ACT ON GUARANTEE OF COMPENSATION FOR LOSS CAUSED BY AUTOMOBILE. [Enforcement Date: Feb. 7, 2010] [Act No. 9450, Feb. 6, 2009, Partial Amendment]

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1 The English version is translated and uploaded only for the purpose of no other than PR, and thereby, Act on Guarantee of Compensation for Loss Caused by Automobile in the Korean language will prevail regarding authorization and permission ACT ON GUARANTEE OF COMPENSATION FOR LOSS CAUSED BY AUTOMOBILE [Enforcement Date: Feb. 7, 2010] [Act No. 9450, Feb. 6, 2009, Partial Amendment] Ministry of Land, Transport and Maritime Affairs (Motor Vehicle Damage Guarantee Team) Tel.: CHAPTER I GENERAL PROVISIONS Article 1 (Purpose) The purpose of this Act is to establish a system by which compensation for the death or injury of any person and the destruction or damage of any property caused by the operation of automobiles is guaranteed in order to protect victims and to promote the sound development of automobile transportation. Article 2 (Definitions) The definitions of the terms used in this Act shall be as follows: <Amended by Act No. 9450, Feb. 6, 2009> 1. The term "automobile" means the automobile under the application of the Automobile Management Act and the construction machinery prescribed by Presidential Decree among those under the application of the Construction Machinery Management Act;

2 2. The term "operation" means to use or manage automobiles according to the methods for using such equipment, regardless of whether or not they transport persons or carry articles; 3. The term "automobile owner" means the owner of an automobile or a person entitled to the use of an automobile, who operates such automobile for himself/herself; 4. The term "driver" means a person who drives an automobile for others or serves in driving assistance; 5. The term "liability insurance" means a type of insurance for which any automobile owner and a person who runs an insurance business after obtaining a license under the Insurance Business Act (hereinafter referred to as the "insurance company") enter into agreement on the guarantee of the liability for indemnifying any person for his/her death or injury caused by the owner's operation of the automobile under this Act; 6. The term "liability mutual aid" means a type of mutual aid for which the automobile owner for business use and a person operating a mutual aid business under the Passenger Transport Service Act, the Trucking Transport Business Act, and the Construction Machinery Management Act (hereinafter referred to as a "mutual aid business operator") enter into an agreement on contents concerning the guarantee of the liability for compensating another person s death or injury caused by the operation of an automobile under this Act; and 7. The term "medical treatment fee covered by the automobile insurance" means the expense generated by a person who has suffered an automobile accident caused by the operation of an automobile thereof (hereinafter referred to as a automobile accident patient ) has received medical treatments provided by a medical institution under the Medical Service Act (hereinafter referred to as the medical institution ), which applies to any of the following cases: (a) Where the relevant expense is paid by the insurance money (including mutual aid money, and hereinafter referred to as the insurance money, etc. ) of the insurance company (including mutual aid business operator, and hereinafter referred to as the insurance company, etc. );

3 (b) Where the relevant expense is paid by the compensation money from the guarantee business of compensation for loss caused by an automobile referred to in Article 30; and (c) Where the medical treatment fee generated by the relevant automobile accident is paid to the medical institution by the automobile accident patient after the compensation for the automobile accident patient (including indemnity under Article 30) is finalized. Article 3 (Responsibility for Compensation of Losses Caused by Automobiles) A person who operates an automobile for himself/herself shall be liable to compensate for losses in the event that he/she has killed or injured another person by the operation thereof: Provided that this does not apply to the cases applicable to any of the following subsections: 1. Where a person other than the passenger is killed or injured, in the event that it has been proven that the person who operates the automobile and the driver thereof were not negligent in its operation, that it was due to the intention or negligence of the victim or a third party other than the person who operates the automobile and the driver thereof, and that there was no defect in the structure and no malfunction of the automobile; and 2. Where a passenger is killed or injured intentionally or by suicide. Article 4 (Application of Civil Act) Excluding the cases under Article 3, with regard to the liability for making compensation for losses of the person who operates an automobile for himself/herself, the provisions of the Civil Act shall apply. <Amended by Act No. 8127, Dec. 28, 2006> CHAPTER II SUBSCRIPTION TO INSURANCE FOR COMPENSATION FOR LOSS Article 5 (Liability to Subscribe to Insurance, etc.)

4 (1) Any owner of an automobile shall be required to subscribe to liability insurance or liability mutual aids (hereinafter referred to as "liability insurance, etc."), which shall be responsible to pay to the victim (referring to a person who has the right to receive the compensation for loss in the case of the death of the victim; hereinafter the same shall apply) the amount prescribed by Presidential Decree in the case that he/she has killed or injured any person(s) during the course of operating the automobile. (2) Any owner of an automobile shall, in addition to the subscription to the liability insurance, etc. referred to in section (1), subscribe to the insurance under the Insurance Business Act or to the mutual aid under the Passenger Transport Service Act, the Trucking Transport Business Act and the Construction Machinery Management Act in order to assume the liability for paying an amount prescribed by Presidential Decree to another person for the destruction or damage of his/her property, which is caused by the operation of the automobile. (3) Any person applicable to any of the following subsections shall, in addition to the subscription to the liability insurance, etc. referred to in section (1), subscribe to an insurance under the Insurance Business Act, or enter into a mutual aid contract under the Passenger Transport Service Act, the Trucking Transport Business Act or the Construction Machinery Management Act, either of which shall guarantee to pay an amount of compensation prescribed by the Presidential Decree that exceeds the ceiling amount of the indemnities covered by any liability insurance, etc. in the case of death or injury of any other person due to operation of the automobile: 1. Any passenger transport service business operator who has been granted a license or has registered in accordance with Article 4 (1) of the Passenger Transport Service Act; 2. Any automobile rental business operator who has registered in accordance with Article 28 (1) of the Passenger Transport Service Act; 3. Any freight trucking service operator and motor-freight forwarding affiliated service operator who has obtained permission in accordance with Articles 3 and 29 of the Trucking Transport Business Act; or 4. Any construction machinery rental business operator who has registered in accordance with Article 21 (1) of the Construction Machinery Management Act.

5 (4) The provisions of sections (1) and (2) shall not apply to the automobiles prescribed by the Presidential Decree and to the automobiles operated only at places other than roads (referring to the road under subsection 1 of Article 2 of the Road Traffic Act, and the same shall apply hereinafter). (5) Subscription to the liability insurance, etc. referred to in section (1) and to the insurance or the mutual aid referred to in sections (2) and (3) shall be subscribed for each automobile. Article 6 (Measures, etc. toward Non-Subscribers to Mandatory Insurance) (1) An insurance company, etc. shall notify automobile owners who have subscribed to insurance or mutual aid contracts of which the owners are obligated to enter into in accordance with the provisions of Article 5(1) through (3) (hereinafter referred to as the "mandatory insurance") due to the expiration of the contract once in the period between 75 days and 30 days prior to the expiration of such contracts and again in the period between 30 days and 10 days prior to the expiration of such contracts respectively: Provided, that where the insurance period is less than one month or where an insurance company, etc. has come to know that the owner of automobile entered into contract again with itself or with another insurance company, etc., such notification may be omitted. <Amended by Act No. 9450, Feb. 6, 2009> (2) In the event that the person who is obligated to subscribe to the mandatory insurance applies to any of the following subsections, an insurance company, etc. shall notify such fact to the Special Self-Governing Do governor or the head of the city/gun/gu (referring to the head of the autonomous Gu, and hereinafter referred to as the head of the city/gun/gu ) within the period prescribed by the Ordinance of the Ministry of Land, Transport and Maritime Affairs: 1. Where the person has entered into a mandatory insurance contract with the said insurance company, etc.; 2. Where the person has cancelled the mandatory insurance contract before the contract expires after having entered into a mandatory insurance contract with the said insurance company, etc.; or

6 3. Where the person who entered into a mandatory insurance contract with the said insurance company, etc. has not enter into a mandatory insurance contract again with the said insurance company, etc. after the contract has expired. (3) Upon the receipt of the notification as provided in section (2), the head of the city/gun/gu shall order without delay the said person to subscribe to a mandatory insurance and submit documents attesting the fact of such subscription, by fixing a period of not less than 10 days and not more than 15 days. (4) The head of the city/gun/gu may keep the registration number plate of an automobile (including the registration number plate of a two-wheeled automobile and the registration number plate of construction machinery, and the same shall apply hereinafter) in custody, which is not covered by any mandatory insurance. (5) When necessary for keeping in custody the registration number plate of an automobile which is not covered by any mandatory insurance pursuant to section (4), the head of the city/gun/gu may request the head of a police station to cooperate. In this case, the head of the police station so requested shall comply with such request unless there exist any special situations not to. (6) When the head of the city/gun/gu has taken into custody the registration number plate of an automobile, which is not covered by any mandatory insurance pursuant to section (4), he/she shall notify the fact to the Special Metropolitan City Mayor, the Metropolitan City Mayor, or the Do governor (referring to the head of the city/gun/gu where the affairs of registering automobiles have been delegated to the head of the city/gun/gu) who is in charge of registering the said automobile in accordance with the Automobile Management Act or the Construction Machinery Management Act, and the owner of the said automobile. (7) Matters necessary for the methods and procedures of notification as provided in sections (1) and (2) for the methods, procedures, etc. of taking number plate of automobile into custody pursuant to section (4), and for the methods, procedures, etc. of cancelling custody shall be prescribed by the Ordinance of the Ministry of Land, Transport and Maritime Affairs.

7 Article 7 (Establishment and Operation of Computer Network for Management of Mandatory Insurance Subscriptions, etc.) (1) The Minister of Land, Transport and Maritime Affairs (hereinafter referred to as the Minister ) may establish and operate a computer network for the management of mandatory insurance subscriptions (hereinafter referred to as the "computer network for the management of subscriptions") which is operated by linking it with the computer information processing organizations under Article 69 (1) of the Automobile Management Act and the computer information processing organizations managed and operated by insurance premium rate calculation institutions under Article 176 of the Insurance Business Act (hereinafter referred to as "insurance premium rate calculation institution") in order to efficiently manage the automobile owners who have not subscribed to mandatory insurance. (2) The Minister may ask the heads of the local governments, the insurance companies, and the heads of the insurance-related organizations to furnish materials prescribed by the Presidential Decree in order to establish and operate the computer network for the management of subscriptions. In this case, the persons who have been asked to provide such materials shall comply with such request from the Minister unless there exist any special situations not to. <Amended by Act No. 9450, Feb. 6, 2009> (3) Deleted. < By Act No. 9450, Feb. 6, 2009> (4) Matters necessary for the computer network for the management of subscriptions shall be prescribed by the Presidential Decree. Article 8 (Prohibition of Operation) Automobiles not covered by the mandatory insurance shall not be operated on a road: Provided that this shall not apply to the automobiles prescribed by Presidential Decree in accordance with Article 5 (4). Article 9 (Request for Issuance of Certificate of Subscription to Mandatory Insurance) A person who has subscribed to the mandatory insurance, the insured person by the contract of the relevant mandatory insurance (hereinafter referred to as the "subscriber, etc.") and

8 other interested persons may, if necessary to verify their rights and obligations or facts of such subscription, request the insurance company, etc. to issue a certificate of subscription to the mandatory insurance for verifying such subscription. Article 10 (Request for Payment of Insurance Money, etc.) (1) In the event that a liability to compensate for loss has occurred to the subscriber, etc. under Article 3, the relevant victim may, in accordance with the conditions as prescribed by the Presidential Decree, demand the insurance company, etc. to pay the insurance money directly to him/her in accordance with Article 724 (2) of the Commercial Act. In this case, the victim may request the insurance company, etc. to pay a part of the insurance money equivalent to medical fee directly to the medical institution that has provided him/her with medical treatment. (2) In the event that the subscriber, etc. has paid the compensation for loss to the victim before the insurance company, etc. pays the insurance money, etc., the subscriber, etc. may demand the insurance company, etc. to reimburse the sum that he/she has paid to the victim within the compensation limit of the insurance money, etc. Article 11 (Advance Payment to Sufferer) (1) In the event that a subscriber, etc. has caused the death or injury of another person due to the operation of an automobile, the victim may request the insurance company, etc. to pay the entire amount of medical fees under the automobile insurance, and a certain amount of money prescribed by the Presidential Decree as advance payment of the insurance money as prescribed in Article 10. (2) When the insurance company, etc. has received the request as prescribed in section (1), he/she shall pay the amount of advance payment requested within the period prescribed by the Ordinance of the Ministry of Land, Transport and Maritime Affairs. (3) When the advance payment made under section (2) exceeds the insurance money, the insurance company, etc. may demand the person who has received the relevant advance payment to refund the excess amount.

9 (4) When it is found that the subscriber, etc. does not have any liability to compensate for the loss after the advance payment as provided in section (2) has been made, the insurance company, etc. may request the person who received the advance payment to refund it. (5) When the insurance company, etc. has not received the refund of any advance payment even though he/she has claimed the refund in accordance with sections (3) and (4), as long as the insurance company, etc. meets the requirements prescribed by Presidential Decree including financial resources for contributions, such insurance company, etc. may claim compensation of the advance payment which has not been refunded to the Government. <Amended by Act No. 9450, Feb. 6, 2009> Article 12 (Claim and Payment of Medical Fee Covered by Automobile Insurance) (1) When an insurance company, etc. becomes aware of the occurrence of an automobile accident through a claim for loss by either a subscriber, etc. or a victim of an automobile accident under the provisions of the latter part of Article 10 (1), or by other reasons, the insurance company, etc. shall, without delay, notify the medical institution treating the victim of whether or not the insurance company, etc. has intention to pay the medical fee covered by automobile insurance and of the limit of such payment. <Amended by Act No. 9450, Feb. 6, 2009> (2) When the medical institution has been notified of whether or not the insurance company, etc. has intention to pay the medical fee covered by automobile insurance and of the limit of such payment under the provisions of section (1), it may claim the payment of the said fee in accordance with the standards publicly notified by the Minister as provided in Article 15. (3) When the medical institution claims the payment of the medical fee covered by automobile insurance in accordance with section (2), such claim shall be made in accordance with the clinical records of the patient s medical record card referred to in Article 22 of the Medical Service Act. (4) In the case where the medical institution has claimed the payment of the medical fee covered by automobile insurance in accordance with section (2), the insurance company, etc.

10 shall pay the amount claimed within 30 days: Provided, that this shall not apply in the case where a request for examination is made in accordance with Article 19 (1). (5) In the case where the medical institution can claim the payment for medical fee covered by automobile insurance to the insurance company, etc. under the provisions of section (2), it shall not make claims on the victim of the automobile accident (including his/her guardian) to pay such medical fee: Provided, that it may make claims on the victim of the automobile accident to pay the relevant medical fees in any of the following cases: 1. Where the insurance company, etc. has notified that it has no intention to pay the medical fee or cancelled the intention of payment of the medical fee; 2. In the case of expenses which are not to be paid by the insurance company, etc.; 3. In the case of medical fee in excess of the limit of payment notified by the insurance company, etc. under section (1); 4. Where the victim has made claims to the insurance company, etc. to pay the medical fee directly to himself/herself as prescribed in Article 10 (1) or Article 11 (1); and 5. In other cases applicable to reasons prescribed by the Ordinance of the Ministry of Land, Transport and Maritime Affairs. Article 13 (Management, etc. of Inpatients) (1) The medical institutions which can claim the medical fees covered by automobile insurance to the insurance company, etc. pursuant to Article 12 (2) shall keep records of leaving the hospital or staying out overnight by patients admitted into such medical institutions due to an automobile accident (hereinafter referred to as the "inpatient"), and manage it. (2) When an inpatient intends to go out or stay out overnight, he/she shall obtain permission from the medical institution. (3) The insurance company, etc. which has notified whether or not he/she intends to pay the medical fee and the limit of the payment pursuant to the provisions of Article 12 (1) may

11 demand for the perusal of records on going out or staying out overnight. In this case, the medical institution shall comply with such demand unless there are justifiable reasons not to. Article 13-2 (Instruction for Leaving Hospital or Transfer to Another Hospital for an Automobile Accident Patient) (1) The medical institution may instruct a patient to leave the hospital where the condition of a hospitalized automobile accident patient has improved after medical treatment such as surgery, treatment, etc. and hospitalized medical treatment is not necessary any longer; and in the cases prescribed by the Presidential Decree such as a case where it is necessary for the patient to receive medical treatment at his/her living area, the medical institution may instruct transfer to another medical institution. In this case, the medical institution shall notify, without delay, the relevant patient and the insurance company, etc. which notified its intention to pay the medical fee covered by automobile insurance in accordance with Article 12 (1) of the reason and date. (2) In the event that the medical institution which has instructed transfer to another medical institution to the automobile accident patient in accordance with section (1) is requested for provision of information in respect to the medical treatment such as perusal or forwarding of the patient s clinical card, opinions of his/her medical practices and the details of medical treatment, it shall immediately comply with such request. [This Article Newly Inserted by Act No. 9450, Feb. 6, 2009] Article 14 (Perusal of Medical Record) (1) In the event that an insurance company, etc. has received a claim for medical fee from a medical institution under Article 12 (2), the insurance company, etc. may request the medical institution for the perusal of the relevant medical records. In this case, the medical institution shall comply with such request unless there are any justifiable reasons not to. (2) Any person who is engaged or was formerly engaged in insurance business, etc. shall not disclose the secrets of other persons which he/she came to learn in the course of his/her perusal of medical record under section (1).

12 Article 14-2 (Mutatis Mutandis Application to Cases Exceeding Compensation Limit of Liability Insurance, etc.) In the event that the automobile owner has subscribed to an insurance or mutual aid which compensates loss in excess of the compensation limit of the liability insurance, etc., the provisions of Articles 10 through 13, 13-2 and 14 shall apply mutatis mutandis where the sufferer claims payment for the medical fee covered by automobile insurance within the limit of the compensation by the insurance or mutual aid which covers the loss in excess of the compensation limit of the liability insurance, etc. in addition to claiming for the compensation up to the compensation limit of the liability insurance, etc. [This Article Newly Inserted by Act No. 9450, Feb. 6, 2009] CHAPTER III STANDARDS FOR MEDICAL FEES COVERED BY AUTOMOBILE INSURANCE AND MEDIATION OF DISPUTES Article 15 (Medical Fees, etc. Covered by Automobile Insurance) (1) The Minister may prescribe and publicly announce the standards for medical fees covered by automobile insurance (hereinafter referred to as the "standards for medical fees covered by automobile insurance") in order to ensure appropriate medical treatment for automobile accident patients and to prevent disputes over medical fees among the insurance companies, etc., the medical institutions and the automobile accident patients. <Amended by Act No. 9450, Feb. 6, 2009> (2) The standards for medical fees covered by automobile insurance shall include the allowable scope of medical fees, procedures for claiming and payment, and other matters prescribed by the Ordinance of the Ministry of Land, Transport and Maritime Affairs. (3) When the Minister is to establish or modify the standards for medical fees covered by automobile insurance, he/she shall listen to the opinions of the Council for Disputes Concerning Medical Fees Covered by Automobile Insurance under Article 17.

13 Article 16 (Survey and Research of Repair Cost) (1) The Minister shall conduct survey and research on the appropriate repair cost (including standard working hours and cost of labor, etc.) and publish the findings from such survey and research in order to prevent any dispute between the insurance company, etc. and automobile repair business operators over the repair cost. (2) Matters necessary for the scope and procedures, etc. for the survey and research referred to in section (1) shall be prescribed by the Presidential Decree. Article 17 (Council for Disputes Concerning Medical Fees Covered by Automobile Insurance) (1) The insurance companies, etc. and medical institutions shall organize the Council for Disputes Concerning Medical Fees Covered by Automobile Insurance (hereinafter referred to as the "Council") mandated to perform the affairs applicable to each of the following subsections through mutual consultations in order to prevent and promptly settle disputes over medical fees covered by the automobile insurance: 1. The examination and mediation of any dispute over the medical fees covered by the automobile insurance; 2. Recommendations on the adjustment of the standards for medical fees covered by the automobile insurance; and 3. The survey and research related to the affairs under subsections 1 and 2. (2) The Council shall be composed of 18 members including one chairperson. (3) The members of the Council shall be commissioned by the Minister, and six members among the persons recommended by the organization of the insurance companies, etc., six members among the persons recommended by the organization of the medical institutions and six members among the persons who meet the requirements prescribed by the Presidential Decree shall be respectively commissioned. (4) The chairperson shall be elected from the members of the Council.

14 (5) The terms of office for the members of the Council shall be two years and may be recommissioned: Provided that the term of office for any member filling a vacancy shall be the remainder of the term of office for his/her predecessor. (6) Detailed matters necessary for the organization and operation, etc. of the Council shall be prescribed by Presidential Decree. Article 18 (Operational Expenses) Expenses necessary for operating the Council shall be borne by the insurance companies, etc. and the medical institutions. Article 19 (Request for Examination of Medical Fees Covered by Automobile Insurance) (1) When it is judged that a claim for payment under Article 12(2) is based upon the wrongful application of the standards for medical fees, the insurance company, etc. concerned may request the Council to examine the claim in question within 60 days after the date of such claim. (2) In the event of requesting the Council to conduct examinations in accordance with section (1), the insurance company, etc. shall pay in advance the amount prescribed by the Presidential Decree to the relevant medical institution, and later pay out the balance with its added interest in compliance with the decision of the Council. In this case, where the amount paid in advance exceeds the amount of medical fees settled by the decision of examination by the Council, the medical institution that has received the amount in advance shall pay back its excess with due interest added thereto. (3) In cases where the insurance company, etc. who has been requested to pay medical fees under Article 12 (2) fails to file an application for examination by the Council within a period as referred to in section (1), it shall be deemed that the insurance company, etc. has agreed on the contents of the claim for payment by the medical institution on the expiration date of such period.

15 (4) The insurance company, etc. shall not reduce the amount of a claim made by the medical institution under Article 12 (2) without applying for examination by the Council as provided in section (1). (5) The interest rate referred to in section (2) shall be prescribed by the Presidential Decree. Article 20 (Procedures, etc. for Examination and Decision) (1) At the request of the insurance company, etc. for examination under Article 19 (1), the Council shall examine and decide thereupon in accordance with the standards for medical fees: Provided, that in cases where the case of request for examination cannot be examined and decided in accordance with the standards for the medical fees, the Council may advise the parties concerned to conciliate with each other. (2) Matters necessary for the procedures for examination and decision by the Council shall be determined by the Council and approved by the Minister. Article 21 (Effect, etc. of Examination and Decision) (1) When the Council has made a decision in respect to a request for examination as provided in Article 19 (1), it shall notify the parties concerned of the results thereof without delay. (2) It shall be deemed that the parties concerned who were notified as prescribed in section (1) have reached an agreement of contents which are same as those of the decision of the Council on the day of expressing their acceptance if the parties concerned has accepted the decision of the Council, or on the day after 30 days from the date of receiving the notification of the decision of the Council if a lawsuit has not been filed within 30 days from the date of receiving such notification by either party. Article 22 (Authority of Council) If deemed necessary for the examination and decision under Article 20 (1), the Council may have the insurance company, etc., medical institutions, organizations of the insurance business operators, or organizations of medical business operators submit necessary

16 documents, state or report opinions, or entrust the relevant specialists with medical diagnosis or examination. Article 23 (Notification, etc. of Violation of Law) When the Council has, in the process of examining the case of the request for examination or in performing other duties, found that the parties concerned or the interested persons have been involved in violating laws, it shall notify the relevant authorities thereof. CHAPTER IV BUSINESS OF LIABILITY INSURANCE, ETC. Article 24 (Obligation to Enter into Contract) (1) When the automobile owners intend to subscribe to the insurance or the mutual aid as prescribed in Article 5 (1) through (3), the insurance company, etc. shall not refuse to enter into the contract unless there exist any reasons provided by Presidential Decree. (2) Notwithstanding the provisions of section (1), in the cases applicable to the reasons prescribed by the Ordinance of the Ministry of Land, Transport and Maritime Affairs including the case where there is a high probability that the owner of an automobile may cause an automobile accident, multiple insurance companies may jointly enter into the insurance or mutual aid as prescribed in Article 5 (1) through (3). In this case, the insurance company shall provide guidance on the procedures for entering into a joint contract and insurance premiums to the owner of automobile. Article 25 (Cancellation, etc. of Insurance Contract) A subscriber or an insurance company, etc. shall not cancel or terminate the mandatory insurance contract unless it applies to one of the following cases: 1. Where the cancellation registration for the relevant automobile is completed in accordance with Article 13 of the Automobile Management Act or Article 6 of the Construction Machinery Management Act;

17 2. Where the status of relevant automobile is changed into one referred to under Article 5 (4); 3. Where the subscriber intends to cancel or terminate one of the subscription contracts as the automobile is doubly covered by another liability insurance policy; 4. Where the relevant automobile is transferred; 5. Where the subscriber has proved that the relevant automobile is unable to be operated any longer due to natural disaster, traffic accident, fire, theft or other reasons; or 6. Other cases prescribed by the Ordinance of the Ministry of Land, Transport and Maritime Affairs. Article 26 (Succession to Mandatory Insurance Contract) (1) In the case of transfer of an automobile insured by the mandatory insurance, the transferee shall, notwithstanding the provisions of Article of the Commercial Act, succeed the rights and duties of the transferor in respect to the mandatory insurance contract for a period of time extending from the transfer date of the automobile (referring to the date when the transferee has the automobile transferred to his/her active possession by payment of the purchase price) to the expiration date of the application period for the registration of automobile ownership transfer under Article 12 of the Automobile Management Act (referring to the date of entering into a new liability insurance contract in the case the transferee enters into a new liability insurance contract, etc. before the expiry of the term of application for the registration). (2) In the case of section (1), the transferor may have a claim against the transferee for the refund of the amount of the mandatory insurance premium (referring to mutual aid contributions in the case of a mutual aid contract; hereinafter the same shall apply) corresponding to a period of succession by the transferee. (3) In the event that the transferee has refunded the transferor the amount corresponding to a period of his/her succession to the mandatory insurance, he/she shall be exempted from payment of the premium to the extent of the amount of his/her refund.

18 Article 27 (Separate Accounting of Mandatory Insurance Business) Any insurance company, etc. shall take care of accounting with respect to the mandatory insurance business separately from other insurance business or mutual aid business. Article 28 (Prior Consultation) When the Financial Supervisory Commission intends to change the standards prescribed by the Financial Supervisory Commission in accordance with Article 127 (2) of the Insurance Business Act (limited to standards for the clause on insurance of automobile insurance under Article 4 (1) 2 (c) of the same Act which apply only to the liability insurance), it shall consult in advance with the Minister. [This Article Wholly Amended by Act No. 9450, Feb. 6, 2009] Article 29 (Payment, etc. of Insurance Money, etc.) (1) When an insurance company, etc. has paid any victim the insurance money, etc. for his/her death, injury, or any destruction or damage of his/her property due to the reasons prescribed by the Presidential Decree such as violating the prohibition of driving under intoxication under Article 44 (1) of the Road Traffic Act, the insurance company, etc. may claim for the compensation of the amount set by the Ordinance of the Ministry of Land, Transport and Maritime Affairs against any person who is legally liable for the loss compensation. (2) In amending the Presidential Decree aiming at revising the insurance money, etc. of the liability insurance, etc. as provided in Article 5(1), such amendment may, if the amended contents become favorable to the subscribers, the following subsections which oblige the insurance company, etc. to pay the revised insurance money, etc., shall be prescribed regardless of the content of contract made before the amendment thereof: 1. Matters which make the previous insurance money, etc. of the already entered into contract deemed as the revised insurance money, etc. without renewing the previous contract to a new contract; and

19 2. Other matters necessary for the revision of the insurance money, etc., or for the payment of the revised insurance money, etc. CHAPTER V GUARANTEE BUSINESS OF COMPENSATION FOR LOSS CAUSED BY AUTOMOBILE Article 30 (Guarantee Business of Compensation for Loss Caused by Automobile) (1) In the following cases, the Government shall, upon the claim of a victim, compensate him/her for the loss incurred within the extent of the insurance money of the liability insurance: 1. Where a person was killed or injured due to an accident caused by the operation of an automobile whose owner was unidentified; or 2. Where a person other than a subscriber, etc. is liable for compensation for the damage as prescribed in Article 3: Provided, that this shall not apply to an accident caused by operation of the automobile referred to in Article 5 (4). (2) The Government may render aid to the children and the dependent family member of persons killed due to the operation of automobiles or of persons handicapped with serious aftereffects so that they may settle the problem of straitened circumstances, of giving up studies, etc. due to economic difficulties, and to help persons handicapped with serious aftereffects be rehabilitated. (3) The Government shall, upon the claim of the insurance company, etc., make compensation for loss in accordance with Article 11 (5). (4) Matters necessary for objects, criteria, amount, method and procedure of the Government's compensation or aids as provided in sections (1) through (3) shall be prescribed by Presidential Decree.

20 (5) The Minister shall perform the affairs in respect to the compensation business of the Government as provided in sections (1) through (3) (hereinafter referred to as the "compensation guarantee business for loss by automobile"). Article 31 (Assistance to Rehabilitation of Persons Handicapped with Aftereffect) (1) The Minister may perform projects (hereinafter referred to as the "rehabilitation project") stated in the following subsections necessary for the rehabilitation of the persons handicapped with aftereffects from automobile accidents by installing a medical rehabilitation facility or occupational rehabilitation facility (hereinafter referred to as a "rehabilitation facility") for assisting their rehabilitation: 1. Medical rehabilitation projects and projects incidental thereto, which are prescribed by Presidential Decree; and 2. Occupational rehabilitation projects (including occupational rehabilitation counseling) and projects incidental thereto, which are prescribed by Presidential Decree. (2) Financial resources necessary for the installation of rehabilitation facilities, and management, operation, etc. of the rehabilitation facilities and rehabilitation projects pursuant to the provisions of Article 32 (1) shall be the amount prescribed by Presidential Decree among the contributions to compensation guarantee business for loss by automobiles pursuant to Article 37. (3) Buildings, land and other structures, etc. being constructed or created for the purpose of the rehabilitation facility shall belong to the State. (4) When the Minister installs a rehabilitation facility, he/she shall listen to the opinions of the organization of the persons handicapped with aftereffects from automobile accidents on important matters regarding the scale, design, etc. thereof. Article 32 (Designation, etc. of Rehabilitation Facility Operator)

21 (1) The Minister may entrust the management and operation of a rehabilitation facility or rehabilitation project to a corporation designated by the Minister among the corporations that meet the requirements in accordance with the classifications of the following subsections: 1. Medical rehabilitation facility and rehabilitation project pursuant to Article 31 (1) 1: corporation that meets the requirements prescribed by Presidential Decree among the medical corporations permitted to practice medicine pursuant to Article 33 of the Medical Service Act; and 2. Occupational rehabilitation facility and rehabilitation project pursuant to Article 31 (1) 2: corporation that meets the requirements prescribed by Presidential Decree and is permitted by the Minister pursuant to Article 32 of the Civil Act and the Act on the Establishment and Operation of Public-Service Corporations among the organizations of the persons handicapped with aftereffects from automobile accidents. (2) Any corporation that intends to be designated pursuant to section (1) shall file an application with the Minister as provided by Presidential Decree. (3) When the corporation entrusted with the management and operation of rehabilitation facility or of rehabilitation project (hereinafter referred to as the "rehabilitation facility operator"), which was designated pursuant to section (1) performs the affairs of management and operation of rehabilitation facility or rehabilitation project, it shall establish separate accounts and conduct such accounting by sorting it out from other businesses. (4) Matters necessary for the procedure of designating the rehabilitation facility operator, and for the supervision thereof, etc. shall be prescribed by Presidential Decree. Article 33 (Cancellation of Designation of Rehabilitation Facility Operator) (1) When the rehabilitation facility operator falls under any of the following subsections, the Minister may cancel the designation thereof: Provided that where he/she falls under subsection 1 or 2, such designation shall be cancelled: 1. Where he/she has been designated by fraudulent or other illegal means;

22 2 Where he/she has become unsuitable to the requirements pursuant to each subsection of Article 32 (1); 3. Where he/she has not conducted accounting by sorting it out from other businesses in violation of Article 32 (3); 4. Where he/she has failed to perform the corrective order pursuant to Article 43 (4) for three times or more without justifiable reasons; or 5. Where he/she has become unable to continuously conduct the duty of management and operation of the rehabilitation facility or rehabilitation project due to changes in circumstances, such as the liquidation of corporation. (2) Where the Minister has cancelled the designation of the rehabilitation facility operator pursuant to section (1) and it applies to all of the following subsections, he/she may allow the person whose designation has been cancelled to continue to conduct the affairs of management and operation of the rehabilitation facility or rehabilitation project by specifying the period and conditions of management and operation thereof until a new rehabilitation facility operator is designated. In this case, the person whose designation has been cancelled shall be deemed as a rehabilitation facility operator within the extent of affairs to be conducted by him/her: 1. Where it is impossible to select a new rehabilitation facility operator since the date when the designation was cancelled; and 2. Where the management and operation of the rehabilitation facility or rehabilitation project are continuously needed. (3) The person whose designation has been cancelled shall not be designated again as a rehabilitation facility operator within two years from the date (referring to the date the affairs were finished in cases where the affairs had been conducted continuously pursuant to section (2)) when the designation was cancelled. Article 34 (Rehabilitation Facility Management Deliberation Committee)

23 (1) In order to deliberate on the matters in the following subsections in respect to the installation of a rehabilitation facility, operation of rehabilitation project, etc., a Rehabilitation Facility Operation Deliberation Committee (hereinafter referred to as the "Deliberation Committee") shall be established under the authority of the Minister: 1. Matters concerning installation and management of the rehabilitation facility; 2. Matters concerning operation of the rehabilitation project; 3. Matters concerning designation and cancellation of designation of a rehabilitation facility operator; 4. Matters concerning the business plan and budget of a rehabilitation facility operator; and 5. Other matters prescribed by Presidential Decree concerning the management and operation of the rehabilitation facility and rehabilitation project. (2) Matters necessary for the organization, operation, etc. of the Deliberation Committee shall be prescribed by the Presidential Decree. Article 35 (Mutatis Mutandis Application) (1) The provisions of Articles 10 through 13, 13-2 and 14 shall apply mutatis mutandis to the claims of victims for compensation under Article 30 (1). In this case the term "insurance company, etc." shall be deemed as "compensation guarantee business operator for loss by automobile", and the term "insurance money, etc." shall be deemed as the "compensation money" respectively. <Amended by Act No. 9450, Feb. 6, 2009> (2) The provisions of Articles 19 and 20 shall apply mutatis mutandis to requests for the examination of medical fees for victims among the compensation as referred to in Article 30(1). In this case, the term "insurance company, etc." shall be deemed as "compensation guarantee business operator for loss by automobile". Article 36 (Adjustment Compared to Compensation, etc. under Other Acts)

24 (1) In cases where a victim is compensated for the loss prescribed in Article 30 (1) pursuant to the State Compensation Act, the Industrial Accident Compensation Insurance Act and other Acts prescribed by the Presidential Decree, the Government shall be exempted from the liability for compensation as provided in Article 30 (1) within the limit of the amount of compensation the victim has received. (2) In cases where a victim is compensated for the loss as provided in Article 30 (1) by the person who has the liability for loss compensation pursuant to Article 3, the Government shall be exempted from the liability for compensation under Article 30(1) within the limit of the amount of compensation the victim has received. (3) In cases where a person, who is supposed to receive aid under Article 30 (2), has received aid for the same reason under any other Act, the Government may not render the aid under Article 30 (2) within the limit of any aid he/she has received. Article 37 (Contributions to Compensation Guarantee Business for Loss by Automobile) (1) Persons who are required to subscribe to liability insurance, etc. in accordance with Article 5 (1) and the owners of the automobiles prescribed by the Presidential Decree among automobiles under Article 5(4) shall pay the Government contributions for the compensation guarantee business for loss by automobile. (2) A contribution to be paid by a person who is required to subscribe to liability insurance pursuant to Article 5(1) among the persons who are required to pay contributions pursuant to section (1) shall be collected by the insurance company, etc. who contracts a liability insurance with the relevant payment obligor at the time of entering into the liability insurance contract and paid to the Government by the insurance company, etc. (3) The contributions pursuant to section (1) shall be appropriated separately from the Government's revenue and expenditure budget and the matters necessary for the amount, the method of payment, and the management of the contributions shall be prescribed by the Presidential Decree.

25 Article 38 (Disposition for Default of Contribution) (1) The Minister shall urge the person who has not paid the contribution as provided in Article 37 within the payment period to pay the contribution by setting a period of not less than ten days. (2) In cases where the person who has been urged to pay the contribution as provided in section (1) does not pay it within the period, the Minister shall collect it in accordance with the practices of disposition on default national taxes. Article 39 (Subrogation, etc. of Claim Right) (1) In the event that the Government has compensated for loss according to Article 30 (1), the Government may subrogate the victim's right to claim the compensation for loss from the person who is liable to compensate for loss under Article 3 within the limit of the amount it has paid. (2) In the event that the Government has compensated the insurance company, etc. in accordance with Article 30 (3), the Government may subrogate the right of the insurance company, etc. to claim the refund from any person who has been paid the advance payment in accordance with Article 11 (3) and (4). (3) In the cases applicable to any of the following subsections, the Government may suspend subrogation of claim right under sections (1) and (2) according to the resolution of the Credit Adjustment Committee for Compensation Guarantee Business for Loss by Automobile under Article 39-2, and make dispositions on deficit of credits such as claims or unreturned prepayment, etc. <Newly Inserted by Act No. 9450, Feb. 6, 2009> 1. When the extinct prescription for the relevant right is complete; and 2. Cases prescribed by the Presidential Decree where it is deemed that there is no possibility to collect on the credit. Article 39-2 (Credit Adjustment Committee for Compensation Guarantee Business for Loss by Automobile)

26 (1) The Credit Adjustment Committee for Compensation Guarantee Business for Loss by Automobile (hereinafter referred to as the Credit Adjustment Committee ) shall be established under the control of the Minister to pass resolutions on the matters related to the disposition on deficit of the credits under Article 39 (1) and (2). (2) Matters necessary for organization, operation, etc. of the Credit Adjustment Committee shall be prescribed by the Presidential Decree. [This Article Newly Inserted by Act No. 9450, Feb. 6, 2009] CHAPTER VI SUPPLEMENTARY PROVISIONS Article 40 (Prohibition of Seizure, etc.) The right of claims under Articles 10 (1), 11 (1), or 30 (1) shall not be seized or alienated. Article 41 (Extinctive Prescription) In cases where the right of claims under Articles 10, 11 (1), 29 (1) or 30 (1) is not exercised for three years, it shall be terminated by extinct prescription. <Amended by Act No. 9450, Feb. 6, 2009> Article 42 (Prohibition of Disposition such as Registration, etc. to Persons Carrying no Mandatory Insurance) (1) In the event that an application for registration, permission or inspection is filed, or a report is made pursuant to Articles 8, 12, 27, 43 (1) 2, 43-2 (1) and 48 (1) of the Automobile Management Act or Articles 3 and 13 (1) 2 of the Construction Machinery Management Act for any automobile, which is required to subscribe to the mandatory insurance in accordance with Article 5 (1) through (3), the competent administrative agency (including any person who is entrusted with the relevant work; hereinafter the same shall apply) shall verify whether or not the automobile is subscribed to the mandatory insurance, and shall register, permit, inspect or receive report only for the automobiles which are subscribed by the