Car crashes and insurance payments


This post comes a bit late after a short vacation.  Thanks again to the Korea Herald and don’t forget to read the disclaimer.

Vehicle accidents and compensation

This post comes a bit late after a short vacation.  Thanks again to the Korea Herald and don’t forget to read the disclaimer.

Vehicle accidents and compensation

The prevalence of motor vehicles in Korea brings the possibility of tremendous injury, and as in other places, this leads to disputes about compensation ― whether there is a duty to pay and how much. 

It may seem a bit cynical, but the law can’t bring back the dead or magically heal a broken leg. It can only attempt to value those things and compensate for them. 

There are two parties from whom an injured party can claim compensation. The driver may have liability under the criminal law, in which case he must compensate the victim or go to jail, and the police and prosecutors will help the victim. 

Assuming he has insurance (which is legally obligated), the insurance company may also have a civil obligation, but in that case the victim must hire an attorney if he wants assistance in dealing with the insurance company. The driver may also have civil liability, but as he is generally less flush with cash than the insurance company, we will later focus on the insurance company here.

Regarding possible criminal liability, the driver must have violated certain traffic law provisions, so evidence is key. Witnesses, CCTV, black box recordings or forensic analysis can help establish what happened. In the following 10 types of cases the driver will be prosecuted, even if the victim does not request it, and the prosecutor and court will look to the driver to make a settlement with the victim, or the driver will face stern punishment:

(1) Ignoring a traffic signal, (2) illegally crossing the median line (making a U-turn or driving on the wrong side of the road), (3) exceeding the speed limit by 20 kph or more, (4) illegally passing, (5) illegally entering an intersection, (6) failing to protect a pedestrian at a crosswalk, (7) failing to have a license or having a suspended license, (8) DUI, (9) illegally driving on a sidewalk and (10) failure to properly open and close doors for passengers. 

The amount of the settlement is based on the seriousness of the victim’s injury and the economic ability of the driver. The typical range is 400,000 won to 1 million won per week of hospitalization, but egregious cases with obvious fault and serious injury can warrant much more, up to tens of millions of won. 

Everyday people, however, are often limited in their means, and so the main source of funds is often from the insurance company. The difference in compensation between individual settlements (where the victim, unaided by counsel, settles directly with the insurance company) and lawsuit-based settlement (where an attorney files a suit) is huge. 

Insurance companies worldwide have significant incentives to underpay, and Korea is no exception. Attempting to settle directly is often fruitless; without the threat of a court ordering greater compensation, offers from the insurance company will often remain unreasonably low.

There are four bases for calculating injury, all of which should be adequately taken into account:

First, there should be compensation for economic losses caused by the car accident. Medical bills, private care (at home or outside), and other direct economic losses should be included.

Second, compensation for mental damages. There is no given standard for mental damages, although awards commonly lie within the 400,000 won to 1 million won per week range. Warranting circumstances, such as the inability to partake in an important life event, like a wedding or funeral, should increase the amount of compensation due.

Third, compensation for lost income during hospitalization: This is another kind of economic damage ― obviously the victim cannot work when they are in bed or surgery, and is therefore losing money. Even those who can telecommute are unlikely to be functioning at 100 percent, addressed further in a moment. Lost wages are easy to calculate. If the injured party was running a business, the cost of hiring someone to cover during the absence should be included.

Fourth, compensation for loss of future earning potential should be included, and this is usually the largest portion of a compensation claim. This reflects the difference between a person’s pre-injury and post-injury income capacity. If your earning capacity is reduced by 20 percent (i.e., you can now earn 80 percent of what you could before the accident) then you should receive compensation equaling 20 percent of your income until retirement. As for evidence, after six months of treatment, a doctor can issue a letter attesting to the “inability rate” you will suffer.

You should be ready to get a second opinion regarding any hospitalization, treatment or disability proportion. Sad to say, some doctors have been known to reverse their diagnosis when the insurance company gets involved. There is no need or reason to tolerate a corrupt diagnosis when an objective one is preferred.

Again, I would stress the need to hire counsel here. Besides the emotionally and physically draining aspects of a traumatic injury, there are economic dynamics to consider in insurance negotiations, and without legal action pending, there is simply no leverage to warrant an increase in the offer beyond the lowball that the insurance company feels like throwing. Lay or professional, no person can handle all of that at once. 

By Darren Bean and Yuna Lee

Yuna Lee is a Korean attorney at Seowoo & Minyul Law Firm in Seoul. You can read her blog at or if there is a legal issue you would like to be addressed, email [email protected] ― Ed.

Disclaimer: This column is not intended as legal advice. No action should be taken or avoided based on this column, no attorney-client relationship is formed by reading this column or contacting the authors, and the authors expressly disclaim any liability for the content of this column. Those with legal problems in Korea should seek advice from an attorney.

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