What Is an Incontestability Clause?

The incontestable clause is also called the irrefutable clause. Its basic content is that the policyholder's failure to perform the truthful notification obligation specified in the preceding paragraph intentionally or due to gross negligence is sufficient to influence the insurer's decision whether to agree to underwrite or increase the insurance rate. From the day when there is a cause for dissolution, it will be eliminated without exercising for more than 30 days. The insurer shall not terminate the contract for more than two years from the date of the establishment of the contract; in the event of an insured event, the insurer shall be liable for compensation or payment of insurance money.

Irrefutable clause

Historically, irrefutable clauses have emerged in order to weather the "credit crisis" and reshape the integrity of an insurance company. Late 18th to early 19th century, British

solve"

The irrefutable clause is generally limited to disputes over the validity of the policy and is intended to prohibit disputes over the validity of the policy due to fraud, concealment, or material misstatement by the policyholder. There are exceptions to this rule. In cases of fraudulent impostor, lack of insurable interest, and intentional murder of the insured, even if the dispute period ends, the insurer can file a defence [5]. Generally speaking, the insurer's defense based on the following reasons is not subject to the irresistible clause: (1) If an accident occurs during an indefensible period, the right of rescission is not extinguished by the expiration of the indefensible period, and the insurer can The contract was terminated by notification of a defect. British and American legislation generally stipulates that "this contract is incontestable after one year from the date of establishment, but subject to the death of the insured" to prevent possible circumvention by the policyholder or beneficiary. (2) In the case of non-payment of insurance premiums, it is not subject to the irrefutable clause. (3) The insured must have insurable interests in the subject matter of the insurance to prevent the use of life gambling and moral hazard factors. Therefore, the dispute over insurance benefits is not within the scope of this rule. (4) Although this rule applies to general fraud, particularly serious fraud may still invalidate the contract, such as impersonating the insured for a medical examination [6]. In insurance practice, irresistible clauses mainly exist in long-term life insurance, health insurance, and accident insurance contracts.

In the international insurance industry, life insurance contracts in developed countries have generally adopted irrefutable clauses. China has finally settled after many years of disputes over whether or not irrefutable clauses were introduced into insurance law. This clause has been adopted in the new insurance law. However, compared with the more specific provisions of the irrefutable clauses in foreign life insurance contracts, the provisions of the irrefutable clauses in the new domestic insurance law are too general. There is no principled provision for the conflict between the irrefutable clauses and the principle of truthful notification. Sex. Specifically, the irrefutable clause has the following defects.

(1) No period of defence is involved

Reporting a case during the irresistible period of time! The insurer shall not terminate the insurance contract for more than two years from the date of the establishment of the insurance contract. In literal terms, it can be understood that as long as two years have passed in the contract, no matter what happens during this period, the insurer cannot terminate the insurance contract. For example, if the insured commits suicide within two years of the establishment of the insurance contract or commits insurance in the form of fraud or the insured dies, but delays until the end of the pleaable period (two years later), the application for compensation is reported, even if the suicide falls within two years Excluding liability, even if the insurance contract concluded by the insured by fraud is an invalid contract, even if the deceased insured conceals major facts, the insurer cannot terminate the insurance contract, which is obviously unreasonable. The insured who belongs to the excluded liability cannot commit suicide simply because of the delay in reporting the case; the invalid contract is invalid from the beginning to the end, and will not change due to the entry into an indefensible period; the death of the insured means the subject matter of the insurance In the event of loss, if the subject matter of the insurance contract is completely lost (death) because of an accident agreed in the insurance contract or an accident not agreed in the insurance contract, the insurance contract is terminated due to the disappearance of the object. In such situations, if there are no clear provisions in laws or regulations, it is very easy to cause some disputes. Such cases have occurred in Taiwan. The insured person violated the notification obligation when applying for insurance and died within two years after the insurance contract was established. After the two-year period expired, the family members immediately demanded the insurance company to pay. Due to the insurance company's refusal to claim compensation, a dispute occurred between the two parties and brought to court.

(2) No application exception for the provision of irrefutable clauses

The use of the defence period cannot be without conditions, and the irrefutable clause does not apply in all cases.

1. Many countries in the world provide exceptions to the application of irrefutable clauses Many countries in the world treat invalid contracts (such as uninsurable benefits, impostors, malicious insurance), default on premiums, and exceed grace periods as exceptions to irrefutable clauses . Article 163 of the German Insurance Contract Law stipulates that, after 10 years after the signing of the contract, the insurer cannot terminate the contract even if it is found that the insurer has violated the obligation to inform when the contract was concluded. But it is not limited to malicious infringers. US law states that whether an insured person concludes an insurance contract because of negligence, or deliberately or even fraudulently, as long as the irrefutable period has passed, it is irrefutable. However, the United States irresistible clause clearly stipulates two prerequisites for its application. One is that the policyholder must pay the premiums on time so that the life insurance contract will remain valid until the two-year defense period expires; the second is that the insurance will be insured when the two-year defense period expires. Man must survive. The irrefutable clause will only take effect if these two conditions are met, otherwise the insurance company has the right to contest the validity of the life insurance contract. Canada's irrefutable clause states that in the absence of fraud, if the policy has been in force for two years during the life of the insured, or after the policy has been reinstated for two years, the insurer will no longer contest the validity of the policy. That is to say, if there is fraud, no matter how it goes, it is defensive, that is, as long as there is fraud, the irrefutable clause does not apply.

2. Hong Kong, China and Macao also provide exceptions to the application of irrefutable clauses. Hong Kong clearly stipulates that if the policyholder misrepresents for the purpose of fraud, it will not be affected! Binding of the irrefutable clause. Articles 974 and 1041 of the Macao Commercial Code provide that: (1) if the insurer's non-declaration or incorrect declaration can affect the risk assessment, the insurer will terminate the contract; (2) the insurer shall not During the year or in a short-term contract, the right to exercise the power of non-declaration or incorrect declaration was exercised; (3) The behavior of the policyholder is intentional, and it does not apply to the provisions of the preceding paragraph. People may have different understandings of the intentional behavior of policyholders in the Commercial Code Law of Macao, but malicious insurance is definitely an intentional act and an irrefutable exception.

3. Provisions for the application of exceptions to the irrefutable clause are in line with the legislative intent of the irrefutable clauses in the new insurance law, which are intended to fully protect the legitimate rights and interests of the insured and the insured. The legal basis of Yizhicai has become an umbrella for malicious fraud by policyholders, which undoubtedly blasphemed insurance law and runs counter to legislative intent. Insurance cannot help or abuse crimes, and it cannot encourage disguise in disguise. Therefore, it is necessary to restrict the irresistible clauses and to list those acts that are clearly contrary to the law and violate the original intent of the legislation.

(3) There is no stipulated relationship with the excluded liability

Excluded liability is also called liability exemption. It refers to the specific scope of the insurance policy that does not bear economic compensation or insurance premium liability to the insured after the occurrence of any risk accident. Matters that are excluded from the liability, regardless of whether the insured and the insured have fulfilled their obligation of truthful notification when applying for insurance, the insurer will not pay compensation when the insurance is released and will not change in any way due to time.

(4) No stipulation applies only to life insurance

The new insurance law places irrefutable clauses in the general provisions of insurance contracts. Technically speaking, it recognizes that all insurance contracts apply irrefutable clauses, and that clause! The statement that the insurer should be liable for compensation or payment of insurance benefits also gives a very vague impression. Because life insurance claims are insurance payments, property insurance claims are loss compensation, but from the original intent of the legislation, the target is obviously life insurance. Only life insurance applies the irrefutable clause. This is because property insurance is basically short-term (one-year) insurance, and there is no irrefutable problem after two years; property insurance is easier to prove after an insured accident; the purpose of the irrefutable clause is to protect the insurance The interests of the person will not be insured refused to pay when the insured failed to fulfill the obligation of truthful notification when applying for insurance.

Requires that any risk report within two years is defensive

For some situations in the next two years, foreign countries usually make some corresponding regulations. For example, most states in the United States often stipulate the irrefutable clause in personal insurance policies: during the life of the insured, from the date of issuance of the policy to the expiration of the policy After two years, I will not contest this policy. This means that at the end of the two-year defence period, the insured must survive, and if the insured dies during the defence period, the insurer can always file a defence. In fact, it can be established for the insured in the insurance contract

The insurance is issued within two years (defendable period), but after two years (non-defendable period), the situation of applying for compensation is uniformly stipulated: the insurer can always file a defense without changing due to the passage of time. That is, if an accident occurs during the pleaable period, the right of rescission will not be extinguished by the expiration of the pleaable period, and the insurer can still inform the contractor of the obligation to be defective.

Exception to application of irrefutable clause

Invalid contracts are not bound by irrefutable clauses

(1) Article 31 of the new insurance law clearly states:! The insured person shall have an insurable interest in the subject matter of the insurance. If the insured person does not have an insurable interest in the subject matter of the insurance, the contract shall be invalid. An invalid contract is a contract that has no legal effect from beginning to end. Therefore, Article 56 of the Contract Law stipulates that an invalid contract or a cancelled contract has no legal binding force from the beginning. Both parties must not perform their rights and obligations based on the contract, so there is no irresistible. The problem.

(2) Article 34 of the new insurance law stipulates that: A contract that is subject to death as the condition for the payment of insurance benefits shall be invalidated without the consent of the insured and approval of the insurance amount. This kind of regulation is very necessary. If you are allowed to privately insure a contract with death as the condition for the payment of insurance benefits without the insured's consent, or to recognize the insurance amount without the written consent of the insured, or even tamper with the insurance amount, it will lead to uninformed The life and body of the third person are in danger.

The status of irrefutable clauses in China

Irrefutable now

Article 16 (1) ^{[1] of the} current Chinese Insurance Law stipulates: "To conclude an insurance contract, the insurer shall explain the terms and conditions of the insurance contract to the insurer, and may make inquiries regarding the relevant subject matter of the insurance or the insured, and apply for insurance. The person shall truthfully inform. "When this article requires the conclusion of an insurance contract, the insured or the insured shall truthfully inform the insurer of important facts about the subject matter of the insurance, and shall not have any concealment, omission, error or fraud. This obligation is statutory and is not affected by whether there is an express agreement in the insurance contract.

The irrefutable clause essentially limits the insurer's right to terminate an insurance contract: even if the insurer commits fraud when signing the contract, the contract will of course continue to be valid after the legal period. On the surface, this rule contradicts the basic principle of contract law that "fraud will invalidate the contract", but the reason why the irrefutable clause is recognized by the law lies in its rationality: First, insurance as a social security tool It is necessary to protect the interests of the beneficiaries of insurance funds and maintain the existence of insurance relationships as much as possible. When entering into a life insurance contract, the insured person generally designates their family members or other aided persons as beneficiaries. These beneficiaries have the right to expect the future payment of insurance. Therefore, life insurance often involves the livelihood arrangements of these people. A period of loss of the right of defense makes the beneficiary irrevocable and loses compassion. Moreover, the life insurance contract is a long-term contract. If it has been established for many years, the insurer has exercised the right of rescission due to the insured person's breach of the notification obligation, making it difficult for the insured to obtain new insurance due to old age and physical weakness. It may even appear that the insurer has signed a contract knowing the existence of a false notification obligation in order to insure the policyholder to pay insurance premiums for many years, but it is obviously unfair to argue against refusing to pay the insurance premium. Secondly, from the perspective of the financial function of the policy, the claim for insurance premiums reflected in the life insurance policy is taken as the pledge, and the pledge is set up to borrow from a third party. If the insurance contract occurs two years after the insurance contract is signed, the insurer will violate the policy. The obligation to inform the defense and refusal to pay the insurance money shall mean that the insured person has died, and the pledgee has no possibility of opposing evidence. If the policy is accompanied by this danger, it will definitely be harmful to the security of the policy credit transaction [4].