Car Insurance Mileage Discount, Now 'Automatically Enrolled'

[Asia Economy Reporter Changhwan Lee] Starting next month, the automobile insurance 'Mileage Discount Rider (Mileage Special Contract)' will be changed to automatic enrollment.

On the 27th, the Financial Supervisory Service announced that the mileage discount rider, which was an optional item when subscribing to automobile insurance, will be changed to automatic enrollment from April 1st.

Non-life insurance companies sell mileage discount riders that provide discounts on premiums based on driving distance, in addition to the main automobile insurance contract.

The mileage discount rider typically offers a premium discount ranging from a maximum of 45% to a minimum of 2% depending on the mileage bracket when driving less than 15,000 km per year.

Despite these benefits, the subscription rate for the mileage discount rider was only 68% as of 2020. The Financial Supervisory Service explained that this system change was made to provide all policyholders with the opportunity to receive premium refunds based on their driving distance.

With the system change, all policyholders will be able to receive partial premium refunds if they comply with the driving distance without any additional premium burden.

However, if driving distance information is not confirmed within the specified period, the rider will be automatically terminated, and those who do not wish to subscribe to the rider can also opt out.

The submission deadline for mileage photos when subscribing to the rider will also be extended. Currently, many insurance companies set the submission deadline for mileage photos within 7 days from the start of liability according to policy regulations.

The Financial Supervisory Service stated that there were criticisms that this deadline was too short, so the submission deadline has been significantly extended to at least 15 days, more than double the current period.

The inconvenience of having to submit mileage photos repeatedly when changing insurance companies will also be resolved.

If a policyholder has already submitted mileage photos to the previous insurance company for premium refunds, they will not need to submit mileage photos again to the new insurance company when renewing the contract after switching companies.

To this end, the Korea Insurance Development Institute has established a mileage information aggregation system (pilot test completed in March), and insurance companies will check the mileage information with the institute during the application stage to automatically verify and reflect the policyholder's mileage. Considering the time required for each company to build the system, this will be applied from July 1st.

A Financial Supervisory Service official said, "The discount rates for automobile insurance premiums based on mileage vary by company. It is advantageous to first consider the overall automobile insurance premium level, then check your own annual average mileage, and choose a company with a higher discount rate to subscribe."

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