Improvement of Standard Automobile Insurance Terms: "Drug-Using Drivers Causing Accidents to Bear 150 Million KRW"

Effective January 1, Next Year

[Asia Economy Reporter Park Sun-mi] The standard automobile insurance policy has been improved to strengthen the responsibility of accident perpetrators such as drug users and drunk drivers, and to enhance compensation for automobile accident victims.

On the 30th, the Financial Supervisory Service announced that it has completed the revision of the standard automobile insurance policy related to strengthening accident deductibles and improving the calculation method of lost income, which will be implemented from January 1 next year.

First, an accident deductible for drug and substance-impaired driving has been newly established. Until now, even if a driver caused an accident while driving under the influence of drugs or substances, the driver had no financial burden for the insurance money paid by the insurer to the victim. Going forward, to ensure fairness with drunk driving and to raise awareness about drug driving, drivers who cause accidents while driving under the influence of drugs or substances will have to bear an accident deductible of up to 150 million KRW. To strengthen the financial responsibility of drunk, unlicensed, and hit-and-run drivers, all insurance payments made under compulsory insurance (bodily injury I, property damage up to 20 million KRW) will be borne by the driver.

Compensation for lost income for soldiers will also be made more realistic. Previously, when a military service member (or prospective member) died or suffered permanent disability due to a car accident, the insurance payment (lost income amount) was calculated based on the soldier's pay during military service (approximately 530,000 KRW per month), resulting in lower insurance payments compared to those exempted from military service. From now on, the payment will be improved to be based on the daily worker's wage (approximately 2.82 million KRW per month), the same as for those exempted from military service, significantly increasing insurance payments in cases of death or permanent disability of military service members (or prospective members).

Additionally, automobile insurance will be improved to apply the simple interest method (Hoffman method), consistent with the court and the State Compensation Act, significantly increasing insurance payments for death and permanent disability. For example, the lost income amount for an 11-year-old female is about 290 million KRW under the compound interest method but increases to about 450 million KRW under the simple interest method. In the case of motorcycle accidents, if the driver proves the purchase price of damaged motorcycle-specific clothing, compensation will be provided up to a limit of 2 million KRW, improving the compensation standards.

The improvements to the standard automobile insurance policy will apply to automobile insurance contracts with coverage starting from January next year. However, the accident deductible related to drunk, unlicensed, and hit-and-run driving will apply to automobile insurance contracts with coverage starting from July 28 next year, in line with the enforcement of the Automobile Damage Compensation Guarantee Act. Also, among the revisions to the standard policy, the payment system for minor injury treatment costs will be applied to accidents occurring after January 2023, following a one-year grace period and improvements in the insurance industry's compensation process.

A Financial Supervisory Service official stated, "While raising awareness of accidents caused by drug and drunk driving, it is expected that the burden of insurance premiums on good-faith policyholders will be reduced by eliminating factors that cause premium increases due to accident compensation. Furthermore, through improvements in lost income compensation and compensation for motorcycle drivers' specialized clothing, the rights and interests of traffic accident victims will be enhanced, expanding the function of automobile insurance as a private safety net."

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