The Supreme Court ruled that an insurer must pay benefits when a life insurance policyholder is injured in a traffic accident and receives treatment during the coverage period but dies after the policy matures.
The Supreme Court's First Division (presiding Justice Ma Yong-ju) said on the 3rd that on the 2nd of last month it overturned an appellate ruling that said the insurer did not have to pay benefits and remanded to the Seoul Central District Court in the suit filed by a person surnamed Park against Shinhan Life for insurance benefits.
Park's spouse, identified as A, enrolled on Apr. 16, 2003, in Shinhan Life's 20-year term policy. The amount to be paid to the legal heirs in the event of death in a weekday traffic accident was 35 million won. If A had survived for 20 years without dying, Shinhan Life would pay a "maturity bonus."
On the morning of Jan. 11, 2023, a weekday, A was struck by a car on a road in front of an apartment in Gwangsan District, Gwangju, received treatment at a hospital, and died on June 20 that year. Park claimed the insurance benefits, but Shinhan Life refused, saying A died after the coverage period ended.
The policy terms A enrolled in state, "If the insured dies due to a traffic accident during the policy period, the death benefit will be paid." Park argued that because A died from a traffic accident that occurred during the policy period, the benefits must be paid, but Shinhan Life countered that because A did not die during the policy period, it had no obligation to pay.
The first trial ruled that Shinhan Life must pay Park 35 million won in insurance benefits. The first trial panel cited a Supreme Court precedent that "when the meaning of the terms is unclear, they must be interpreted in favor of the customer."
By contrast, the appellate court dismissed Park's claim. The appellate panel said, "If it is interpreted to include cases where the accident directly causing death occurred during the policy period but death occurred after the policy period ended, the insured would be able to receive both the maturity bonus and the death benefit."
The Supreme Court said, "The grounds for paying the traffic-accident death benefit under the policy terms are not clear, so it is reasonable to interpret, by applying the contra proferentem principle under the Act on the Regulation of Terms and Conditions, that only the occurrence of a traffic accident during the policy period is required." It then found that the lower court misapplied the legal principles governing the interpretation of insurance policy terms.