Medical Expenses for Car Accident Deductibles Can Be Covered by Indemnity Insurance

Financial Dispute Mediation Committee Decision by FSC
Scope of Indemnity Insurance Coverage After Auto Insurance Compensation

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] The financial authorities have decided that a portion of medical expenses not covered by automobile insurance after a traffic accident can be claimed through actual expense medical insurance.

According to the insurance industry on the 3rd, the Financial Supervisory Service's Financial Dispute Mediation Committee recently made this decision regarding a dispute mediation request filed by applicant A against B Life Insurance.

According to the recently released mediation decision document, in August 2017, A was hospitalized and received outpatient treatment for a back injury sustained in a traffic accident while traveling in a rental car driven by an acquaintance. The opposing driver's non-life insurance company and the rental car mutual aid association paid approximately 27.12 million KRW in medical expenses to the medical institution and deducted an amount corresponding to the applicant's fault ratio (20%), which was 5.42 million KRW, from the settlement payment.

Soon after, A filed a claim against B Life Insurance, with whom he had purchased actual expense insurance in 2012, demanding payment of 90% of the medical expenses (5.42 million KRW) not compensated by automobile insurance.

However, B Insurance argued that for inpatient medical expenses, only 40% of the amount actually borne by the insured should be paid, and for outpatient medical expenses, only 40% of the amount after deducting each item’s deductible from the amount actually borne should be paid, thus refusing to pay 90%.

Generally, actual expense insurance excludes coverage for medical expenses compensated by automobile insurance. The mediation committee judged that medical expenses compensated by automobile insurance or workers' compensation insurance are grounds for exemption in actual expense insurance, and stated that overlapping compensation for medical expenses covered by automobile insurance would not be allowed.

The actual expense insurance that A subscribed to included a special clause stating that "the insured's out-of-pocket medical expenses are compensated according to the coverage details of each insured item." The clause defined the compensation amount as "90% of the sum of the insured's out-of-pocket expenses and non-reimbursed portions of medical benefits as stipulated by the National Health Insurance Act."

On the other hand, it stipulated that "in cases where the National Health Insurance Act or Medical Care Assistance Act does not apply," 40% of the amount actually borne by the insured for inpatient medical expenses would be compensated. A argued that since the medical expenses compensated by automobile insurance did not fall under "cases where the National Health Insurance Act does not apply," B Insurance was responsible for compensating 90% of the medical expenses.

The mediation committee decided that since A did not go through the medical benefit procedures stipulated by the National Health Insurance Act or the Medical Care Assistance Act, B Insurance was only responsible for paying 40% of the 5.42 million KRW in medical expenses.

However, the non-life insurance industry explained that this case does not apply to all actual expense insurance policies. An industry official stated, "Some actual expense insurance policies sold in the past included special clauses covering non-reimbursed expenses," adding, "Currently sold actual expense insurance policies have been revised to prevent excessive compensation."

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