Reflections on the Legal Nature and Key Issues of Fidelity Guarantee Insurance

Due to the distinctive features of fidelity guarantee insurance, which differ from typical surety insurance, various issues arise regarding the legal nature of this insurance contract, the rights acquired by the insurer after paying the insurance claim, and the scope of exercising such rights. This paper reexamines the legal nature of current fidelity guarantee insurance, arguing that while the type of insurance contract for the benefit of others can be viewed as a form of typical surety insurance, the type of insurance contract for one's own benefit should be regarded as a form of general indemnity insurance, similar to credit insurance. It is particularly noted that, in the latter case, a separate term, “fidelity credit insurance,” should be used. Moreover, since fidelity guarantee and fidelity credit insurance cannot be classified as liability insurance, the direct claim right of the victim under the Commercial Act cannot be applied. The starting point for the statute of limitations on the right to claim insurance benefits should be differentiated based on the type of damage covered: in cases where the insured suffers direct damage due to the employee's illegal acts, the statute of limitations should begin from the occurrence of the insurance event, while in cases where the insured assumes employer liability to a third party, the statute of limitations should begin from the time the damage amount is determined. Given the differing legal nature of current fidelity guarantee insurance depending on the type of contract, it is necessary to separate and reorganize the terms into fidelity guarantee insurance terms and fidelity credit insurance terms. As part of revising the insurance terms, this paper proposes clarifying expressions in the compensation clauses of current fidelity guarantee insurance terms that might be misunderstood as liability insurance, distinguishing and organizing whether the rights acquired by the insurer after paying the insurance claim are subrogation rights or rights of indemnity according to each set of insurance terms, clarifying the coverage of defense costs, and specifying how the statute of limitations should be applied based on the type of damage covered. This would clarify the legal nature of fidelity guarantee and fidelity credit insurance, helping to appropriately fulfill the intended purpose of the insurance contract for the parties involved and contributing to the prevention of unnecessary and costly disputes.