A fire occurred in a specific unit of an apartment and spread to other homes, ruling from the Supreme Court stated that the group insurance company joined by the residents' representative meeting must pay insurance benefits to the affected unit.

Overview of the Supreme Court building. /Courtesy of News1
Overview of the Supreme Court building. /Courtesy of News1

The Supreme Court's 1st division (Chief Justice Seo Kyung-hwan) recently confirmed a ruling by the second trial in a lawsuit filed by Samsung Fire & Marine Insurance, which is the insurer for individual A who suffered damage from a fire that spread from another unit, against Hyundai Marine & Fire Insurance, the group insurance provider for the apartment, with a partial victory for Samsung Fire & Marine Insurance, reported on the 14th.

A fire broke out in apartment 705 in Seoul in November 2020. The fire spread upstairs through the stairs, and unit 1305, where individual A resides, also suffered fire damage. The entire interior of the home and belongings, including clothes and blankets, suffered soot damage, totaling an expense of approximately 9.48 million won for recovery.

Individual A had personally taken out fire insurance with Samsung Fire & Marine Insurance. The residents' representative meeting for the apartment had a group fire insurance contract with Hyundai Marine & Fire Insurance. Since this apartment is a special building with more than 16 floors, it was mandatory to be enrolled in group insurance. Thus, Samsung Fire & Marine Insurance paid 4.74 million won to individual A for fire damage. Hyundai Marine & Fire Insurance also paid 4.74 million won to individual A as the group insurance provider.

Subsequently, Samsung Fire & Marine Insurance filed a lawsuit in May 2021 to recover the 4.74 million won paid to individual A from Hyundai Marine & Fire Insurance. Samsung Fire & Marine Insurance argued that the fire occurred due to the negligence of the resident of unit 705, and since individual A, being a 'third party,' suffered damage, Hyundai Marine & Fire Insurance was liable for compensation. The special clause in the group insurance stipulates that in the event of a fire in the building, there is a responsibility to compensate for damages to 'third parties,' which is defined as 'persons other than the house owner or immediate family.'

However, Hyundai Marine & Fire Insurance argued that individual A is a co-insured under the group insurance and therefore does not qualify as a third party, thus holds no liability.

The first trial ruled against Samsung Fire & Marine Insurance, citing that the negligence of the resident of unit 705 was not recognized. However, the second trial overturned the first trial's decision and ordered Hyundai Marine & Fire Insurance to pay 4.74 million won to Samsung Fire & Marine Insurance. A was recognized as a 'third party,' and it was concluded that Hyundai Marine & Fire Insurance must compensate for the damages according to the special terms. The second trial court stated, "Since the fire occurred in unit 705 and caused damage to unit 1305, individual A qualifies as a 'third party,' and Hyundai Marine & Fire Insurance has a responsibility to compensate individual A."

Hyundai Marine & Fire Insurance filed an appeal against the second trial ruling, but the Supreme Court found no errors in the second trial's decision. A Supreme Court official noted, "This is the first case explicitly ruling that when the residents' representative meeting of an apartment has enrolled in group insurance, individual homeowners are considered 'third parties' and that the group insurance company must compensate for damages in case of an incident."