[1] The meaning of a guarantee insurance, and the requirements for the insured to exercise the insurance claim against the insurer

[2] Standard for determining the specific amount of an insurance accident in a guarantee insurance contract, and where the purpose of the guarantee insurance contract is to compensate for damages caused by the policyholder’s failure to perform the duty to repair defects during the warranty period of the main contract, but the insurance period is the same as the warranty period of the main contract, whether the said guarantee insurance contract should be construed as a contract with the effect that the insurer is liable even if the insurance accident occurred after the expiration of the warranty period for the defects that occurred within the cover

[3] In a case where Party A and Company B entered into a warranty insurance contract with respect to contracted construction works for which the insurance period was five years, which is the same period as the warranty period, and the five-year insurance period expired, and the pledge against Party B’s future claim for reimbursement against Party A as the secured claim for reimbursement, the case holding that the lower court erred by misapprehending the legal doctrine, on the ground that the warranty period under the main contract, which is the same period as the insurance period of the above insurance contract, was expired without exercise of right, and thus the future claim for reimbursement was extinguished

[1] A guarantee insurance policy refers to a non-life insurance policy under which the insurer takes over the coverage of the loss to be suffered by the insured (a creditor under a principal contract) due to a policyholder’s default on an obligation under a certain legal relationship with the insured. In order for the insured to exercise its insurance claim against the insurer, the insured requires two requirements such as “the occurrence of an insured event” in which the policyholder’s default on an obligation under a principal contract and the occurrence of the insured’s property loss. In other words, the insurer shall compensate for the loss incurred by the insured due to a policyholder’s default on an obligation under a principal contract within the scope of the insurance contract amount.

[2] The term "accident" refers to an uncertain accident that specifies the insurer's obligation to pay insurance proceeds in an insurance contract. The specific issue of the insurance accident in a guarantee insurance policy ought to be determined by comprehensively taking into account the terms and conditions of the insurance contract incorporated into account an agreement between the parties to the contract and the details of the insurance contract and the contract cited in the terms and conditions of the insurance contract. In addition, if the insurance period is stipulated in the guarantee insurance policy, the insurer is in principle liable for the insurance contract only when the insurance accident occurs within the given period. However, if the purpose of the guarantee insurance contract is to compensate for damages caused by the policyholder's failure to perform the insurer's duty to repair defects during the warranty period of the principal contract, barring special circumstances, the said guarantee insurance contract should be interpreted as a contract that takes responsibility as the insurer even if the insurance accident occurred after the expiration of the warranty period.

[3] Where Party A and Party B concluded a warranty insurance contract with respect to the contracted construction works for which the insurance period was five years, which is the same period as the warranty period, and the five-year insurance period elapsed, and the pledge against Party B’s future claim for reimbursement against Party A is terminated, the case holding that the judgment below erred by misapprehending the legal principle that Company B is liable for damages within the scope of the insurance coverage period, even if Party A’s claim for reimbursement or supplementation of the defects arising within the five-year insurance period was received by Party A, a policyholder (debtor under the main contract), but failure to perform the claim for reimbursement or supplementation, and the insurance period in this case is clearly different from that of Party A’s claim for remuneration or supplementation, and even if Party A’s claim for reimbursement or supplement was made within the insurance coverage period after the lapse of the insurance period, it cannot be readily concluded that the warranty liability period of the aforementioned insurance contract was extinguished by the misapprehension of the legal principle as to the claim for reimbursement against Party A’s future claims under the condition that Party B’s claim for reimbursement was not established.

[1] Articles 65 and 726-5 of the Commercial Act / [2] Articles 665, 666 subparagraph 5, and 726-5 of the Commercial Act; Article 105 of the Civil Act / [3] Articles 665, 66 subparagraph 5, and 726-5 of the Commercial Act; Article 105 of the Civil Act

[1] Supreme Court Decision 2001Da68914 Decided September 26, 2003 (Gong2003Ha, 2062), Supreme Court Decision 2004Da20265 Decided December 24, 2004 (Gong2005Sang, 191) / [2] Supreme Court Decision 2013Da62490 Decided November 26, 2015

Plaintiff (Law Firm Dongnam, Attorneys Ahn Chang-hwan et al., Counsel for the plaintiff-appellant)

Seoul Guarantee Insurance Co., Ltd. and one other (Law Firm Freeboard, Attorneys Song Jin-jin et al., Counsel for the plaintiff-appellant)

Changwon District Court Decision 2019Na61523 decided June 19, 2020

The part of the lower judgment against Defendant Seoul Guarantee Insurance Co., Ltd. is reversed, and that part of the case is remanded to Changwon District Court. The appeal against Defendant New Bank is dismissed. The costs of appeal between the Plaintiff and Defendant New Bank are assessed against the Defendant New Bank.

The grounds of appeal are examined.

1. As to the grounds of appeal by Defendant Seoul Guarantee Insurance Co., Ltd. (hereinafter “Defendant Guarantee Insurance”)

A. Based on its reasoning, the lower court: (a) premised on the premise that the warranty liability of the instant construction against Non-Party Co., Ltd. (the trade name before the change: hereinafter “Non-Party Co., Ltd.”) of the Defendant Guarantee Insurance ceases to exist upon the lapse of five-year limitation period; and thus, (b) the future indemnity claim against the Non-Party Co., Ltd. under each of the instant warranty insurance contracts against the Defendant Non-Party Co., Ltd. under the Defendant Guarantee Insurance will not definitely occur; and (c) on the ground that this constitutes a ground for termination of each of the instant pledge contracts, the lower court determined that the Defendant Guarantee Insurance was liable to notify the Defendant New Bank Co., Ltd. (hereinafter “Defendant Bank

B. However, among the above determination by the court below, it is difficult to accept for the following reasons that the future claim for reimbursement against the non-party company of the defendant surety insurance, which is the secured claim of the pledge of this case, does not definitely accrue.

1) The term "guarantee insurance" means a non-life insurance contract the insurer accepts the coverage of the loss that the insured (beneficiary under a principal contract) will incur due to a policyholder's non-performance of an obligation under a certain legal relationship with the insured, and the insured requires two requirements, "the occurrence of an insured event," which is called a policyholder's default on the principal contract, and "the occurrence of the insured's property loss," which is based on this. In other words, the insurer shall compensate for the loss that the insured suffers due to the policyholder's failure to perform his/her obligation under a principal contract, within the scope of the insurance contract amount (see, e.g., Supreme Court Decisions 2001Da68914, Sept. 26, 2003; 2004Da20265, Dec. 24, 2004).

In particular, an insurance accident refers to an uncertain accident that specifies the liability of the insurer for the payment of insurance proceeds in an insurance contract. The specific issue of an insurance accident in a guarantee insurance policy shall be determined by comprehensively taking into account the insurance clause included in the contract under an agreement between the parties and the specific contents of the insurance clause and the main contract citing the insurance clause. In addition, if the insurance period is stipulated in a guarantee insurance policy, the insurer is in principle liable for the insurance contract only when the insurance accident occurs within the given period. However, if the purpose of the guarantee insurance contract is to compensate for losses caused by the policyholder’s failure to perform the duty to repair defects for the defect that occurred within the warranty period of the main contract, unless special circumstances exist, the said guarantee insurance contract is interpreted as a contract that assumes liability as an insurer even if the insurance accident occurred after the expiration of the warranty period (see Supreme Court Decision 2013Da62490, Nov. 26, 2015, etc.).

2) According to the reasoning of the judgment below, the non-party company and the defendant surety insurance in relation to each of the instant construction works for which the non-party company entered into each of the instant warranty insurance contracts with the insurance period of five years, respectively. Article 6 of the insurance clauses provides that “The company shall compensate for the loss suffered by the insured, who is the creditor, by failing to perform the repair or supplement claim under the main contract entered into in the insurance policy, even though the contractor, who was the debtor, received the completion inspection or examination of the contract or the sales contract and received the request for the repair or supplement of the defects that occurred within the warranty period, even if they were to do so.”

In light of the above legal principles, the insured event stipulated in each of the warranty insurance contracts of this case refers to the non-party company, which is a policyholder (debtor under the main contract), received a claim for the repair or supplementation of the defects that occurred within the insurance period of five years, but fails to perform it. The insurance period of this case is only the occurrence of each of the construction works of this case done by the non-party company, and it is clear in the language and text of Article 6 of the insurance clause that the non-party company received a claim for the repair or supplementation. Therefore, as to the defects that occurred within the insurance period of each of the warranty insurance contracts of this case, even if the non-party company requested the repair or supplementation after the expiration of the insurance period, even if the non-party company did not perform it in accordance with the main contract, the defendant surety insurance is also liable for such defects within the scope of the insurance amount. Furthermore, it cannot be readily concluded that each of the claims for compensation against the non-party company of the defendant surety insurance of this case, which is the secured claim of each of this case, was extinguished.

3) Nevertheless, the lower court determined that the Plaintiff’s claim for the Defendant’s surety insurance against the non-party company of the Defendant surety insurance was not established definitely on the ground that the period of each of the instant warranty insurance contracts was expired without exercising the right within the period of warranty of each of the instant warranty insurance contracts, which is identical to the period of each of the instant warranty insurance contracts, and that the Plaintiff’s claim for reimbursement against the non-party company of the Defendant surety insurance was accepted. In so determining, the lower court erred by misapprehending the legal doctrine on the meaning and occurrence of the insured events under the guarantee insurance contract, thereby failing to exhaust all necessary deliberations. The allegation contained in the grounds of appeal on this point is with merit.

2. As to the appeal by Defendant Bank

When an appellate brief is not filed within the deadline for submitting the appellate brief prescribed in Article 427 of the Civil Procedure Act, the appeal shall be dismissed pursuant to Article 429 of the same Act.

According to the records, the defendant bank did not state the grounds for objection in the petition of appeal, and did not submit the appellate brief within the deadline for submitting the appellate brief, which constitutes grounds for dismissal of appeal.

3. Conclusion

Therefore, without further proceeding to decide on the remainder of the grounds of appeal by Defendant Guarantee Insurance, the part regarding Defendant Guarantee Insurance among the judgment below is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The appeal by Defendant Bank is dismissed, and the costs of appeal between the Plaintiff and Defendant Bank are assessed against the losing party. It is so decided as per Disposition

Justices Kim Jae-hyung (Presiding Justice)