China Life Insurance Tianjin Branch Insurance Knowledge Popularization: Consequences of Violating the "Utmost Good Faith" Principle

Integrity is the foundation of an insurance contract. Violating this principle not only may result in the loss of coverage but also trigger a series of legal issues. Whether you are the policyholder or the insurer, failing to fulfill the duty of disclosure or breaching warranty agreements can lead to contract termination, claim denial, or non-refundable premiums.

So, what actions could lead to these consequences? How might they affect your rights? Today, China Life Insurance Tianjin Branch will help you understand the legal implications of violating the principle of utmost good faith, guiding you to avoid “traps” during the application and performance of your insurance contract and protect your rights.

Violation of Disclosure:

1. If the policyholder intentionally conceals facts or fails to fulfill the duty of disclosure, the insurer has the right to terminate the contract. If an insurance incident occurs before the insurer terminates the contract and results in a loss, the insurer may refuse to pay compensation or benefits and will not refund the premium. If the policyholder negligently or carelessly breaches the duty of disclosure, and the undisclosed facts are sufficient to influence the insurer’s decision to underwrite or adjust the premium, the insurer has the right to terminate the contract. If the undisclosed facts significantly impact the occurrence of an insurance event, the insurer may cancel the contract; for losses occurring before termination, the insurer is not liable for compensation or benefits but may refund the premium.

2. If the insurer fails to clearly explain the exemption clauses at the time of signing the contract, such exemption clauses are invalid. For clauses that exempt the insurer from liability, the insurer should provide sufficient notice on the application form, insurance policy, or other certificates, and clearly explain the content to the policyholder in writing or verbally.

Violation of Warranties:

Any act that breaches warranty clauses or agreements, or fails to fulfill contractual commitments or guarantees, constitutes a violation of warranties. All warranty provisions in the insurance contract are crucial, regardless of their importance, both the policyholder and the insured must strictly adhere to them. Violations typically result in two outcomes: first, the insurer refuses to pay compensation or benefits; second, the insurer terminates the contract.

China Life Insurance Tianjin Branch Reminder: An insurance contract is a legal agreement based on trust. Integrity is not only a responsibility but also the foundation for safeguarding your rights. When applying for insurance, be sure to disclose facts truthfully and review carefully; during the contract period, strictly follow relevant agreements to avoid misunderstandings or negligence affecting future claims. If you have questions about the terms, please consult the insurance company or a professional to ensure clear understanding and secure coverage.