[Handling Attorney] Wang Zhanping

[Keywords] Civil/Personal Insurance Contract Disputes/Scope of Insurance Liability/Interpretation of Clauses

【Key Points of the Ruling】

Motor vehicle drivers shall drive in accordance with the relevant provisions of the Road Traffic Safety Law and shall abide by the provisions of road traffic safety laws and regulations, driving safely according to operational standards. In the Road Traffic Safety Law, “road” refers to highways, urban roads, and places—though within the jurisdiction of a particular entity—that permit the passage of motor vehicles belonging to the public, including squares and public parking lots as well as other areas designated for public access.

In an insurance contract concluded using standard terms provided by the insurer, if there is a dispute between the insurer and the policyholder, the insured, or the beneficiary regarding the terms of the contract, such terms shall be interpreted according to their ordinary meaning. If there are two or more interpretations of the contract terms, the interpretation that is most favorable to the insured and the beneficiary shall prevail.

[Basic Facts of the Case]

On September 22, 2014, Li’s father, Li, signed an insurance policy with the Shenyang Branch of a certain Life Insurance Co., Ltd. The policyholder and the insured were both Li, with Li designated as the beneficiary in the event of death. The insurance products involved were a “certain endowment insurance” and an “additional Million-Year Driving Accident Personal Injury Insurance,” each with a basic coverage amount of 200,000 yuan. According to Article 6, Paragraph 1, Item 1 of the Endowment Insurance Terms, the death benefit is 5,412 yuan (110% × (1,400 + 1,060) × 2). Under Article 6, Paragraph 2 of the Additional Million-Year Driving Accident Personal Injury Insurance Terms, the death benefit for accidental death while driving a private vehicle is set at 2 million yuan (200,000 yuan × 10). If the insured suffers a traffic accident recognized by the public security traffic management department while driving or riding in a private vehicle within the territory of the People’s Republic of China, and dies within 180 days from the date of the accident due to that accident, the death benefit payable under this additional contract will be the balance remaining after deducting any previously paid personal injury disability benefits for private vehicle accidents from ten times the basic coverage amount of this additional contract at the time of death—namely, 2 million yuan (200,000 yuan × 10). According to Article 6, Paragraph 3, the general accidental death benefit is payable as follows: if the insured suffers an accidental injury and dies within 180 days from the date of the accident, the death benefit will be the balance remaining after deducting any previously paid personal injury disability benefits for private vehicle accidents from the basic coverage amount of this additional contract at the time of death. The period during which the insured is driving or riding in a private vehicle is defined as starting from the moment the insured enters the vehicle’s cabin and ending when the insured exits the vehicle. The defendant shall pay only one of the following benefits under the main contract and this additional contract: maturity benefit, death benefit, private vehicle accidental death benefit, or general accidental death benefit.

Around 5 p.m. on February 25, 2016, Li drove a Jeep with three passengers from Sanmianchuan Sanjianpao Village in Fakou County and entered the ice surface of the Liao River along its bank. As they were driving across the middle section of the river, the ice broke, causing the Jeep to fall into the Liao River. Two of the occupants were rescued by firefighters, but Li died from drowning despite being given emergency medical treatment by paramedics at the scene. The insurance company agreed to pay a general accidental death benefit of 200,000 yuan as stipulated in the contract. However, the beneficiary of the insured person requested that the insurance company pay a private car accidental death benefit of 2 million yuan (200,000 yuan × 10). Consequently, the case was brought before the court.

【Judgment Result】

1. Within 10 days after this judgment becomes effective, the Shenyang Central Branch of a certain insurance company shall pay Li a sum of RMB 200,000 in insurance benefits.

II. The other claims of Li Mou are dismissed. The case filing fee of 22,843 yuan shall be borne by Li Mou in the amount of 18,543 yuan and by the Shenyang Branch of a certain Life Insurance Co., Ltd. in the amount of 4,300 yuan.

【Reasons for the Ruling】

The court held that, as a motor vehicle driver, Li should have driven in accordance with the relevant provisions of the Road Traffic Safety Law, strictly complying with the laws and regulations on road traffic safety and driving safely according to established operating procedures. Under the Road Traffic Safety Law, “road” refers to highways, urban roads, and other places—though under the jurisdiction of a particular entity—that permit public motor vehicle traffic, including squares and public parking lots open to the general public; “traffic accident” means an incident on a road in which persons are injured or killed or property is damaged due to fault or accident involving a vehicle. In this case, Li drove a motor vehicle on a non-road surface—the Liahe River ice—where, after the vehicle fell into the water, Li was unable to be rescued at the scene and drowned. The insurance contract signed between Li and the Shenyang Branch of a certain Life Insurance Company stipulates that, in the event of an accidental death while driving or riding in a private car within the territory of the People’s Republic of China, if the accident is recognized by the public security traffic management department as a traffic accident, and the insured dies within 180 days from the date of the accident, the insurer shall pay the accidental death benefit for private cars equal to ten times the basic sum insured under this supplementary contract, less any previously paid accidental disability benefits for private cars. Thus, the accidental death benefit for private cars amounts to 2 million yuan (200,000 yuan × 10). Clearly, Li’s conduct did not comply with the aforementioned legal provisions; therefore, Li’s claim for payment of the accidental death benefit for private cars is not supported. As for the defense raised by the Shenyang Branch of the said Life Insurance Company—that Li’s injury occurred outside the vehicle and thus falls outside the scope of insurance coverage, and that his behavior constitutes participation in adventure activities, which is excluded from liability—according to the Insurance Law, when an insurance contract is concluded using standardized terms provided by the insurer, and there is a dispute over the terms between the insurer and the policyholder, the insured, or the beneficiary, the terms shall be interpreted according to their ordinary meaning. If there are two or more interpretations of the contract terms, the interpretation favorable to the insured and the beneficiary shall prevail. In this case, the insured Li, driven by a lucky mindset and excessive confidence, inevitably left the vehicle upon encountering danger and attempted self-rescue. Therefore, the defendant should pay the beneficiary the insurance benefit according to the “general accidental death benefit” clause in the insurance contract, which would be more favorable to Li.

【Relevant Statutes】

Contract Law of the People's Republic of China

Article 44: Effectiveness of Contracts. A contract that is established in accordance with the law shall become effective upon its establishment. If the law or administrative regulations stipulate that the contract must undergo approval, registration, or other formalities to become effective, such stipulations shall be followed.

Article 60: Strict Performance and Good Faith Obligations. The parties shall fully perform their respective obligations in accordance with the agreement. The parties shall abide by the principle of good faith and, based on the nature and purpose of the contract as well as prevailing trade practices, fulfill their obligations to give notice, provide assistance, maintain confidentiality, and perform other related duties.

Article 107: Liability for Breach of Contract If one party fails to perform its contractual obligations or performs them in a manner that does not conform to the agreed terms, it shall bear liability for breach of contract, including continuing to perform the contract, taking remedial measures, or compensating for losses.

Insurance Law of the People's Republic of China

Article 30: In the event of a dispute over the terms of an insurance contract concluded using standard clauses provided by the insurer, the insurer, the policyholder, the insured, or the beneficiary shall interpret such terms according to their ordinary meaning. If there are two or more interpretations of the contract terms, the people’s court or the arbitration institution shall adopt an interpretation that is favorable to the insured and the beneficiary.

[Lawyer’s Perspective]

The lawyer argues that the accident in this case does not qualify as a traffic accident covered under the provision for accidental death benefits for private vehicles stipulated in the insurance contract. According to Article 6, Paragraph 2 of the "Supplementary Million-Year Driving Accident Insurance Terms," which governs the accidental death benefit for private vehicles: "If the insured person suffers a traffic accident recognized by the public security traffic management department while driving or riding in a private vehicle within the territory of the People's Republic of China (excluding Hong Kong, Macao, and Taiwan), and dies within 180 days from the date of the accident due to injuries sustained in that accident, we shall pay the accidental death benefit for private vehicles as set forth below, and this supplementary contract shall then terminate."

It is known that the accidental death benefit for private vehicles (2 million yuan) requires that the accident be officially recognized by the public security traffic management department. However, in this case, the traffic police department did not issue either a liability determination or an accident certificate to confirm that the incident was indeed a traffic accident. Typically, the traffic management department does not limit itself to issuing only liability determinations for traffic accidents; it can also issue accident certificates—in cases where liability cannot be determined. Yet, if an incident does not meet the criteria for a traffic accident, the traffic management department is simply unable to issue either a liability determination or an accident certificate. Furthermore, in this case, the insured person did not die at the scene after the vehicle fell into the water. Instead, he died later, while attempting to rescue others from the water outside the vehicle. In other words, even if a liability determination for a traffic accident had been issued, the insured would still not have died as a result of a traffic accident.

Additionally, Article 6 of the insurance policy’s coverage provisions stipulates: “During the period when the insured is driving or riding in a private vehicle, the coverage begins from the moment the insured enters the vehicle’s cabin and ends when the insured exits the vehicle.” It is clear that regardless of whether the insured voluntarily leaves the vehicle or is compelled to do so, once the insured steps out of the vehicle, he or she no longer falls within the scope of coverage for accidental death benefits related to private vehicles. In other words, if the insured leaves the vehicle while driving and subsequently finds himself or herself outside the vehicle, only to be struck by another vehicle, drown, or suffer similar incidents, such events would not be covered under this insurance policy. In fact, when drafting this provision, the insurance company relied on big data principles prevalent within the insurance industry—specifically, data on traffic accidents in China rather than on all types of accidental events. Moreover, since the insurance payout under this provision amounts to ten times the insured amount, the risk it assumes is strictly limited to traffic accidents involving private vehicles. Therefore, the scope of coverage should be strictly defined, requiring both conditions—the use of a private vehicle and involvement in a traffic accident—to be met simultaneously. Of course, there are instances where vehicles registered under a company’s name but actually owned by individuals may lead to disputes following an insurance claim; thus, insurers need to provide further clarification in their policy wording. The people’s courts must fully respect the insurance company’s practice of explicitly clarifying such terms within the coverage scope, as these clauses define the scope of insurance liability rather than serving as exclusion clauses. In practice, many judges have mistakenly identified these clauses as exclusion clauses instead of coverage clauses. Such misidentification has resulted in failure to adequately alert and clearly explain the coverage terms, rendering those terms invalid and artificially expanding the insurer’s liability, thereby adversely affecting the development of the entire insurance industry.