Supreme Court: Insurer's Paid Solatium and Non-covered Medical Expenses Excluded from Indemnity Claim

On May 20, 2026, the South Korean Supreme Court ruled that when an insurer exercises its right of subrogation against a tortfeasor, any solatium (consolation money) and non-covered medical expenses it voluntarily paid to the victim must be deducted from the indemnity claim. The case arose from a traffic accident where the insurer compensated the victim and then sought full reimbursement from the responsible party. The central dispute was whether such payments, especially discretionary non-insured treatment costs and personal solace amounts, fall within the scope of recoverable loss. The Court held that solatium is strictly personal to the victim and cannot be transferred to the insurer, while non-covered treatments reflect the victim's choice and the insurer's voluntary assumption, not a legally obligated damage. This decision limits insurers' subrogation recovery and mandates exclusion of these items.

The Supreme Court ruled that such amounts must be deducted from the indemnity claim; the insurer cannot recover solatium or non-covered treatment costs from the liable party, as they do not constitute compensable damage subject to subrogation.

Whether solatium and non-covered medical expenses voluntarily paid by an insurer to a victim can be included in the insurer's subrogation claim against the tortfeasor.

The ruling directly reduces the financial burden on accident perpetrators, discourages insurers from overpaying and then shifting costs, clarifies the boundaries of subrogation in non-insured medical payments, and is expected to prompt insurance companies to revise their claims handling policies and product structures to align with the narrowed recovery scope.