Financial Supervisory Service Discloses Precautions for Using Credit and Guarantee Insurance
Subscription Not Allowed if Deposit Falls Below Certain Level
Mr. Park, who lives in a jeonse apartment, recently saw news about reverse jeonse and worried that he might not get his deposit back, so he inquired about insurance enrollment with an insurance company. The insurer refused to provide coverage, citing a decline in the apartment’s market price, and Mr. Park filed a complaint with the Financial Supervisory Service.
Jeonse Deposit Guarantee Credit Insurance can be applied for until half of the lease contract period has elapsed. However, if the market price of the leased property falls below a certain level relative to the deposit, insurance enrollment is not possible, so caution is advised.
Based on recently received complaints, the Financial Supervisory Service provided guidance on the terms and conditions that users of credit and guarantee insurance often overlook on the 13th. Credit insurance is purchased by creditors to protect against debtors’ default. Guarantee insurance is purchased by debtors on behalf of creditors.
Even if insured under Jeonse Deposit Guarantee Credit Insurance, compensation may not be possible if the contract holder does not notify the landlord of their intention to refuse renewal at least two months before the lease contract ends. If the tenant fails to notify the landlord of refusal to renew the lease two months before expiration, the lease is implicitly renewed. This means a new contract with the same terms is considered to have been established. Any deposit non-return incidents occurring thereafter pertain to a separate lease contract and are not covered by the insurance contract.
The policyholder has an obligation to maintain the priority repayment right throughout the insurance period. If the resident registration is changed due to moving out, the priority repayment right is lost from that point, and compensation may not be received. Also, even if the policyholder maintains resident registration, if they move to another residence, remove all household items, and hand over the door keys?thus losing actual control?they fail to maintain possession, a requirement for the priority repayment right, and may not receive compensation.
Guarantee insurance is a contract made for the benefit of a third party such as a creditor, who is the insured. When the policyholder cancels early or changes contract details such as the insurance period or coverage amount, the insured’s consent is required. When calculating the refund premium for the remaining period, the cancellation date is not the date the insurer is notified of the cancellation intention, but the date when necessary documents such as the insured’s written consent are received, so caution is needed.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
