Claim for Insurance Due to Car Value Depreciation After Accident... Why It Was Denied

Financial Supervisory Service Advises Caution
on Insurance for Depreciation in Used Car Value

#Driver Moon was operating a vehicle that had been in use for seven years since purchase when another driver caused a traffic accident, resulting in repair costs of 12 million won. After checking the used car market, Moon found that the market value had dropped by approximately 17 million won and filed a complaint, insisting that the insurance company compensate for the loss in market value. However, the automobile insurance policy stipulates that compensation for loss in market value is only available for vehicles that have been in use for five years or less since purchase. As a result, the insurance company denied Moon's claim, stating that the loss was not eligible for compensation.

It has been pointed out that even if policyholders claim insurance compensation for loss in used car market value after an accident, it is often difficult to receive payment unless certain conditions are met. Policyholders are advised to clearly understand these requirements.

On November 23, the Financial Supervisory Service explained that, according to automobile insurance policies, compensation for loss in market value is only paid for vehicles that have been in use for five years or less since purchase, and only if the repair costs exceed 20% of the vehicle's value immediately before the accident, regardless of the actual decline in market value in the used car market.

In automobile insurance property damage coverage, compensation for loss in market value is a regulation that covers the depreciation of a vehicle due to repair history following a traffic accident. The policy does not compensate for the actual amount by which the used car market value has decreased, but instead calculates the compensation amount by considering the age of the damaged vehicle and the repair costs, treating this calculated amount as the loss in market value.

The Financial Supervisory Service also shared another case. Driver Park was operating a vehicle that had been in use for three years since purchase when another vehicle collided with Park's car, resulting in repair costs of 2 million won. Park filed a complaint, stating that the used car market value (30 million won) was expected to decrease due to the accident and that compensation for the loss in market value was necessary.

However, the automobile insurance policy stipulates that compensation for loss in market value is only available when the repair costs exceed 20% of the vehicle's value immediately before the accident. Since Park's repair costs (2 million won) did not exceed 20% (6 million won) of the pre-accident vehicle value (30 million won), the insurance company stated that the loss in market value was not eligible for compensation.

The Financial Supervisory Service further cautioned that, under automobile insurance policies, the compensation amount for loss in market value is not the actual decrease in market value in the used car market, but rather an amount calculated according to policy standards (10-20% of the repair costs), and policyholders should take note of this.