Discussion On The Incontestable Clause In The Insurance Law

In The Insurance Law revised in 2009 of China, the incontestable clause is introduced, i.e. the Paragraph 3 of Article 16. In accordance with this clause, based on the Insurant breaching of the principle of utmost good faith, failing to perform the duty of disclosure, the right to terminate a Contract of the Insurer shall be extinguished since the day that the cause for termination has been known to the Insurer and being not exercised over 30 days. Since being entered into the Contract and more than 2 years, the Insurer shall not terminate the Contract; if insurance accident happened, the Insurer shall be responsible for the compensation or pay under its insurance obligation. This clause is of great significance for limiting the Insurer abusing of rights and protecting the interests of the Insurant, and makes up for these shortcomings existed in the duty of disclosure system of The Insurance Law before revised of our country. However, there still are some defects on the understanding to the incontestable clause between the practical field and even the academia, which may cause different understanding and judgment using different standards in judicial application. Therefore, the connotation of incontestable clause is trial to be discriminated and defined in this paper, the theoretical basis of the law is studied and elaborated, and problems may existed in judicial application is compared and analyzed, which has provided opinions and suggestions for the further refinement and perfection of Chinese insurance law concerning on the incontestable clause.In this paper, the body is divided into four parts, and the main contents are as follows:Part I is about the evolution of incontestable clause and its legislation. Started from the definition of the basic meaning of incontestable clause, methods of contrastive analysis, historical study and comparative study are adopted to research the historical figures and the current situation of legislation of incontestable clause. Incontestable clause is different from rules of eqiuty estoppel and abstention rules in Insurance Law, which is originated from the Insurer's conscious activity when deal with crisis of confidence in the insurance industry, experienced evolution from contracted terms to legalized mandatory terms, and finally became a system generally ruled by the insurance law of the countries all over the world. No matter the English-American law systems or Mainland law systems, the incontestable clause is set in the form of written law in most of countries, and all of which are mandatory rules and shall not expel to be applied because of the agreement of Parties.Part II refers to the theoretical basis of the law of incontestable clause, study to which in our country is still weaker. It is emphatically analyzed and expounded from perspective of the basic principles of civil law, and the legitimacy of its system is revealed. The basis of incontestable clause is the principle of good faith, which is the reasonable configuration to the rights of both Parties made after weighing interests of both Parties of insurance contract, so as to make the two Parties of the contract in equal and fair legal position. Incontestable clause also embodies the principle of reliance protection, which makes the expectation interest and reliance interest to the insurance contract of the Insurant and beneficiary more stable. The incontestable clause is the scheduled period set by the insurance law aiming at specific right to terminate a contract of Insurer, which can make the validity of contract to be determined earlier, prevent the Insurer abusing of the legal right to terminate a contract, effectively restrain the moral hazard and reflect the principle of prohibition on the abuse of right.Part III is concerned with the judicial application of incontestable clause. Comparative study and hermeneutic methods are adopted, judicial application issues concerning on incontestable clause are analyzed, and the author put forward his/her own opinion directed at problems existed or may existed in judicial application: What related to the application of incontestable clause is the duration of insurance agreed by insurance contract. When insurance contract period is shorter than scheduled period, only the possibility of incontestable clause is appropriate for this Contract can be negated, opposite to the qualification of applying to the incontestable clause. Incontestable clause shall be appropriate for all types of insurance, including the property insurance. For the right to terminate a Contract of the Insurer caused by the Insurant's fraudulent activities, if it forfeit due to incontestable clause, the right of claiming cancellation can be performed according to the rules of the right of claiming cancellation in the Civil Law. The right to terminate a Contract of the Insurer and the right of claiming cancellation in the Civil Law can be applied at the same time. As to whether the fraudulent activities are appropriate for incontestable clause, the author agrees to statement that to separately treat serious fraud and general fraud.Part IV is about the legislative perfection of incontestable clause. Being established in the rules to incontestable clause of The Insurance Law of China, to find out the shortage and raise perfect proposal. Problems existed in the rules concerning incontestable clause of The Insurance Law of China are: rules to the effective date of counterplea period of incontestable clause are unclear; rules to the incontestable items are unclear; rules to whether the fraudulent activities are appropriate for incontestable clause are unclear. The author claims that to make further perfection to incontestable clause by revising the law and making judicial interpretation: made clear provision that serious fraud is not appropriate for incontestable clause and general fraud is appropriate for incontestable clause; increase the premise condition of application of incontestable clause, taking the Insurant's defaulting the insurance expenses as the premise for applying incontestable clause; clear the duration of insurance applying incontestable clause, making provision that only the counterplea period more than two years can be appropriate for incontestable clause.