The Supreme Court building in Seocho-gu, Seoul. [Yonhap]
The Supreme Court building in Seocho-gu, Seoul. [Yonhap]

A driver identified as A was involved in a shared-fault collision at an intersection. Total vehicle repair costs came to 2.7 million won ($1,740), but because of a deductible clause in his auto insurance policy, his insurer covered only 2.2 million won, leaving him to pay 500,000 won out of pocket. When he sought to recover that amount from the other driver's insurer, the claim was rejected. Going forward, however, drivers in A's situation will have a clear legal path to reclaim such deductibles from the opposing insurer.

The Supreme Court has ruled that a driver in a shared-fault traffic accident may seek reimbursement of the auto insurance deductible they personally paid from the other party's insurer.

According to legal sources Sunday, the Supreme Court's Second Division, presided over by Justice Kwon Young-jun, overturned a lower court ruling against A in his damages suit against non-life insurer B and remanded the case to the Daejeon District Court.

Both the first and second instance courts had ruled against A, reasoning that he had voluntarily entered into an auto insurance contract containing a deductible clause and therefore could not seek damages from the other party's insurer.

The Supreme Court disagreed. It held that the portion of the deductible corresponding to the other party's share of fault can be claimed separately from that party. The ruling reaffirms a legal principle the court established in January after holding a public hearing on the matter.

At that time, the court said a deductible agreement "is an arrangement between the insured and the insurer under which the insurer does not bear a certain amount or proportion of the loss, and the insured does." It added that "at least the portion of the deductible corresponding to the insured's own share of liability is interpreted as meaning the insured ultimately bears that amount."

In other words, even when an insurer pays out a claim by deducting the deductible before fault ratios are finalized — a so-called advance-settlement approach — the driver can still demand from the other party's insurer the share of the deductible that corresponds to the other party's fault.

However, the Supreme Court added that in such cases, "whether the other party's insurer may separately seek restitution of unjust enrichment for part of the subrogation payment it has already made to the insured's insurer is a distinct matter."

In this case, A's insurer had already received 1.08 million won in full from insurer B — the amount corresponding to the other party's share of fault in the total repair costs.

As a result, B may now seek restitution of unjust enrichment from A's insurer for the portion of that payment attributable to the other driver's share of the deductible.


attom@heraldcorp.com