机动车辆保险条例草案

The China Insurance Association's draft of new regulations for motor vehicle insurance contains a series of important modifications for both the insured and the insurers.

One of the new clauses enforces full value compensation to all damaged cars for insurance holders, replacing the widely discredited "No liability, No compensation" clause. The current stipulation states that those who are insured for damage shall be compensated only when they are at fault and that compensation is proportional to the relative liability. The Assistant Chief Judge of Nanjing People's Court, Xing Jiadong, says the clause conflicts with existing national laws.

"This clause tends to mitigate the insurance company's responsibility by excluding insurance holders' rights. This clause s is not legally binding according to our national laws."

Insurance experts say the modification is subversive to insurance companies as it requires them to pay for their consumers' wants and needs.

Another modification, supported by many, is the drop in dues. Under the current regulations, whether the car is new or old, the insurance dues are set for the car as if it were new, meaning higher payments. However, the compensation is based on actual value. This usually means that with high monthly payments comes low coverage. The draft requires insurance companies to set their dues and compensation according to car's actual value. Experts say this will help the insured avoid unnecessary expenditures.

Appreciative of the efforts in the proposed legislation, insurance expert Yang Bo says the modifications could be more comprehensive and detailed.

"There are no clear or detailed regulations on the insurance rate, so different insurance companies will set their rates in their own interests. When there is a dispute over an insurance claim, problems will arise."

Insurance expert Pan Hao points out that there are still loopholes in the proposed legislation. The draft says the insurance company must cover car damage from rainstorms and floods but not damages caused by water-filled engines. Pan Hao says this is too vague.

"If water gets in the car's engine while driving in a rainstorm, will the insured still be compensated? The insured would say yes, but the insurers may heartily disagree. Actually, insurance companies can sort out all similar cases by saying the insured drove in wet conditions, a move that could be seriously detrimental to the insured's financial interests."

Pan Hao says clauses must be exact, detailed and in clear language, otherwise these loopholes will cause major problems in the future.

For CRI, I'm Wang Wei.