Starting next month, the driver of an Avanti hit by a Porsche will have their insurance premiums suspended, regardless of the cost of expensive repairs.

This is because lower-priced cars involved in accidents with higher-priced vehicles often bear the brunt of higher repair costs despite being less at fault.

The Financial Supervisory Service (FSA) announced on July 7 that it will improve the auto insurance surcharge system from next month so that the high repair costs of high-value vehicles will not be passed on to lower-value vehicles through increased premiums.

In the case of an accident involving a high-value vehicle with a per-case repair cost of more than 120 percent of the average and an average new car price of more than 80 million won, insurance premiums have been increased by compensating the high repair cost of the high-value vehicle even if the low-value vehicle is less than 50 percent at fault.

On the other hand, it has been pointed out that it is unreasonable that the insurance premiums of expensive vehicles are not increased because the amount of damages is small.

In response, the Financial Supervisory Service has decided 스포츠토토to increase insurance premiums for high-value vehicles that have caused high repair costs, but to suspend the increase for low-value vehicles so that insurance premiums are not burdensome.

The new system applies to accidents involving two-party negligence between a high-value vehicle and a low-value vehicle, where the amount of compensation paid by the low-value vehicle exceeds three times the amount paid by the high-value vehicle, and the amount paid by the low-value vehicle exceeds 2 million won.

Comparison before and after the improvement of the surcharge system
[Image courtesy of Geumgamwon].

For example, if the high-priced car is 90% at fault and the damage is 100 million won, and the low-priced car is 10% at fault and the damage is 2 million won, the high-priced car will only pay 1.8 million won (2 million won × 90%) to the low-priced car, but the low-priced car will have to pay 10 million won (100 million won × 10%) to the high-priced car.

In this case, the current system does not surcharge the higher-priced vehicle, but only the lower-priced vehicle. However, starting next month, only the higher-priced vehicle will be charged, while the lower-priced vehicle will be deferred.

An example of an accident between a high-value car and a low-value car
[Courtesy of Geumgamwon].

To this end, the NFPA plans to create a separate score in addition to the existing accident score to be reflected in the premium surcharge.

For high-value vehicles, the insurance premium will be increased by adding one point to the existing accident score, and for low-value vehicles, the insurance premium will be suspended by applying only 0.5 points to the separate score instead of the existing accident score.

The number of accidents involving high-value vehicles surged from 36,000 in 2018 to 50,000 last year. As of last year, the average repair cost for expensive vehicles was 4.1 million won, 3.2 times higher than the 1.3 million won for ordinary vehicles.

An official from the Financial Supervisory Service said, “With a fair insurance calculation system in place, such as imposing surcharges on expensive vehicles that caused car accidents, we expect to improve the equity of insurance premium burden and the public’s trust in the auto insurance system.”

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