[Title] Does Driving an Electric Bicycle Without a License Qualify as an Exclusion Under the Accident Insurance Contract?

Keywords: unlicensed electric bicycle riding, accidental injury insurance, exclusion clauses, principle of non-interpretation, obligation to provide clear explanations

[Attorneys in Charge] Wang Zhanping,

Wu Zhikuan: Former lawyer at Liaoning Tongfang Law Firm

[Features] In the first-instance court, our claim was not upheld. Although the second-instance court did uphold our claim, we believe that the reasoning behind the second-instance court’s judgment is incomplete.

[Party concerned] n

Plaintiff: Tang Mou'an, male, born on September 2, 1989.

Plaintiff: Xia Molan, female, born on March 29, 1966.

Plaintiff: Tang Moujiang, male, born December 22, 1941.

Defendant: Dandong Branch of a Certain Life Insurance Co., Ltd.

[Case Summary]

Plaintiff Tang Moujiang is the father of the deceased Tang Mouzhong; Plaintiff Xia Moulan is the wife of Tang Mouzhong; and Plaintiff Tang Mou’an is the son of Tang Mouzhong. At the time of his death, Tang Mouzhong was an employee of Dandong City XX Machinery Co., Ltd. In August 2017, the company insured its employees with Guoshou Comprehensive Accidental Injury Insurance through the defendant. Two policies of this type were purchased for Tang Mouzhong, both in card format. The policy numbers are: 51301140066**** and 513021140066****. The premium for each policy was 100 yuan, paid by the company, and the insurance benefit for each policy was 70,000 yuan. The name of the insured listed on the policies was Tang Mouzhong, and the beneficiaries upon death were Tang Mouzhong’s legal heirs. The policies prominently highlighted in boldface that the company would not be liable for paying insurance benefits if the insured’s death, disability, or medical expenses were caused by any of the following circumstances: among them, item seven stated that the company would not cover claims if the insured drove under the influence of alcohol, drove without a valid driver’s license, or drove a motor vehicle without a valid registration certificate. When the company made the insurance purchase, the defendant insurance company’s agent explained the exclusion clauses to the person in charge of Tang Mouzhong’s company. Liu Mouzhi repeatedly explained these exclusion clauses to employees at company meetings. At around 7:00 a.m. on September 26, 2017, Tang Mouzhong was involved in a traffic accident and died at the scene. According to the traffic police department’s determination, Tang Mouzhong drove a motor vehicle that had not been registered with the public security authorities on the road without obtaining a driver’s license as required by law, and failed to yield the right-of-way to vehicles traveling straight when making a turn. He bears equal responsibility for this accident.

[Judicial Authority] Intermediate People's Court of Dandong City, Liaoning Province

【Judgment/Content】

The court of first instance held that, where an insurer uses prohibitive provisions stipulated in laws and administrative regulations as grounds for excluding liability under the insurance contract, and after having provided appropriate notice of such exclusion clauses, the insured, the policyholder, or the beneficiary claims that the clause is invalid on the ground that the insurer failed to fulfill its obligation to provide clear explanation, the people’s court shall not support such a claim. In this case, although the policyholder registered under the insurance contract was Tang Mochong, it was actually Tang Mochong’s employer—the Dandong Pharmaceutical Machinery Co., Ltd.—that entered into the contract with the defendant insurance company and paid the premium. Therefore, Dandong Pharmaceutical Machinery Co., Ltd. is the actual policyholder under the contract, while Tang Mochong is the insured. The insured, Tang Mochong, drove a motor vehicle without a license and without license plates on the road, thereby violating relevant provisions of the Road Traffic Safety Law. The insurance company had already provided special notice of this exclusion clause in the insurance certificate and had fulfilled its obligation to explain the clause to the policyholder, Dandong Pharmaceutical Machinery Co., Ltd. According to the contractual agreement and applicable legal provisions, the insurer is thus exempt from its obligation to pay insurance benefits. Consequently, the plaintiff’s claim for the insurance company to pay insurance benefits lacks both factual and legal basis, and the court of first instance dismissed the claim.

The original plaintiff in this case appealed to the Dandong Intermediate People's Court. The second-instance court held that Article 17 of the Insurance Law of the People's Republic of China stipulates: “When concluding an insurance contract and using standard clauses provided by the insurer, the insurer shall attach these standard clauses to the policy submitted to the insured. The insurer shall explain the contents of the contract to the insured. With regard to clauses in the insurance contract that exempt the insurer from liability, the insurer must, at the time of contract conclusion, provide conspicuous warnings on the policy, insurance certificate, or other insurance documents sufficient to attract the insured’s attention, and must also clearly explain the content of such clauses to the insured either in writing or orally. If no such warnings or explicit explanations are provided, such clauses shall be deemed invalid.” In this case, the activation card policy inquiry provided by the three appellants in the second instance indicated that the insured for the insurance in question was Tang Mochong. Therefore, the life insurance company should have fulfilled its obligation to provide a warning to the insured, Tang Mochong, at the time of contract conclusion. However, the appellee, the Dandong Branch of a certain life insurance company, knowing full well that the insured for the insurance in question could only be a natural person, failed to provide sufficient evidence demonstrating that it had indeed provided Tang Mochong with conspicuous warnings regarding the clauses in the insurance contract that exempted the insurer from liability at the time of contract conclusion. Consequently, these exclusion clauses are invalid. The life insurance company is therefore obligated to pay the accidental injury insurance benefits as stipulated in the insurance policy, totaling 140,000 yuan.

[Lawyer’s Perspective]

The court of first instance held that although Tang Mochong was listed as the insured in the insurance contract at issue, the entity that entered into the contract with the defendant insurance company and paid the premiums was Dandong Pharmaceutical Machinery Co., Ltd., the employer of Tang Mochong. Therefore, the company should be regarded as the actual insurer under the contract. The court’s factual finding was erroneous. The determination of the insurer should be based on the insurance policy itself. An insurer may authorize a third party to pay the premiums on its behalf; thus, the insurer is not necessarily the person who actually pays the premiums but rather the insurer identified in the insurance policy. Moreover, the reasoning of the second-instance court did not address the issue of interpreting the insurance clauses applicable to this case. According to the common understanding of an ordinary person, electric vehicles cannot be registered and objectively cannot obtain motor vehicle license plates or registration certificates. Although the electric vehicle in this case was identified as a motor vehicle through expert appraisal, there remains a dispute over whether it falls within the definition of “motor vehicle” stipulated in the insurance contract terms. In accordance with the Supreme People’s Court Gazette case—Cao Liancheng, Hu Guilan, Cao Xinjian, and Cao Xianzhong v. Jiangsu Branch of Minsheng Life Insurance Co., Ltd. regarding an insurance contract dispute—the summary of the judgment stated: “In the absence of explicit provisions in the insurer’s exclusion clauses or in the interpretation of the insurance terms regarding the criteria for identifying a ‘motor vehicle,’ given the misleading information provided by the manufacturer’s product manual and the product inspection certificate (both indicating that the vehicle is a moped), coupled with the fact that the insured could objectively not obtain a motor vehicle license plate, the interpretation that the vehicle in question does not fall within the category of ‘motor vehicle’ specified in the insurer’s exclusion clauses is consistent with the common-sense understanding of an ordinary vehicle purchaser and user. Hence, such an interpretation should favor the insured, and the vehicle in question should be deemed not to fall within the scope of the insurer’s exclusion clauses. Under these circumstances, the insured’s driving of the vehicle without obtaining a driver’s license also does not constitute the situation of driving without a license as defined in the exclusion clauses.” Similar to the present case, although China is not a common-law country, the Supreme People’s Court’s Gazette cases reflect the Supreme Court’s prevailing judicial views and carry significant guiding importance for judicial practice.

[Reason for Recommendation]

The resolution of the two key issues in this case holds broad significance for the proper application of law in judicial practice. First, how to determine the insured; second, although this case involves a dispute over a personal insurance contract, its particularity lies in whether the identification of an electric vehicle as a motor vehicle falls within the scope of the exclusion clause in the insurance contract pertaining to driving without a license—a scenario that is commonly encountered in disputes over liability arising from motor vehicle traffic accidents. However, the second-instance court failed to provide a clear interpretation of the relevant clause in this case, leaving a gap in its reasoning.