Consumers may still sue the car manufacturer after receiving an insurance payout, but this right becomes limited if the right to claim compensation has been transferred to the insurance company.

1. When a vehicle breaks down: Who is liable?

Vehicles can encounter risks such as electrical faults, explosions, sudden breakdowns, or safety failures. These incidents may stem from various causes: user error, accidents, poor maintenance, or manufacturing defects. In many cases, vehicle owners believe the fault lies with the manufacturer and seek compensation. In fact, numerous lawsuits have been filed demanding accountability from carmakers.

2. Can you still sue after receiving insurance money?

Under current consumer protection laws, individuals have the right to claim compensation if a product is defective or unsafe. The Civil Code also allows those who suffer damage to property, health, or life to sue the responsible party.

However, if the vehicle owner has insurance and receives a payout, their right to sue may be restricted. Article 16 of the 2022 Law on Insurance Business states:

Article 16. Principles of Entering and Executing Insurance Contracts

The conclusion and execution of insurance contracts must comply with the basic principles of civil law and the following:

…

4. Principle of Subrogation: The insured is responsible for transferring to the insurer or the foreign non-life insurance branch the right to claim compensation from a third party who caused the damage, within the scope of the insurance payout. This principle does not apply to life or health insurance contracts.

According to this provision, once the insurance payout is received, the vehicle owner no longer has the right to directly sue the manufacturer for the insured portion of the damage.

Instead, the insurance company holds the right to decide whether to pursue legal action against the manufacturer. If the vehicle owner insists on suing, the chances of winning are slim—especially if the manufacturer can prove that the right to claim compensation was transferred through signed agreements with the insurer. This is known as the “subrogation principle” in insurance contracts.

It’s important to note that insurance claims and damage claims are two separate legal actions:

• Insurance claims must follow the terms of the insurance contract.
• Damage claims follow the contract between the buyer and the manufacturer and/or general legal provisions on non-contractual compensation.

Therefore, the compensation amounts may differ. Vehicle owners still have the right to demand additional compensation from the manufacturer if the insurance payout does not fully cover the actual damage.

3. What about damages outside the scope of insurance?

If the incident causes damage beyond the scope of insurance—such as fire spreading to other property or causing injury—the vehicle owner still has the right to seek compensation from the manufacturer. In such cases, it’s crucial to determine whether a manufacturing defect directly caused the damage.

Additionally, the owner may claim emotional distress compensation if no agreement is reached, in accordance with legal provisions. However, proving a technical fault from the manufacturer is a complex process requiring expert analysis. If the vehicle is severely damaged or no longer intact, identifying a manufacturing defect becomes even more difficult.

4. Advice for vehicle owners

Pursuing legal action is time-consuming and costly, requiring thorough legal and technical preparation. Before deciding to sue, vehicle owners should carefully evaluate their case, gather sufficient evidence, and consult experts to avoid unfavorable outcomes.