[1] Criteria for determining what an insurance accident occurred in a guarantee insurance policy

[2] Where the purpose of the Guarantee Insurance Contract is to compensate for damages caused by the policyholder’s failure to perform the warranty liability period for the defect that occurred during the warranty period of the prime contract, whether the insurer is liable even if the insured event occurred after the expiry of the warranty period for the defect that occurred during the warranty period of the prime contract (affirmative in principle)

[3] The starting point of the statute of limitations of the right to claim insurance (=the time the insurance accident occurred) and the person who asserts the benefit of the statute of limitations

[1] Articles 65, 66 subparag. 2, and 726-5 of the Commercial Act; Article 105 of the Civil Act / [2] Articles 665, 66 subparag. 2 and 5, and 726-5 of the Commercial Act; Article 105 of the Civil Act / [3] Article 662 of the Commercial Act; Article 166(1) of the Civil Act

[1] Supreme Court Decision 2004Da16976 Decided April 28, 2006 (Gong2006Sang, 908) Supreme Court Decision 2012Da44808 Decided June 26, 2014 / [2] Supreme Court Decision 2000Da3897 Decided May 29, 2001 (Gong2001Ha, 1455) Supreme Court Decision 2008Da31874 Decided August 21, 2008

The third council of occupants' representatives of the non-owned apartment (Law Firm Tae, Attorneys Choi Ho-ho et al., Counsel for the plaintiff-appellant)

Seoul Guarantee Insurance Co., Ltd. (Law Firm Democratic, Attorneys Yoon Jae-sik et al., Counsel for defendant-appellant

Seoul High Court Decision 2013Na9774 decided July 16, 2013

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. 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 an insurance accident in a guarantee insurance policy ought to be determined by comprehensively taking into account the specific contents of the insurance clause included in the contract and the insurance policy and the main contract citing the insurance clause (see, e.g., Supreme Court Decisions 2004Da16976, Apr. 28, 2006; 2012Da44808, Jun. 26, 2014). 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 occurred within the period. However, even if the purpose of the guarantee insurance contract is to compensate for the defect that occurred within the warranty period of the main contract for damages due to the policyholder’s failure to repair its defects during the warranty period of the contract, the guarantee insurance contract should be interpreted as the insurance contract, i.e., the insurance period of which is within the warranty period of the contract, even after the expiration of the warranty period of the contract.

B. Comprehensively taking account of the adopted evidence, the lower court acknowledged the following facts: (a) the new construction company (hereinafter “new construction”) and Pyeongtaek Construction Co., Ltd. (hereinafter “Masan Construction”) concluded each of the instant guarantee insurance contracts on the defect repair for the period of insurance from May 23, 2007 to May 1, 2007, which is the same as the defect warranty period of the main contract; (b) two years, three years, five years, and ten years; and (c) issued the guaranty insurance policy by the Defendant; and (d) the terms and conditions of the said guaranty insurance policy provide that “the Defendant shall be liable to compensate or supplement the defect that occurred within the warranty period after receiving a request for repair or supplement of the defect that occurred within the warranty period, even if the Defendant did not comply with the contract indicated in the insurance policy despite having received a request for the completion inspection or supplement of the contract; and (b) determined that the Defendant was liable for the defect repair or supplement within the warranty period of 201,000 square meters from each of the instant construction contracts.

The above determination by the court below is just in light of the aforementioned legal principles and records, and contrary to the allegations in the grounds of appeal, it did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal principles on the meaning

2. Regarding ground of appeal No. 2

A. The statute of limitations of a right to claim insurance proceeds from the time when an insured incident occurred pursuant to Article 166(1) of the Civil Act, barring special circumstances, and the burden of proving the starting point of the statute of limitations lies on a person who asserts the benefit of prescription (see, e.g., Supreme Court Decision 2012Da18748, Aug. 23, 2012).

B. In full view of the adopted evidence, the lower court rejected the Defendant’s defense that the right to claim regarding each of the instant guaranteed insurance contracts has expired by prescription, on the ground that: (a) there was no evidence to acknowledge that the instant insurance accident occurred before two (2) years retroactively from May 20, 201 when the instant lawsuit was brought, and (b) the Plaintiff requested repair of the primary defect from March 28, 2008 to November 25, 201 when the new construction was continuously requested for repair of the primary defect from May 27, 2008 to December 2, 2010, on the ground that it was recognized that the primary defect was repaired from May 27, 2008 to December 2, 2010.

The above determination by the court below is just in light of the aforementioned legal principles and records, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on the starting point of extinctive

3. 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.

Justices Park Poe-young (Presiding Justice)