[Become an Insurance Insider] Don't Expect Help from Insurance Companies in Cases of Drunk Driving or Hit-and-Run Accidents

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[Asia Economy Reporter Oh Hyungil] Starting next month, the standard automobile insurance policy will apply an increase in the deductible for voluntary insurance in cases of drunk driving, unlicensed driving, and hit-and-run accidents.

Additionally, from October, the revised Enforcement Rules of the Automobile Damage Compensation Guarantee Act, which raise the deductible for mandatory insurance for drunk drivers, are also scheduled to be implemented.

Accordingly, drivers involved in unlicensed or hit-and-run accidents will have to pay up to 154 million KRW. In the case of accidents caused by drunk driving, the deductible will be up to 165 million KRW.

This implies that no assistance should be expected from non-life insurance companies in the event of an accident.

According to the insurance industry on the 30th, current automobile insurance requires mandatory subscription to 'Bodily Injury I' with a damage amount up to 150 million KRW based on death criteria, and 'Property Damage' with damage up to 20 million KRW. Voluntary insurance consists of 'Bodily Injury II' and 'Property Damage' covering amounts exceeding these limits.

Until now, when a drunk driver caused an accident, the driver only had to pay a deductible of up to 3 million KRW for 'Bodily Injury I' and 1 million KRW for property damage. The insurance company covered the remaining damages. This led to the problem of insurance premium burdens being passed on to other good insurance consumers.

Therefore, the deductible for drunk drivers will be raised to 10 million KRW for 'Bodily Injury I' and 5 million KRW for mandatory property damage. The Ministry of Land, Infrastructure and Transport is promoting the revision of the Enforcement Rules of the Automobile Damage Compensation Guarantee Act containing these details, which is expected to be implemented around October.

Along with this, if a drunk driving accident or hit-and-run accident occurs, deductibles will also be imposed on voluntary insurance 'Bodily Injury II' and 'Property Damage (over 20 million KRW)'.

The deductible will be up to 100 million KRW for 'Bodily Injury II' and 50 million KRW for voluntary property damage.

Unlicensed driving accidents were previously included in 'non-compensable damages' under voluntary 'Bodily Injury II' and property damage, but with this revision, they will be subject to deductibles.

Accordingly, if a drunk driving accident causes bodily injury damages of 200 million KRW and property damage of 50 million KRW, the insurance company can seek reimbursement from the driver for 60 million KRW related to bodily injury damages (10 million KRW deductible for Bodily Injury I + 50 million KRW deductible for Bodily Injury II) and 35 million KRW related to property damage (5 million KRW deductible for mandatory property damage + 30 million KRW deductible for voluntary property damage) after compensating the victims.

However, the deductible amount may vary depending on the accident damage amount. If bodily injury damages are 150 million KRW or less or property damage is 20 million KRW or less, voluntary insurance does not apply, and only 3 million KRW (raised to 10 million KRW after the revision) and 1 million KRW (raised to 5 million KRW after the revision) respectively need to be paid.

The financial authorities estimate that the introduction of deductibles for voluntary insurance will reduce annual insurance payouts for drunk driving by about 70 billion KRW, resulting in a 0.5% reduction in insurance premiums.