If the insurer cancels the guarantee insurance contract on the ground of the fraud of the policyholder, whether the insured’s insurance claim is recognized (affirmative with qualification)

A guarantee insurance contract, the purport of which is to take over by an insurer the amount of damages suffered by a creditor due to a debtor's default, is non-life insurance contract, which covers the debtor's default as an insured event. However, in substance, the purpose of which is the same as a guarantee insurance contract with the nature of the guarantee, and in cases of an automobile installment sales guarantee insurance, the insured is to enter into an installment sales contract with the guaranteed insurance or to perform the duty of delivery of goods under the installment sales contract already concluded. Thus, in general, in cases of a guarantee insurance contract for another person where an insurer cancels an insurance contract due to a policyholder's fraud, the insured cannot obtain the insurance claim even if the insured event occurs, even if the insured had already been issued the guarantee insurance contract, and thus, it is necessary to protect the insured's trust if the insured becomes aware that the insured had not been aware of the function of the guarantee insurance contract due to the fact that the insurer had already concluded a new guarantee insurance contract or fulfilled its duty of due to the performance of the duty under the already concluded contract with the insurer, and that the insured had no special interest in the insured's presentation of the guaranteed insurance contract was made.

Articles 110, 428, 539, and 542 of the Civil Act; Articles 639(1) and (2), 651, and 659 of the Commercial Act; Article 5(1) of the Insurance Business Act

Supreme Court Decision 92Da4345 delivered on May 12, 1992 (Gong1992, 1847) Supreme Court Decision 95Da46265 delivered on October 10, 1997 (Gong1997Ha, 3380) Supreme Court Decision 95Da11009 delivered on November 14, 1997 (Gong1997Ha, 3783)

Korea Guarantee Insurance Corporation

Both Motor Vehicles Co., Ltd. (Law Firm, Kim & Lee, Attorneys Kim Man-man et al., Counsel for the plaintiff-appellant

Seoul District Court Decision 98Na26483 delivered on November 13, 1998

The judgment of the court below is reversed and the case is remanded to the Seoul District Court Panel Division.

The grounds of appeal are examined.

A guarantee insurance contract, the purport of which is to take over by an insurer the amount of damages suffered by an obligee due to the obligor’s default, is non-life insurance contract, which covers the obligor’s default as an insured event. However, in substance, the purpose of which is the same as a guarantee insurance contract with the nature of the guarantee (see, e.g., Supreme Court Decisions 95Da11009, Nov. 14, 1997; 95Da46265, Oct. 10, 197; 92Da4345, May 12, 1992). In the same case, the insured is to enter into an installment sales contract based on the guarantee insurance or to perform the duty of delivery of goods under the installment sales contract, and thus, in general, even if an insurer cancels an insurance contract on grounds of the policyholder’s fraud, the insured may not obtain insurance claims, and otherwise, the insurer already entered into a new guarantee insurance contract with the insurer’s trust insurance policy or the insured’s duty to perform the same function by issuing a new guarantee insurance contract.

Therefore, even if a policyholder who is a principal obligor had deceiving an insurer in entering into a guarantee insurance contract, and the insurer had cancelled its declaration of intent on the ground that the insured party caused mistake in entering into a guarantee insurance contract, if the obligee, who is the insured of such guarantee insurance contract, knew or could have known such deception, or if so alleged by the Plaintiff, the insured would have known or could have known that such deception had occurred, or if so alleged by the Plaintiff, whether the documents required for entering into a guarantee insurance contract submitted by the insured on behalf of the insurer were true and the insurer and agreed in advance between the insured and the insurer to confirm only the documents which have undergone such examination and conclude the guarantee insurance contract. However, it cannot be asserted against the insured with its revocation, barring special circumstances such as the fact that the insured was negligent in failing to perform his/her duty of care necessary for examining the documents.

However, according to the records, the defendant in this case asserted that he received the installment sales policy issued by the plaintiff on May 20, 1997 and delivered the motor vehicle as indicated in the judgment to the non-party 1 on the following day, and the plaintiff seems not to dispute this issue. Thus, the defendant in this case should be deemed to have received the surety insurance policy and have a new interest by trusting the mortgage security function of the surety insurance.

Nevertheless, the court below, based on the evidence of the judgment, found that the plaintiff issued the guaranteed insurance contract of this case to guarantee the obligation to pay the installment to the non-party 1, the principal debtor under the guaranteed insurance contract concluded by the non-party 1 with the non-party 3 who is the automobile selling company. The non-party 1 also presented the non-party 2's certificate of personal seal impression to the defendant as a joint guarantor of the guaranteed insurance contract of this case with the non-party 1 merely issued the guaranteed insurance contract of this case with the non-party 1, because the non-party 1 had no interests in the guaranteed insurance contract of the non-party 1, the non-party 1 had no interests in the guaranteed insurance contract of the non-party 1, and the plaintiff did not request the cancellation of the guaranteed insurance contract of this case for the reason that the non-party 1 had no interests in the guaranteed insurance contract of this case. The plaintiff's declaration of the contract of this case and the non-party 1 had no interests in the guaranteed insurance contract of this case. The plaintiff's assertion that the non-party 1 had no interests in this case.

Therefore, the judgment of the court below is reversed and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Jong-chul (Presiding Justice)