Supreme Court Rules in 500 Million Won Insurance Claim Lawsuit: "Insurer's 'Duty to Explain' Takes Precedence Over Policyholder's 'Duty to Disclose'"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyung-min] The Supreme Court has ruled that the insurer's 'duty to explain' should take precedence over the policyholder's 'duty to disclose.'

The Supreme Court's First Division (Presiding Justice Kim Seon-su) announced on the 8th that it upheld the lower court's ruling partially in favor of plaintiff A in an insurance claim lawsuit filed against Meritz Fire & Marine Insurance.

In March 2016, A filed an insurance claim with Meritz Fire after his son died in a motorcycle accident. However, in June of the same year, Meritz Fire notified the cancellation of the insurance and non-payment of the insurance money, stating that "A's son did not disclose the fact that he regularly rode a motorcycle at the time of the insurance contract, which violated the policyholder's duty to disclose." In fact, at the time of the insurance contract, although A's son was working part-time delivering by motorcycle, he answered "No" to the question about whether he drove a motorcycle.

A filed a lawsuit demanding payment of 550 million KRW in death insurance benefits, claiming that he was never informed by the insurer that accidents caused by motorcycle driving would not be covered.

The trial focused on which should take precedence between the policyholder's 'duty to disclose' and the insurer's 'duty to explain.' The first trial ruled in favor of A, stating, "Whether or not the motorcycle was driven is an important matter in the insurance contract, and it does not appear that the duty to explain regarding the duty to disclose was fulfilled." The second trial also ruled similarly, stating, "It cannot be considered that the duty to explain was fulfilled regarding the fact that a special clause should be added if the motorcycle is driven regularly, and that insurance benefits may not be received if the duty to disclose is violated concerning motorcycle driving." The Supreme Court affirmed the lower court's ruling, stating there was no error in the lower court's judgment.

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