[Decision] Concealing Cause of Accident Constitutes Insurance Fraud Even If Insurer Failed to Explain Policy Terms

Acquittal in Second Trial Overturned Due to Insurer's Failure to Explain Policy
Supreme Court: "Means of Exercising Rights Exceeded Acceptable Limits"

The Supreme Court has ruled that if someone conceals the fact that an accident involved an electric scooter and falsely claims they were simply "injured in a fall" to receive insurance benefits, this constitutes insurance fraud-even if the insurer failed to fulfill its duty to explain the policy and was therefore liable to pay. On September 25, the Supreme Court’s Criminal Division 3 (Presiding Justice Noh Kyungpil) overturned a lower court’s acquittal of Mr. A, who had been indicted for violating the Special Act on Prevention of Insurance Fraud, and remanded the case to Jeju District Court for a guilty verdict (2024Do11951).

Photo to aid understanding of the article. Pixabay.

[Facts]

Mr. A, who was working as a branch manager at an insurance company, learned in 2021 that the son of a client had been injured while riding an electric scooter. Knowing that the insurance policy did not cover accidents occurring while operating a "motorcycle," Mr. A nevertheless submitted a claim, falsely stating the cause of injury as "injured in a fall," and intentionally omitted the emergency medical chart that could have revealed the true circumstances of the accident.

[Key Issue]

The main issue was whether recording the cause of the accident somewhat differently could be considered a "deceptive act" constituting fraud.

[Lower Court Rulings]

Mr. A argued, "An electric scooter is not classified as a motorcycle under the policy, so I would have been entitled to the insurance payment anyway. Therefore, this is not fraud."

The court of first instance stated, "Even if the claim was eligible for payment, deliberately falsifying the cause of the accident and omitting the emergency chart constitutes a deceptive act that cannot be accepted by social standards," and imposed a fine of 2 million won.

The appellate court acquitted Mr. A. The appellate court found, "At the time the insurance contract was signed (2019), it was unclear whether an 'electric scooter' was included under the policy’s definition of 'motorcycle.' Since the insurer did not fulfill its duty to explain that accidents involving electric scooters were not covered, Mr. A had a legitimate right to claim the insurance payment."

[Supreme Court Decision]

The Supreme Court overturned the acquittal and remanded the case for a guilty verdict. The court stated, "The defendant’s actions exceeded the socially acceptable means of exercising one’s rights and constitute a deceptive act as defined in insurance fraud." The court further explained, "Even if the insurer failed to fulfill its duty to explain that accidents occurring while operating an 'electric scooter' are not covered and thus was liable to pay, this alone does not change the fraudulent nature of the defendant’s actions."

The court concluded, "The lower court’s acquittal was based on a misunderstanding of the legal principles regarding deceptive acts in fraud or a failure to conduct the necessary review, thereby violating the principles of logic and experience and exceeding the limits of judicial discretion, which affected the outcome of the ruling."

Reporter Ahn Jaemyung, The Law Times

※This article is based on content supplied by Law Times.

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