for compensation must be brought. If the injured party fails to react in time, the claim may become time-barred, and the right to compensation is lost. Under the Law on Obligations there are two key limitation periods: the subjective time limit of three years from the day the injured party learned of the damage and of the person who caused it (in practice, three years from the moment the victim became aware of the damage and of the person responsible, for example from the day of the traffic accident or from the later day on which the identity of the person responsible was established, whichever is later), and the objective time limit of five years from the day the harmful event occurred, regardless of the knowledge of the injured party. This is the final time limit after which the claim for compensation can no longer be enforced in any case: after five years from the harmful event the responsible party can successfully invoke limitation. Where the damage was caused by a criminal offence, the longer time limits tied to the limitation of criminal prosecution for that offence apply; in other words, the claim for compensation does not become time-barred as long as the time limit for the criminal prosecution of the perpetrator runs, so that the injured party does not lose civil protection before the criminal proceedings against the person responsible are completed.

How the court determines the amount

Material damage is proved and calculated: the repair invoices, the medical costs, the difference in earnings and the lost profit are established from the documents and, where necessary, by an expert of the appropriate profession (a traffic, medical, financial or construction expert). Non-material damage cannot be calculated, so the law entrusts the court with awarding fair monetary compensation, taking into account the significance of the good injured and the purpose of the compensation, without it serving aims that are incompatible with its nature (Article 200). To keep the awards consistent, the courts rely on established case law, and the supreme courts of the entities have adopted orientation criteria and amounts for the individual forms of non-material damage, which the lower courts use as a starting point and adjust to the circumstances of the case. The degree and the duration of the pain and fear, the percentage of the reduction of life activity and the disfigurement are established by medical experts, whose findings are the basis of the award. The office prepares the claim so that every form of damage is stated separately and supported by evidence, which is decisive both for the negotiations with the insurer and for the judgment.

Representation by Law Office Prnjavorac

Law Office Prnjavorac has many years of experience in representing clients in disputes for compensation throughout Bosnia and Herzegovina. We represent natural persons (individuals) and legal persons (companies), whether in the role of the injured party claiming compensation or in the role of the defendant defending itself against an unfounded claim. Our approach to every case is thorough and professional:

• Professional analysis of the case. For every client we carry out a detailed legal analysis of the case. After reviewing the documentation and the facts, we set out clearly the legal basis, the estimated range of the possible compensation and the prospects of success in the proceedings. Such an analysis helps the client to understand its position and to make informed decisions.
• Preparation of the strategy and the evidence. On the basis of the analysis we design the optimal strategy of representation. We obtain the necessary evidence, engage experts where needed and rely on the relevant statutory provisions and the case law that supports our client. Knowledge of the current case law in the field of compensation is of exceptional importance: we follow the decisions of the domestic courts and use precedents to argue the amount of the compensation claimed and to increase the chances of success.
• Efficient conduct of the proceedings. Whether it is a matter of negotiations with an insurer or of litigation before the court, our team represents your interests energetically and professionally. We first try to reach a settlement whenever possible, so that you obtain the compensation faster and at lower cost. If the dispute nevertheless ends up in court, we use all legal mechanisms to protect your rights, from the timely filing of the action and all submissions, to representation at the hearings and the lodging of legal remedies where needed.
• Maximum compensation in the shortest time. Our aim is for every client to obtain the most favourable possible compensation for the damage suffered, and in the shortest possible time. Every harmful event and every client are particular, so we provide a personalised service adapted to your circumstances. Through negotiations or court proceedings we fight for you to obtain the full amount of compensation you are entitled to by law, whether it is a matter of material damage (compensation of costs, lost profit, repair of property) or of non-material damage (compensation for pain, suffering, fear and other forms of non-pecuniary damage).

Related case law and regulations

The related fields of law, individual positions of the courts and the relevant regulations are available, in Bosnian, on the office’s portal: the consolidated text of the Law on Obligations of the FBiH and RS with case law, the Law on Compulsory Insurance in Traffic of the FBiH, the pages on compensation for damage in BiH, compensation for damage in case law, the collection of damages, the law of obligations, the law of obligations in case law and insurance law. Individual positions of the courts include: an injured party partly compensated under property insurance may claim the difference from the person responsible, compensation for damage and VAT, compensation for damage arising from an insured event, the beginning of the objective limitation period, deterioration of health after the conclusion of the proceedings, subrogation in compensation for damage, proving lost profit before the court and the time limit for the claim for compensation for de facto expropriation.