[Becoming an Insurance Insider] Should You Inform Your Insurer If You Ride a Delivery Motorcycle?

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[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] Damage caused by motorcycle accidents is increasing day by day. Since the growth of the delivery industry after COVID-19, the operation of two-wheelers has surged, making two-wheeler insurance a hot topic in the non-life insurance industry.

According to the National Police Agency, last year, traffic accidents per 10,000 vehicles in South Korea were 74.2, continuing a steady decline over the past five years. The number of fatalities decreased from 4,292 in 2016 to 3,081 last year, and it is expected that this year the number may drop into the 2,000 range.

However, two-wheeler traffic accidents show a completely different pattern.

Based on police reports, two-wheeler traffic accidents increased steadily at an average annual rate of about 10%, from 15,773 cases per 10,000 vehicles in 2016 to 23,673 cases in 2020. In particular, the number of fatalities in two-wheeler traffic accidents reached 439 in 2020, accounting for 14.2% of all traffic accident deaths.

With the continued growth of the delivery industry and increased two-wheeler operation, there are concerns that motorcycle accidents will further increase in the future.

Most motorcycle accidents were caused by disorderly driving such as running red lights and speeding, as well as violations of traffic laws.

Among traffic law violation accidents, 65% were due to running red lights, which is 1.5 times higher than the 45.6% share of red light violations among personal two-wheelers. Additionally, one in five cases involved crossing the center line, and accidents due to unlicensed driving accounted for 9.8%.

By accident type, 4 out of 10 cases (38.1%) were rear-end collisions with the vehicle ahead caused by speeding or failure to drive safely. Collisions with surrounding vehicles due to sudden lane changes accounted for 25.4%, and accidents at intersections caused by entering without slowing down accounted for 24.2%, showing a pattern of frequent accidents involving two-wheelers used for paid transportation.

Furthermore, the day and time when delivery two-wheeler traffic accidents occur most frequently is Friday between 7 PM and 8 PM.

[Image source=Yonhap News]

Supreme Court: "Even if motorcycle delivery was not reported, insurer must pay if explanation was not given"

With the increase in delivery motorcycle accidents, it has become important for insurers to identify work use. Recently, the Supreme Court ruled that if the insurer did not properly explain the terms, they cannot refuse to pay insurance benefits on the grounds that the motorcycle operation was not reported, drawing attention.

The Supreme Court's 2nd Division (Presiding Justice Min Yoo-sook) overturned the lower court's ruling that dismissed the plaintiff's claim against Samsung Fire & Marine Insurance and remanded the case to the Busan District Court.

Mr. A had subscribed to five accident insurance policies with Samsung Fire & Marine Insurance from 2009 to 2014. In June 2015, while delivering food by motorcycle, he slipped and suffered cervical spine injuries, resulting in paralysis. Mr. A claimed insurance benefits but was denied.

The insurer argued that the first insurance policy included a two-wheeler coverage exclusion clause, so there was no obligation to pay. For the other four policies, they refused payment, claiming the insured violated the duty to notify the insurer about two-wheeler use.

Mr. A claimed that Samsung Fire & Marine Insurance did not properly explain the terms at the time of contract, but the first and second trial courts ruled against him.

However, the Supreme Court judged that the insurer failed to fulfill its duty to explain properly.

The Supreme Court stated, "Exemptions from the insurer's duty to clearly explain to the general public unfamiliar with accident insurance content, terms, and conditions should be interpreted strictly. It is difficult for the general public to easily determine whether their motorcycle operation constitutes continuous use requiring notification without the insurer's explanation," and ordered a retrial.

Following this Supreme Court ruling, insurers are expected to strengthen prior guidance on delivery motorcycle operation. The obligation to notify in advance about motorcycle riding and paid transportation is likely to become more important.

While it is expected that insurance blind spots will decrease, the burden of high insurance premiums for paid transportation remains an unresolved issue. According to the non-life insurance industry, as of the end of last year, the average insurance premium for paid transportation two-wheelers was 1.77 million KRW, more than 11 times higher than the 160,000 KRW for household and non-paid transportation insurance. The premium difference is due to the high accident rate of delivery motorcycles.

An official from the non-life insurance industry said, "If violations of traffic laws by two-wheeler drivers continue to be neglected as they are now, there will inevitably be limits to improving their awareness of such violations. Raising awareness that two-wheeler drivers will be caught if they violate traffic laws is necessary to reduce two-wheeler traffic accidents."