Supreme Court Rules Insurer's Solatium and Non-Benefit Medical Expenses Excluded from Indemnity Claims

On May 20, 2026, the Supreme Court of Korea delivered a significant ruling limiting the scope of an insurer's subrogation rights. After an insurance company compensated a victim for personal injury, it sought indemnity from the responsible third-party tortfeasor. The insurer included solatium (consolation money for emotional distress) and non-benefit medical expenses in the claimed amount. The Supreme Court held that such payments, due to their personal and non-pecuniary nature, do not automatically transfer to the insurer via subrogation and must be excluded from the indemnity calculation. The decision clarifies that while insurers can recover direct property damages, deeply personal compensation elements remain with the victim, preventing double recovery by insurers in this context.

The Supreme Court of Korea ruled that solatium payments and non-benefit medical expenses disbursed by the insurer should be excluded from the indemnity claim against the tortfeasor. The court reasoned that these compensatory amounts are inherently personal to the direct victim, and the insurer's right of subrogation does not extend to purely non-pecuniary or personally attributed benefits.

Whether an insurer that has paid solatium and non-benefit medical treatment costs to an injured victim can exercise subrogation rights to recover these specific categories of compensation from the tortfeasor, or whether such amounts must be deducted from the total indemnity claim.

The ruling significantly strengthens victim protection by ensuring that compensation for emotional distress remains solely with the injured party. Insurance industry practices are expected to shift, with insurers reassessing policy terms, premium calculations, and recourse strategies. The decision sets a clear legal boundary for subrogation claims, potentially lowering third-party liability exposure for individual tortfeasors and reinforcing the principle that insurance cannot profit from a victim's personal suffering.