Insurance Company Loses Appeal Over 15% Deductible in Passenger Injury Claim for Approximately 12,492 RMB
Insurance Company Loses Appeal Over 15% Deductible in Passenger Injury Claim for Approximately 12,492 RMB
CASE OVERVIEW
An appellate court in Northern China upheld a trial court judgment requiring an insurance company to pay full compensation to two injured passengers, rejecting the insurer’s argument that a 15% deductible clause in the commercial passenger accident insurance policy should apply. The total compensation awarded was 12,492.22 RMB.
CASE BACKGROUND AND FACTS
On September 14, 2009, at approximately 10:50 PM, Mr. Guo was driving a car owned by Mr. Li along a road in a township in Northern China. The vehicle was traveling east to west when Mr. Guo failed to observe road conditions ahead and took improper evasive action, causing a traffic accident. Both Mr. Guo and the two passengers, Mr. Ji and Ms. Li, were injured.
The traffic police determined that Mr. Guo bore full responsibility for the accident, while the two passengers had no fault. Mr. Ji incurred medical expenses of 4,851.40 RMB, and Ms. Li incurred medical expenses of 4,176.70 RMB. The vehicle was insured with Tianan Insurance Company under a commercial passenger accident insurance policy, with a liability limit of 10,000 RMB per passenger.
COURT PROCEEDINGS AND EVIDENCE
The injured passengers filed a lawsuit in the local district court seeking compensation for medical expenses, nursing fees, lost wages, transportation costs, and hospital meal allowances. The trial court calculated Mr. Ji’s total losses at 6,268.54 RMB and Ms. Li’s total losses at 6,223.68 RMB, based on the 2009 provincial personal injury compensation standards.
The insurance company appealed, arguing that the passenger accident insurance was a type of personal insurance, different from compulsory third-party motor vehicle liability insurance. The insurer contended that the vehicle owner should bear primary liability and that the insurance company should only be liable after the owner compensated the passengers. The insurer further argued that under the policy terms, a 15% deductible should apply because the driver was fully at fault, reducing the insurer’s liability by 940.28 RMB for Mr. Ji and 933.55 RMB for Ms. Li.
During the appeal, the insurance company submitted the insurance policy application form and the passenger liability insurance条款, claiming that Mr. Li had signed the form acknowledging the deductible clause. Mr. Li disputed the signature, stating it was not his. The insurance company had not presented this evidence during the first trial.
COURT FINDINGS AND JUDGMENT
The appellate court identified the key issue as whether the 15% deductible was validly included in the insurance contract and who should bear that portion of the loss.
The court found that the insurance company failed to prove that Mr. Li had agreed to the deductible clause. Mr. Li denied signing the application form, and the insurer provided no additional evidence to verify the signature. Furthermore, the insurance company did not raise the deductible issue during the first trial and did not submit the relevant policy documents at that time. The court therefore declined to accept the evidence submitted for the first time on appeal.
The court held that the trial court had correctly determined the facts and applied the law. The appellate court dismissed the insurance company’s appeal and affirmed the original judgment. The insurer was ordered to pay the full amounts of 6,268.54 RMB to Mr. Ji and 6,223.68 RMB to Ms. Li. The vehicle owner was ordered to bear the first-instance court fees, and the insurance company was ordered to bear the second-instance court fees of 300 RMB.
KEY LEGAL PRINCIPLES
The court applied the principle that an insurer bears the burden of proving the existence and validity of any exclusion or limitation clauses in an insurance contract. When an insured party disputes a signature on a policy document, the insurer must provide reliable evidence to authenticate the signature. Failure to raise a defense or submit relevant evidence during the initial trial may result in the waiver of that defense on appeal.
The judgment also affirmed that commercial passenger accident insurance policies are distinct from compulsory third-party liability insurance under traffic safety laws, but the insurer may still be directly sued by injured passengers if the policy allows or if the insurer consents to direct payment.
PRACTICAL INSIGHTS
This case illustrates the importance for insurance companies to properly document policy terms and obtain clear, verifiable consent from policyholders for any deductible or exclusion clauses. Insurers should present all relevant evidence and arguments during the first instance trial to avoid being barred from raising new issues on appeal.
For passengers injured in vehicle accidents, this ruling confirms that they may seek direct compensation from the insurer under a commercial passenger accident policy, even when the policy is not a compulsory third-party insurance. The court emphasized that the insurer’s obligation to pay is not contingent on the vehicle owner first compensating the passengers, unless the policy clearly states otherwise.
LEGAL REFERENCES
General Principles of the Civil Law of the People’s Republic of China, Article 119
Civil Procedure Law of the People’s Republic of China (2007), Articles 64, 130, 153, 157
Supreme People’s Court Interpretation on Compensation for Personal Injury, Articles 17, 19, 20, 21, 22, 23
DISCLAIMER
This article is for informational purposes only and does not constitute legal advice. Laws and regulations may vary by jurisdiction. Readers should consult a qualified legal professional for advice on specific legal matters.