Supreme Court Decision 2026Da201325, July 16, 2026 [Insurance Proceeds]

【Holding】

[1] Principle of interpretation against the drafter in interpreting insurance policy terms

[2] In a case where a group insurance contract with an insurance period of one year and with B, etc. as the insured was concluded under the farmers' safety insurance operated by A insurance company, which had been selected as the insurer pursuant to the Act on Safety Insurance for Farmers and Fishers and Prevention of Work Accidents (the “Farmers and Fishers Safety Insurance Act”, 농어업인안전보험법); the policy terms provided that survivors' benefits would be paid to the beneficiary "where the insured dies from a farm work safety accident or farm work safety disease during the insurance period"; B went missing after being swept away by rapids in a river during the insurance period, and after the insurance period ended, a declaration of disappearance was made and B was deemed to have died on the date the period of disappearance expired; and C, the beneficiary, thereafter sued A company for payment of survivors' benefits, etc. arising from B's death, the Court held that, based on the understanding of the average customer, the policy terms could fully be interpreted as providing that survivors' benefits are payable even where a farm work safety accident occurs during the insurance period and the insured is deemed to have died by a declaration of disappearance at least after the end of the insurance period, and that such interpretation is also objective and reasonable; nevertheless, the lower court erred in its misapprehension of legal principles, etc. by holding that A company's obligation to pay insurance proceeds arises only where B was deemed to have died by a declaration of disappearance during the insurance period

【Summary of Decision】

[1] Insurance policy terms should be interpreted fairly and reasonably in accordance with the principle of good faith, taking into account the purpose and intent of the terms, and should be interpreted objectively and uniformly based on the understanding of the average customer and in consideration of the interests of the insured group as a whole, without regard to the purpose or intent pursued by the individual contracting parties. If, even after such interpretation, a policy term is objectively open to multiple interpretations, each of which is reasonable, so that the meaning of the term is unclear, it must be interpreted in favor of the customer.

[2] In a case where a group insurance contract with an insurance period of one year and with B, etc. as the insured was concluded under the farmers' safety insurance operated by A insurance company, which had been selected as the insurer pursuant to the Farmers and Fishers Safety Insurance Act; the policy terms provided that survivors' benefits would be paid to the beneficiary "where the insured dies from a farm work safety accident or farm work safety disease during the insurance period"; B went missing after being swept away by rapids in a river during the insurance period, and after the insurance period ended, a declaration of disappearance was made and B was deemed to have died on the date the period of disappearance expired; and C, the beneficiary, thereafter sued A company for payment of survivors' benefits, etc. arising from B's death, the Court held as follows: the policy terms include "where a declaration of disappearance is made during the insurance period" within the insured's "death" and provide that in such case "the insured shall be deemed to have died when the period of disappearance recognized by the court expires"; since Article 27 of the Civil Act sets the period of disappearance at one year or five years, in the case of farmers' safety insurance, which is usually concluded for a short insurance period of one year, a declaration of disappearance would in most cases be made after the end of the insurance period, and since under Article 28 of the Civil Act a person subject to a declaration of disappearance is deemed to have died upon the expiration of the period of disappearance, the effect of the declaration would also in most cases arise after the end of the insurance period; considering these circumstances, it is natural to interpret "where a declaration of disappearance is made during the insurance period" as "where the peril giving rise to the declaration of disappearance occurred during the insurance period." For these reasons, when the wording of the policy terms is examined based on the understanding of the average customer, the phrase "during the insurance period" in the terms may be regarded as modifying only "farm work safety accident or farm work safety disease," and thus the terms could fully be interpreted as providing that survivors' benefits are payable even where a farm work safety accident occurs during the insurance period and the insured is deemed to have died by a declaration of disappearance at least after the end of the insurance period, and such interpretation is also objective and reasonable; nevertheless, the lower court erred in its misapprehension of legal principles, etc. by holding that A company's obligation to pay insurance proceeds arises only where B was deemed to have died by a declaration of disappearance during the insurance period.

【Referenced Statutes】

[1] Article 5 of the Act on the Regulation of Terms and Conditions (the “Terms and Conditions Act”, 약관법) [2] Article 5 of the Terms and Conditions Act; Articles 27 and 28 of the Civil Act; Articles 1, 7(1)1, and 9(1)5 of the Farmers and Fishers Safety Insurance Act

【Referenced Precedents】

[1] Supreme Court Decision 2011Da1118, April 28, 2011

Supreme Court Decision 2017Da285109, July 24, 2018

Supreme Court Decision 2025Da211789, April 2, 2026 (Gong2026Sang, 1050)

(Source: Supreme Court Decision 2026Da201325, July 16, 2026 | Judicial Information Disclosure Portal, Precedents)

2026. 10. 14. · By Attorney Dongwoo Shin