Precedent 22 provides a guidance to resolve the following legal issues:
(i) Has the policyholder breached his/her obligation to provide information when the insurance company's information requirement is unclear?
(ii) What are legal risks that the Insurance Company has to bear arising from its unclear request?
Summary of facts
According to the Precedent 22, the Insurance Company refused to pay compensation because before entering into the Insurance Agreement (“Agreement”), the policyholder had a history of stomach pain and increased blood fat but did not declare them in the Insurance Request Application Form. The Insurance Company presented a consultation document of the hospital showing that the policyholder has a 2-year history of stomach pain as accompanying evidence.
In Insurance Company’s opinion, the phrase “disorder of the stomach” in the Insurance Request Application Form covers all diseases related to the stomach, including stomach ailments. The fact that the policyholder marks the box "no" at the question "Gastrointestinal ulcers, gastrointestinal bleeding, pancreatitis, colitis, frequent indigestion, difficulty swallowing, or disorders of the stomach, intestines and liver or gallbladder?”, (meaning the policyholder declared that there was no stomach disorder) is a dishonest declaration.
In addition, the Insurance Company also provides biochemical testing sheets collected in the periodic medical examination records of the policyholder. The Insurance Company believes that this is also a deliberate act of dishonest declaration because the policyholder did a blood test but did not declare it in the Insurance Request Application Form.
(i) Is there a breach of the policyholder's obligation to provide information?
The plaintiff argued that “stomach pain” and “disorder stomach” are two different definitions. There are no documents, no evidences that stomach pain is a disorder in the stomach. And it is a normal activity for the policyholder to have periodic health check that the agency, where the policyholder works, has organized a health check for its employees. Moreover, the results of the periodic health check do not show any illness related to the policyholder's refusal to sign the insurance Agreement. Therefore, the Insurance Company believes that the policyholder provides dishonest information and refuse to pay insurance are unfounded.
Thus, when concluding the insurance Agreement, the Insurance Company is responsible for providing information and explaining the insurance terms and conditions to the buyer. If this explanation is not clear, leading to the buyer not providing sufficient information, it deems that the buyer is not in breach of the obligation to provide information.
(ii) Which legal risks that the Insurance Company has to bear arising from its unclear request?
The policyholder and the Insurance Company has different understandings of the content "stomach pain" and "disorder in the stomach". According to the provisions of Civil Code and the laws on insurance, in case the model contract contains an unclear provision, the party offers the model contract shall be at a disadvantage when interpreting that provision (Clause 2 Article 407, Clause 4 Article 409 of the Civil Code 2005 and Article 21 of the Law on Insurance Business 2000). Therefore, the Court found that there was not enough basis to determine that stomach pain was in the context of stomach disorders as in the opinion of the Insurance Company, but it had to be explained in favor of the policyholder.
According to the resolution of the Precedent 22, when the Insurance Company requests to provide information, but that request is not clear, leading to the parties having different interpretations of the insurance terms, this provision must be resolved preferred in favor of the policyholder.
When dealing with issues related to a breach of the obligation to provide information about medical conditions in a life insurance policy, it is necessary to refer to the Precedent 22 for a unifed settlement.
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