Financial authorities have determined that if a traffic accident victim suffers serious injuries, the driver's insurance must cover the criminal settlement amount, even if the perpetrator is not prosecuted. This decision aims to ensure that insurance companies provide coverage when settlements are made to reduce the likelihood of criminal charges.
On May 14, the Financial Supervisory Service reported that its Financial Dispute Resolution Committee ruled in favor of three cases related to driver’s insurance claims, stating that insurance companies must pay out amounts equivalent to the criminal settlement. This insurance product covers criminal settlement amounts when the insured causes serious injuries classified as injury grades 1 to 3 under the Automobile Damage Compensation Act.
The victims in these cases sustained significant injuries classified as grades 1 to 2 from a typical traffic accident. After reaching a criminal settlement with the perpetrator, they filed claims for traffic accident support payments with their insurance company. However, the insurer denied the claims, arguing that since the perpetrator was not prosecuted due to a lack of grounds for prosecution, “this was not a case requiring a criminal settlement.”
The committee disagreed with this assessment, stating that the terms of the insurance policy clearly indicate that injury grades 1 to 3 are sufficient grounds for compensation. The ruling emphasized that the determination of whether the victim ultimately received a serious injury classification or whether the prosecution was initiated is irrelevant; what matters is the severity of the injuries.
Furthermore, the committee concluded that a criminal settlement is not only necessary after a criminal conviction. The potential for criminal liability can change based on the victim's recovery status or the possibility of long-term injuries immediately following the accident. Therefore, if the perpetrator reached a settlement to mitigate the risk of criminal charges, the insurance company must recognize this as a valid criminal settlement.
The Financial Supervisory Service explained that this decision holds significance for both drivers and victims of traffic accidents. It allows perpetrators to lessen their financial burden from settlements and return to their daily lives, while victims can receive timely and meaningful compensation. The agency plans to continue promoting reasonable insurance payouts in driver’s insurance and other essential insurance products.
* This article has been translated by AI.
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