FSS: "Driver Insurance Must Pay Criminal Settlement Funds for Grade 1-3 Injury Traffic Accidents"

Even When a Serious Injury Is Caused and a Criminal Settlement Is Reached,
Insurance Companies Must Pay Settlement Funds
Even If a Non-Prosecution Disposition Is Received

The financial supervisory authorities have determined that insurance companies must pay criminal settlement funds under driver insurance, even if the policyholder, after causing a serious injury such as brain damage, spinal fracture, or limb amputation to another party in a general traffic accident, receives a non-prosecution disposition following a criminal settlement.

According to the Financial Supervisory Service on May 14, the Financial Dispute Mediation Committee decided the previous day that driver insurance should provide traffic accident settlement support funds (criminal settlement funds) for accidents in which the victim suffered a Grade 1 to 3 injury under the Automobile Liability Security Act (ALSA) due to a general traffic accident.

The dispute arose when an insurance company refused to pay insurance benefits after the policyholder's general traffic accident resulted in the victim sustaining a Grade 1 or 2 severe injury, and a criminal settlement was reached between the parties.

The insurance company argued that since the perpetrator received a non-prosecution disposition from the police, a criminal settlement was not originally required.

The committee determined that "Grade 1 to 3 injuries under the ALSA" are independent grounds for insurance payment according to the policy terms.

The committee interpreted that, as the policy states payment is required "in cases where the victim suffers a serious injury leading to prosecution or sustains a Grade 1 to 3 injury under the ALSA," the mere occurrence of a Grade 1 to 3 injury itself constitutes grounds for payment.

Furthermore, the committee found that even if the severity of the injury is not finally confirmed, the necessity of a criminal settlement is recognized if there was a possibility of criminal liability at the time of settlement.

The committee explained that, since investigative agencies consider factors such as treatment period and loss of work capacity to determine whether to prosecute, there remains a possibility of criminal punishment until judicial proceedings are concluded.

Accordingly, the committee decided that insurance benefits should be paid, considering that the applicants' injuries were classified as Grade 1 or 2 under the ALSA and that a settlement was reached to mitigate potential future criminal liability for the perpetrator.

An official from the Financial Supervisory Service stated, "We plan to promote the establishment of prompt and reasonable insurance payment practices for daily-life insurance products such as the driver insurance traffic accident settlement support rider and travel insurance," and added, "We will continue to actively hold the dispute mediation committee to safeguard consumer rights and interests."

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