SEOUL, Nov. 18 (Korea Bizwire) – South Korea’s top financial watchdog said Wednesday that it will move to stop what has been called ridiculous amounts of money paid in insurance to expensive car owners involved in accidents, a move that will help prevent insurance bills of wrongdoers from skyrocketing but may work to the disadvantage of owners of such vehicles.
The move follows a recent series of widely published incidents where owners of expensive, imported cars were strongly criticized for running up high repair costs, causing insurance bills of those at fault to go up.
Such incidents prompted a public uproar especially as some of those at fault were said to be ordinary people with standard domestic cars that only cost a fraction of what their insurance companies had to pay to repair a simple bumper or a door of cars they damaged.
The Financial Supervisory Service (FSS) said it will help prevent such cases by prohibiting car owners from demanding a replacement of parts damaged in what it called “trivial” accidents, such as fender benders.
What will be considered trivial will be determined through tests before the end of the year, it added.
Also, the FSS will ban direct cash payments by insurance companies to car owners to make sure that insurance payments are made only for actual, verified repair work.
The watchdog said rental services were another major cause of the high repair costs of especially expensive cars.
Currently, those who demand rental cars to use while their damaged cars are repaired are allowed to rent a car of the same class and year from the same manufacturer as their own.
Starting as early as March, car owners will only be able to demand a rental car of the same class and year as their own, meaning an owner of a 2015 Mercedes Benz S600 that has a 6-liter engine and costs roughly US$250,000 may be provided with a car from any manufacturer, as long as the car has a 6-liter engine, the FSS said.