Interpretation on Several Issues Concerning the Application of the «PRC Insurance Law» (2)

Article 3: If, at the time of entry into an insurance contract, the proposer or his/her/its agent fails to personally affix his/her/its signature or stamp and the same is signed or stamped by the insurer or its agent on his/her/its behalf, the contract shall not be binding on the proposer. However, if the proposer has paid the premiums, he/she/it shall be deemed to have endorsed the signing or stamping of the contract on his/her/its behalf.

If, after the insurer or its agent has completed the insurance documents on behalf of the proposer, the proposer signs or stamps the same in confirmation, the contents filled in on his/her/its behalf shall be deemed to represent the true intent of the proposer, unless there is evidence to show that any of the circumstances set forth in Article 116 or 131 of the Insurance Law applies to the insurer or its agent.

Article 4: If an insurer has accepted the application submitted by the proposer and received the insurance premium and an insured event occurs before it makes known its intent to approve the application, and the insured or beneficiary requests that the insurer bear the liability for payment of insurance indemnities or benefits in accordance with the contract, the people's court shall uphold such request if the coverage conditions are satisfied; if such conditions are not satisfied, the insurer shall not bear the insurance liability, but shall refund the premiums it has charged.

If the insurer asserts that the coverage conditions are not satisfied, it shall bear the burden of proof in respect thereof.

Article 5: The information on the subject matter of insurance or the insured well known to the proposer at the time of entry into the insurance contract constitutes information that the proposer “shall truthfully provide” as specified in the first paragraph of Article 16 of the Insurance Law.

Article 6: The proposer's obligation of providing information to the insurer is limited to the scope and content asked by the insurer. If a dispute arises between the parties over the scope or the content that was asked, the insurer shall bear the burden of proof in respect thereof.

If an insurer requests the termination of a contract on the grounds that the proposer breached his/her/its obligation of truthfully providing information to the insurer in the general provisions on the question form in the application, the people's court shall reject such request, unless such general provisions contain specific information.

Article 7: If, after the formation of the insurance contract, the insurer learns or ought to have learnt that the proposer failed to perform his/her/its obligation of truthfully providing information to the insurer, but nevertheless charges him/her/it the premiums, and then requests termination of the contract pursuant to the second paragraph of Article 16 of the Insurance Law, the people's court shall reject such request.

Article 8: If an insurer fails to exercise its right to terminate a contract, but directly refuses to pay indemnities on the grounds that a circumstance as specified in the fourth or fifth paragraph of Article 16 of the Insurance Law applies, the people's court shall reject such refusal, unless the parties have reached a separate consensus on the refusal to pay indemnities and the continuation of the insurance contract.

Article 9: The clauses in a standard contract provided by the insurer that exempt it from, or reduce, its liability, such as liability exemption clauses, deductibles, deductible percentages and pro rata settlement or benefit, may be found to be “clauses that exempt the insurer from liability” as specified in the second paragraph of Article 17 of the Insurance Law.

Clauses that grant the insurer the right to terminate the contract due to a breach by the proposer or insured of a statutory or contractual obligation do not constitute “clauses that exempt the insurer from liability” as specified in the second paragraph of Article 17 of the Insurance Law.

Article 10: If an insurer sets a prohibitive provision in a law or administrative regulations as grounds for exemption from liability in an exemption from liability clause in the insurance contract and if, after the insurer has called attention to such clause, the proposer, insured or beneficiary claims that such clause is invalid because the insurer failed to perform its obligation of giving a clear explanation, the people's court shall reject such claim.

Article 11: If, at the time of entering into the contract, the insurer uses, in the application or policy document or other such insurance certificate, text, a font, symbols or other prominent mark sufficient to draw the attention of the proposer to the clauses in the insurance contract that exempt the insurer from liability, the people's court shall find that the insurer performed its obligation of bringing such clauses to the attention of the proposer as specified in the second paragraph of Article 17 of the Insurance Law.

If an insurer gives an explanation to the proposer of the concept, contents and the legal consequences of the clauses in the insurance contract that exempt the insurer from liability, either in writing or orally, in a manner that can be understood by an ordinary person, the people's court shall find that it performed its obligation of giving a clear explanation as specified in the second paragraph of Article 17 of the Insurance Law.

Article 12: If, in the case of an insurance contract entered into online, by telephone or by other such means, the insurer brings clauses that exempt it from liability to the attention of the proposer and clearly explains the same on its website, by audio, by video or by other such means, the people's court may find that it performed its obligations of bringing such clauses to the attention of the proposer and of giving a clear explanation.

Article 13: An insurer bears the burden of proof in respect of its having performed its obligation of giving a clear explanation.

If the proposer, in respect of the insurer's performance of its obligation of giving a clear explanation complying with the requirements of the second paragraph of Article 11 hereof, signs or stamps the relevant document or otherwise confirms the same, the insurer shall be found to have performed such obligation, unless there is other evidence showing that the insurer failed to perform its obligation of giving a clear explanation.

Article 14: If provisions in an insurance contract are inconsistent, a finding shall be made in accordance with the following rules:

(1) if the application and the policy document or other insurance certificate are inconsistent, the application shall prevail; however, if the inconsistency was explained by the insurer and agreed to by the proposer, the provisions of the policy document or other insurance certificate signed in acceptance by the proposer shall prevail;

(2) if a negotiated clause and a standard clause are inconsistent, the negotiated clause shall prevail;

(3) if the dates recorded on insurance certificates are different, that formed on the later date shall prevail; and

(4) if an insurance certificate has both handwritten text and printed text, the portion written by hand and signed and/or stamped by the parties shall prevail.

Article 15: The 30 day determination period specified in Article 23 of the Insurance Law shall start to count from the date on which the insurer receives for the first time the claim request and the relevant proof and information provided by the proposer, insured or beneficiary.

If the insurer requests that the time for the provision by the proposer, insured or beneficiary of additional relevant proof and information be subtracted therefrom, the people's court shall uphold such request. The subtracted period shall run from the date on which the notice given by the insurer pursuant to Article 22 of the Insurance Law reaches the proposer, insured or beneficiary until the date on which the additional relevant proof and information provided by the proposer, insured or beneficiary as required in the notice reaches the insurer.

Article 16: An insurer shall exercise the right to claim indemnities by subrogation in its own name.

Pursuant to the first paragraph of Article 60 of the Insurance Law, the period of limitation of actions for an insurer's right to claim indemnities by subrogation shall start to count from the date on which it secures such right.

Article 17: If the explanation given by the insurer of a term that is not a term of art in insurance which appears in the standard clauses of an insurance contract provided by the insurer is in keeping with the professional idea, or although it is not in keeping with the professional idea but is favourable to the proposer, insured or beneficiary, the people's court shall approve it.

Article 18: A people's court shall examine in accordance with the law the written traffic accident report, fire report, etc. produced in accordance with the law by the administrative department and confirm its attendant probative force, unless there is counter evidence that can overturn the same.

Article 19: If, after the occurrence of an insured event, the insured or the beneficiary institutes a legal action against the insurer and the insurer argues that it does not bear insurance liability on the grounds that the insured or the beneficiary did not demand that a third party assume the liability, the people's court shall reject such argument.

If, after the occurrence of a property insurance incident, the insured institutes a legal action in respect of the portion of his/her/its loss not covered by the third party, requesting that the insurer indemnify him/her/it therefor, the people's court shall accept the case in accordance with the law.

Article 20: An insurance company's (sub)-branch that has been lawfully established and obtained a business licence constitutes another organisation for the purposes of Article 48 of the PRC Civil Procedure Law (2nd Revision) and may participate in a legal action as a party to an insurance contract dispute case.

Article 21: The Interpretation shall apply in insurance contract dispute cases that have not reached final judgment after the implementation hereof. The Interpretation shall not apply in cases that were final before the implementation hereof and in which a party then applies for a retrial or in which a decision for retrial is made in accordance with the procedure for the monitoring of trials.