[1] Whether an insurer may refuse the insured's claim for insurance money in a case where there is a clause of non-payment refusal as stipulated in Article 724 (1) of the Commercial Code under an automobile insurance clause (affirmative with qualification)

[2] Whether the insurer may refuse the insured's claim for the payment of insurance money pursuant to Article 724 (1) of the Commercial Act and Article 724 (1) of the Automobile Insurance Clause before the victim receives actual compensation from the insured even if the decision of recommending settlement that the victim would pay the damages in the lawsuit of claiming compensation against the insured (affirmative)

[1] In the context of an insurance company's automobile insurance clause, if the insured does not have a clause refusing payment of insurance money to the insured before the insured pays damages to a third party, the insurer shall be deemed to have waived the right to refuse payment under Article 724 (1) of the Commercial Act according to the terms and conditions. However, if the terms and conditions explicitly provide for refusing payment, the insurer shall be entitled to refuse the insured's claim for payment of insurance money under Article 724 (1) of the Commercial Act and Article 724 (1) of the Commercial Act unless there are special circumstances to deem that the insurer has renounced or not exercised the right to refuse payment.

[2] Even if the decision to recommend settlement has become final and conclusive in a claim for damages filed by the victim against the insured, if there exists a clause that "the insurer does not pay all or part of the insurance money before the claimant for damages has received damages, and does not pay it in excess of the amount of damages paid by the insured," the insurer may refuse the insured's claim for the payment of the insurance money pursuant to Article 724 (1) of the Commercial Act and Article 724 (1) of the same Act before the victim has actually received damages from the

[1] Article 724 (1) of the Commercial Act / [2] Article 724 (1) of the Commercial Act

[1] Supreme Court Decision 94Da1788 delivered on September 15, 1995 (Gong1995Ha, 3365), Supreme Court Decision 94Da28093 delivered on September 26, 1995 (Gong1995Ha, 3509), Supreme Court Decision 95Da24807 delivered on September 29, 1995 (Gong1995Ha, 3620), Supreme Court Decision 200Da2542 delivered on October 13, 200 (Gong200Ha, 2317), Supreme Court Decision 203Da35611 delivered on November 14, 2003

[Plaintiff-Appellee] One other

Dongbu Fire and Marine Insurance Co., Ltd. (Law Firm Vindication, Attorneys Gyeong-soo et al., Counsel for the plaintiff-appellant)

Busan High Court Decision 2006Na555 decided June 15, 2006

The part of the judgment of the court below against the defendant ordering the payment of KRW 43,163,766 and damages for delay thereof shall be reversed, and this part of the case shall be remanded to Busan High Court. The remaining appeal by the defendant shall be dismissed.

We examine the grounds of appeal.

1. As to the misapprehension of legal principles as to the duty to clarify and explain the terms and conditions

Upon entering into an insurance contract, the insurer and the person engaged in the conclusion or solicitation of the insurance contract are obligated to specify and explain the important contents of the insurance contract, such as the content of the insurance contract, the system of the insurance premium rate, changes in the matters stated in the written application for the insurance, and reasons for the exemption of the insurer's liability. If the insurer entered into an insurance contract in violation of such duty to specify and explain the insurance contract, he/she may not claim the contents of the contract as the content of the insurance contract (see Supreme Court Decisions 97Da4494 delivered on September 26, 1997; 2005Da38713, 38720 delivered on October 28, 2005).

The court below, after compiling the adopted evidence, found facts as stated in its decision, and found that the non-party 1, an insurance solicitor of the defendant at the time of entering into the insurance contract of this case, did not explain the contents of the special agreement on limited driving to the family in this case on behalf of the plaintiff Ansan, and failed to perform his duty to explain and explain them. Thus, the defendant cannot assert the contents of the above special agreement as the contents of the insurance contract of this case. In light of the above legal principles and the records, the above fact-finding and determination of the court below is just and it is not erroneous in the misapprehension of legal principles as to the violation of the rules of evidence or the duty to explain the terms and conditions.

In addition, in light of the records, it is difficult to view that the criteria of knowledge at the time of entering into the insurance contract of this case had been well aware of the contents of the above special agreement, and thus, it cannot be viewed that the defendant

The ground of appeal pointing out this point is without merit.

2. As to the misapprehension of legal principles as to Article 724(1) of the Commercial Act

A. Article 724(1) of the Commercial Act provides that "An insurer shall not pay all or part of the insured amount to the insured before a third party receives compensation for any damage caused by an accident attributable to the insured." Thus, if the insured does not have a clause that prohibits the insured from paying the insurance amount before the insured pays the damage to a third party (hereinafter referred to as "payment refusal clause"), such as the provisions of the insurance company's automobile insurance clause, the insurer shall be deemed to waive the right to refuse payment under Article 724(1) of the Commercial Act according to the terms and conditions (see, e.g., Supreme Court Decisions 94Da1788, Sept. 15, 1995; 95Da24807, Sept. 29, 1995; 95Da24807, Sept. 29, 1995; 200. 36. 15. 205. 14. 2005. 14. 2005. 14. 2005. 14.

B. The court below acknowledged, based on its adopted evidence, that the non-party 2, the victim of the instant accident, filed a claim for damages against the Plaintiffs, who are the insured of the instant insurance contract, the Plaintiffs confirmed that the settlement recommendation decision was made to pay damages to each of the non-party 2, 43,163,766 won and damages for delay (hereinafter referred to as the "determined amount of accrued damages"). Although the Plaintiffs did not actually pay the confirmed amount of damages to the non-party 2, the insured may claim for insurance proceeds if the amount of damages to the insured is determined by judicial compromise, etc., and the insurer shall pay insurance proceeds within 10 days, on the ground that the Defendant, the insurer, cannot refuse the Plaintiffs' claim for the payment of the insurance proceeds under Article 724(1) of the Commercial Act, and ordered the Defendant to pay the confirmed amount of accrued damages to the Defendant.

C. However, the defendant asserts that the terms and conditions explicitly stipulate that "the defendant shall not pay all or part of the insurance money to the insured before the claim for damages is paid by the insured, and shall not pay it in excess of the amount of damages paid by the insured," and the plaintiffs do not dispute this point. Thus, the defendant may refuse the claim of the insured for the payment of the insurance money in accordance with Article 724 (1) of the Commercial Act and Article 724 (1) of the same Act before the victim is actually compensated by the insured.

Nevertheless, the judgment of the court below ordering the payment of unpaid damages solely for the reasons stated in its holding is erroneous in the misapprehension of legal principles as to Article 724 (1) of the Commercial Act or by failing to exhaust all necessary deliberations, which affected the conclusion of the judgment. The ground of appeal pointing this out has merit, and this part of the judgment of the court below cannot be reversed.

3. Therefore, the part of the judgment of the court below against the defendant ordering the payment of the amount of unpaid damages is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The defendant's remaining appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices

Justices Kim Yong-dam (Presiding Justice)