[2] In a case where it is found that the policyholder claimed insurance proceeds as a ground for payment of the medical treatment or received the payment of the whole or part of the hospital treatment, whether the insurer may terminate the insurance contract (affirmative with restriction) / Whether the insurer has a prior obligation to explain the above termination right to the insurer (negative), and whether the insurer’s exercise of the insurer’s right to termination can be deemed as a violation of Article 63 of the Commercial Act and Article 9 subparag. 2 of the Regulation of Standardized Contracts Act (negative) / Whether the exercise of the above termination right can be deemed as a violation of the principle of trust and good faith under the insurance contract solely on the ground that the insurer did not disclose that the insurer did not meet the payment requirements at the stage of examining the payment of the insurance proceeds

[3] Whether an unfair act by either party that destroys trust relationship, which serves as the basis of an insurance contract, may entirely affect the whole insurance contract in a case where such act is so serious that it is difficult to expect the maintenance of the contract itself, even though it is related to a special agreement on the pertinent insurance contract (affirmative in principle)

[2] In a case where the policyholder claimed for the payment of the insurance money as a ground for the payment of the hospitalized treatment or where it is found that all or part of the hospitalized treatment was not required, the insurer may terminate the insurance contract if it is deemed that there is a serious reason to expect the existence of the insurance contract as a basis for the insurance contract due to the loss of trust relationship, which serves as the basis for the policyholder’s claim for unfair insurance money or the receipt of the insurance money, due to the destruction of the insurance contract, in full view of various circumstances, such as the background leading up to receiving the hospitalized treatment, whether the patient knew that there was no need for the hospitalized treatment, the number of days of being hospitalized without the necessity of the hospitalized treatment, claim for insurance money or its receipt, frequency of receiving the insurance money

Meanwhile, such termination right is based on Article 2 of the Civil Act that provides for the principle of trust and good faith and is naturally premised on an insurance contract relationship. Thus, it cannot be deemed that the insurer has an obligation to explain in advance to the insurer, or the insurer’s exercise of such termination right violates Article 63 of the Commercial Act and Article 9 subparag. 2 of the Regulation of Standardized Contracts Act. The insurer’s exercise of such termination right does not constitute a violation of the principle of trust and good faith under an insurance contract solely on the ground that the insurer did not disclose that it failed to meet the payment requirements at the stage of examining the payment of insurance proceeds and paid insurance proceeds. However, such termination right is not an insurance contract that is not specified in the insurance clause and it is not clear whether there exists any cause for termination in a specific case, and it may be an excessive disadvantage to the policyholder, taking into account that the insurer’s rejection of unfair claim for insurance proceeds or refund of the already paid insurance proceeds, the insurer’s exercise of such termination

[3] A contract of insurance requires a strong fiduciary relationship between the parties due to the nature of the party’s ethical and good faith required. Therefore, in a case where an insurance contract is destroyed by an unfair act of the party to the contract and the other party terminates the contract, if an unfair act of the party that destroys the fiduciary relationship is related to a special agreement, not the principal contract of the relevant insurance contract, even though such act is so serious that the whole insurance contract cannot be expected to maintain the contract itself due to its significant impact, it shall be deemed that the termination extends to the whole insurance contract, barring special circumstances.

1. Review of the reasoning of the lower judgment and the record reveals the following facts.

A. On November 14, 2015, the Plaintiff entered into the instant insurance contract with the Defendant, the insured, the beneficiaries of the residual disability insurance proceeds, and the beneficiaries of the death insurance proceeds, respectively, based on a selective contract that guarantees the payment of the fixed amount of insurance proceeds in the event of injury, death, or disability after the death of the Plaintiff, as a basic contract for the payment of the fixed amount of insurance proceeds, and as a selective contract that guarantees hospitalization, general medical expenses incurred by injury

B. Although it is possible for the Plaintiff to receive medical treatment, the Plaintiff was prosecuted for committing a crime that acquired insurance money, such as a large amount of medical expenses, from eight insurance companies including the Defendant, by committing long-term hospitalization, and was sentenced to conviction, and the judgment became final and conclusive (hereinafter “related criminal case”).

C. The Defendant filed a lawsuit against the Plaintiff seeking the return of unjust enrichment on the ground of the fraudulent fraud of the insurance money paid during the period in which a public prosecution was instituted in the relevant criminal case, and the judgment became final and conclusive.

D. The Plaintiff filed a claim against the Defendant for the instant insurance money on the ground that the special agreement on guaranteeing medical expenses incurred in hospitalization (hereinafter “the instant special agreement”) under the instant insurance contract is subject to the payment of insurance money. Of the criminal facts found guilty in the relevant criminal case, the amount obtained by the Plaintiff from the Defendant is equivalent to KRW 11,045,855 in total.

E. On July 27, 2018, the Defendant notified the Plaintiff of the termination of the instant insurance contract based on Article 14(1)1 and 3 of the General Terms and Conditions of the instant insurance contract, and Articles 653 and 659 of the Commercial Act, on the ground that the Defendant was found guilty in the relevant criminal case.

F. Article 14(1) of the General Terms and Conditions of the instant insurance contract provides that no compensation shall be made for damage caused by the insured or the contractor’s intentional act, and Paragraph (2) provides that the contract may be terminated upon occurrence of such cause. Article 2(1) and (2) of the General Terms and Conditions of the instant Special Terms and Conditions are identical to Article 2 of the General Terms and Conditions of the instant Special Terms and Conditions.

2. Whether the termination of the instant insurance contract is lawful

A. An insurance contract is a continuous contract that exists during the insurance period as well as a continuous contract that remains in existence for a long time, and is likely to cause moral hazard, and thus requires strong trust between the parties. Therefore, if the fiduciary relationship, which forms the basis of the contract, is destroyed due to a party’s unfair act, etc. during the existence of the insurance contract, and the existence of the contract is not expected due to a serious reason, the other party may terminate the contract to the future by terminating it.

In a case where the policyholder claimed or paid the insurance money for the cause of the payment of the hospitalized treatment, but it is found that the whole or part of the hospitalized treatment is unnecessary, the insurer may terminate the insurance contract if the insurance contract is deemed to have been destroyed due to the policyholder’s improper claim for the insurance money or the receipt of the insurance money, and if it is deemed that there exists a serious reason that the existence of the insurance contract cannot be expected to continue, in full view of various circumstances, such as the background leading up to the hospitalized treatment, whether the hospitalized patient was aware of the absence of the necessity of the hospitalized treatment, the number of days of hospitalization without the necessity of the hospitalized treatment, claim for or receipt of the insurance money, frequency of receipt of the insurance money, circumstances relating to other insurance contract to which

Meanwhile, such termination right is based on Article 2 of the Civil Act that provides for the principle of trust and good faith and is naturally premised on an insurance contract relationship. Thus, it cannot be deemed that the insurer has an obligation to explain in advance to the insurer, or the insurer’s exercise of such termination right violates Article 63 of the Commercial Act and Article 9 subparag. 2 of the Regulation of Standardized Contracts Act. The insurer’s exercise of such termination right does not constitute a violation of the principle of trust and good faith under an insurance contract solely on the ground that the insurer did not disclose that it failed to meet the payment requirements at the stage of examining the payment of insurance proceeds and paid insurance proceeds. However, such termination right is not an insurance contract that is not specified in the insurance clause and it is not clear whether there exists any cause for termination in a specific case, and it may be an excessive disadvantage to the policyholder, taking into account that the insurer’s rejection of unfair claim for insurance proceeds or refund of the already paid insurance proceeds, the insurer’s exercise of such termination

B. The lower court determined as follows.

Of the instant insurance contract, the instant insurance accident under the instant special agreement refers to “the subject of hospitalized treatment due to a disease,” and if the Plaintiff was hospitalized by exaggeration or by deceiving symptoms even though it was a disease that could cause pain, it constitutes “the case where the insured or the policyholder intentionally causes an insurance accident” under Article 14(1) of the General Terms and Conditions of the instant insurance contract, and thus, the instant insurance contract was lawfully terminated by giving notice of termination pursuant to Article 14(1) and (2) of the General Terms and Conditions of the instant insurance contract, as it constitutes a cause for the Defendant to cancel the insurance contract pursuant to Article 14(2)

In addition, a continuous contract, such as the instant insurance contract, may be terminated if it is difficult for the other party to maintain the trust relationship as it is destroyed and kept. The instant termination notice may also be deemed to have expressed his/her intent of termination on the ground that the Defendant destroyed the trust relationship. Even if not, the contract was lawfully terminated at the time when the Defendant delivered the Plaintiff the statement of reasons for appeal containing his/her intent to terminate the instant insurance contract due to the destruction of trust relationship.

C. We examine the judgment of the court below in light of the aforementioned legal principles.

Article 14(1) and (2) of the General Terms and Conditions of the instant insurance contract purport that the insurance contract may be terminated in cases where the insured et al. intentionally caused a disease, etc. and caused medical expenses to be incurred after receiving hospitalized treatment. Since the Plaintiff’s false and excessive hospitalization actually occurred, but the Plaintiff received hospitalized treatment in the absence of the need to be hospitalized, it does not constitute grounds for termination under the said general terms and conditions. Furthermore, as the Defendant paid the relevant insurance money in accordance with the instant special agreement, Article 2(2) of the Special Terms and Conditions of the instant special agreement is applicable to the grounds for termination. The Defendant erred by applying Article 14(2) of the General Terms and Conditions at the time of notice

However, taking account of the circumstances such as the amount of unfair payment insurance money related to the claim of this case, and the progress of relevant criminal cases, it can be acknowledged that the Plaintiff’s claim of insurance money destroyed the fiduciary relationship, which serves as the basis of the insurance contract of this case, and thus, there is a serious reason for not able to expect the continuation of the insurance contract. Therefore, the termination notice of this case includes the declaration of termination on the ground of the damage to the fiduciary relationship, and even if not, the lower court’s conclusion that the insurance contract of this case was lawfully terminated at the time when the appellate brief of this case containing the Defendant’s declaration of termination on the ground of the damage to the fiduciary relationship reaches the Plaintiff is justifiable, and as long as the termination on the ground of the damage to the fiduciary relationship is acknowledged, the lower court did not exhaust all necessary deliberations

3. Scope of termination.

A. As seen earlier, an insurance contract requires a strong fiduciary relationship between the parties due to the nature that is sufficiently required of the party’s ethical and good faith. Therefore, in a case where an insurance contract is destroyed due to a party’s unfair act and the other party terminates the contract, if an unfair act by the party that destroys the fiduciary relationship is related to a special agreement that is not a main contract of the relevant insurance contract, even if such act is serious and thus, it cannot be expected that the entire insurance contract should be maintained due to its significant impact, barring special circumstances, the effect of termination shall be deemed to affect the entire insurance contract.

B. The lower court determined that the instant insurance contract was entirely terminated as indicated in its holding. Examining the reasoning of the lower judgment in light of the relevant legal doctrine and the record, the lower court did not err by misapprehending the legal doctrine on the scope of termination as

4. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Noh Jeong-hee (Presiding Justice)