Termination of Insurance Contract due to Violation of Obligation to Give Notice under Article 652 of the Commercial Law: A critical analysis of the Korea Supreme Court Case No. 2012Da62318 rendered on 24. July 2014

Abstract

In the case of an accident while driving a motorcycle after signing an accident insurance, the judgment is divided by the court on whether the Policyholder knew the “legal” meaning of motorcycle driving in relation to the insurance contract according to the evidence submitted by the Plaintiff and the Defendant. In the target case, the court accepted the argument made by the insurer that the insured party violated the legal duty to inform after contract them, as they did not inform the insurer despite knowing that motorcycle driving represented an increase in risk. Given that the duty to notification and the duty to inform after contract are considered to be in line with each other in the process of entering into and maintaining an insurance contract, this interpretation appears to be disadvantageous to the general public. As a result of reviewing this target judgment, it is deemed necessary to interpret strictly whether the insured party was aware that motorcycle driving posed a ‘significant change or increase in the risk' related to the insurance contract, and whether they were aware of the existence of the duty to inform after contract and its consequences and strengthening the insurer's burden of proof and the duty to explain the terms. It is believed that policyholders can be protected in the reality of the insurance industry, where insurance contracts are concluded under the terms and conditions unilaterally prepared by insurers in a superior economic and social position.