Consumer Agency: "Telecom Companies Must Pay Insurance for Irreparably Damaged Phones"

Reference photo. (Photo by Asia Economy DB)

[Asia Economy Reporter Seungjin Lee] The Consumer Dispute Mediation Committee has ruled that telecommunications companies must pay damage insurance benefits even when repairs are impossible, whereas previously such benefits were only paid if the damaged mobile phone was repaired.

On the 10th, the Korea Consumer Agency's Consumer Dispute Mediation Committee announced that regarding the case where Telecom Company A refused to pay insurance benefits on the grounds that damage insurance does not cover cases where the mobile phone cannot be repaired, it decided that this refusal does not align with the purpose of indemnity insurance aimed at compensating for accident-related damages, and ordered the payment of the insurance benefits.

Damage insurance refers to a service provided by telecommunications companies in partnership with insurance companies, allowing customers to receive support for replacement or repair costs if damage occurs after purchasing a mobile phone.

In July last year, Mr. K, in his 50s, purchased a mobile phone at a Telecom Company A agency, and the next day received a URL for insurance enrollment from the agency, through which he joined the mobile phone damage insurance via mobile authentication. In November, Mr. K’s phone was crushed under a vehicle and he sought to claim insurance, but Telecom Company A refused to pay, stating that cases where damage is so severe that repair is impossible are not covered.

Telecom Company A argued that the damage insurance Mr. K subscribed to does not provide benefits if repair is impossible, and since Mr. K agreed to the terms and conditions and precautions, compensation is not possible according to the contract.

In response, the Consumer Dispute Mediation Committee judged that excluding cases of severe damage where repair is impossible from coverage does not align with the purpose of indemnity insurance aimed at compensating for accident-related damages.

Furthermore, since the coverage was only described as "damage" on the website and in the terms provided to Mr. K, and the exclusion clauses were written in small print making them difficult to recognize, the committee interpreted that Telecom Company A neglected its duty to clearly and accurately communicate the scope of coverage.

Accordingly, the Consumer Dispute Mediation Committee notified Telecom Company A to pay Mr. K the amount obtained by deducting the deductible from the maximum insurance benefit payable under the damage insurance.

The Consumer Dispute Mediation Committee stated, "This decision is significant in that it pointed out problems in mobile phone damage insurance terms that disadvantage subscribers and protected consumer rights," and added, "Telecommunications companies should voluntarily improve insurance terms to reflect the purpose of indemnity insurance."

This content was produced with the assistance of AI translation services.