Precedent No. 23/2018/AL

Precedent No. 23/2018/AL on the validity of a life insurance contract when the insurance buyer fails to pay the insurance premium due to the fault of the insurance company was approved by the Council of Judges of the Supreme People's Court on October 17, 2018 and promulgated under Decision No. 269/QD-CA dated November 6, 2018 of the Chief Justice of the Supreme People's Court.

Source of case law:

Civil Appeal Judgment No. 538/2009/DS-PT dated March 31, 2009 of the People's Court of Ho Chi Minh City on the case of "Insurance contract dispute" between the plaintiff, Ms. Pham Thi T, and the defendant, P Life Insurance Company Limited; the person with related rights and obligations is Ms. Vu Thi Minh N.

Position of the case law:

Paragraphs 4, 7, 8 of the “Court's Opinion” section.

Overview of case law:

- Case law:

The life insurance application file shows that the policyholder chose to collect the insurance premium at the policyholder's home address. When the premium payment deadline came and during the grace period, the insurance company's staff did not come to collect the premium from the policyholder.

- Legal solutions:

In this case, it must be determined that the policyholder is not at fault for not paying the premium. The life insurance contract is not invalidated because the policyholder does not pay the premium within the agreed time limit.

Legal provisions relating to precedents:

Article 23 of the Law on Insurance Business 2000 amended and supplemented in 2010.

CASE CONTENT

Plaintiff Ms. Pham Thi T stated:

Her husband, Tran Huu L, registered to buy insurance from P Life Insurance Company Limited. Her husband died in an accident. According to the contract, she is the beneficiary. Now she requests the defendant to pay the insurance amount of 300 million VND and interest at the basic interest rate from August 2005 to present, which is 126 million VND, for a total of 426 million VND.

Defendant P Life Insurance Limited Liability Company, with authorized representative Mr. Nguyen Quoc T, presented:

Mr. L had to pay the second insurance premium on June 24, 2005, and was then given a two-month extension but still did not pay. Mr. L died on August 27, 2005, the time the insurance contract had lapsed for 3 days. Therefore, the defendant did not accept to pay as requested by the plaintiff.

The person with related rights and obligations, Ms. Vu Thi Minh N, presented:

She was the defendant's agent and sold insurance to Mr. L. She agreed with Mr. L that when the insurance premium was due, she would collect the premium directly at Mr. L's house. However, when the final payment deadline came, she had to attend political school in the province and could not collect the premium. The reason for not being able to pay was objective, so she requested the defendant to pay the insurance premium to the plaintiff.

In the Civil Judgment at First Instance No. 38/2008/DS-ST dated August 21, 2008 of the People's Court of District 1, Ho Chi Minh City, it was decided:

1. Do not accept Ms. Pham Thi T's request for P Life Insurance Company Limited to pay insurance money and interest due to late payment of VND 426,000,000.

2.  Regarding court fees: Ms. Pham Thi T must pay the first instance civil court fee of 7,890,000 VND, but is entitled to deduct the advance payment of court fees of 6,000,000 VND according to receipt No. 2185 dated June 9, 2006 of the Ho Chi Minh City Civil Judgment Enforcement. Ms. T must also pay 1,890,000 VND.

The first instance judgment also stated the parties' right to appeal.

On September 1, 2008, Ms. Pham Thi T appealed.

At the appeal hearing 

The plaintiff did not withdraw the claim and requested an appeal.

The parties could not reach an agreement on the settlement of the lawsuit.

Ms. T presented her appeal request, requesting the Trial Panel to accept her request to force P Life Insurance Company Limited to pay the insurance money and interest due to late payment of 426,000,000 VND. The reason was that the company's staff did not come to collect the insurance money, not that she did not pay. The lawyer protecting Ms. T's legal rights and interests requested the Trial Panel to accept this request of Ms. T.

Mr. Nguyen Quoc T, representative of P Life Insurance Company Limited, and the lawyer protecting legal rights and interests, requested the trial panel to uphold the first instance judgment.

JUDGMENT OF THE COURT

[1] After studying the documents in the case file and examining the evidence at the trial and based on the results of the debate at the trial, the Trial Panel determined:  

[2] Regarding form: Ms. Pham Thi T's appeal was made within the statutory time limit and is valid.

[3] About the content: 

[4] Based on the life insurance claim file (record 15-17), the address for P Life Insurance Company Limited to collect fees is at house number 231, Hamlet 3, Commune B, District G, Ben Tre Province, which is the home of Mr. L. This is also consistent with the statement of Ms. N, who is an insurance sales agent and fee collector for P Life Insurance Company Limited.

[5] Ms. T's appeal that Mr. L did not pay the insurance premium on time was due to the company not sending anyone to collect it has a basis as evidenced above.

[6] Based on the confirmation paper of the police of commune B, it shows that Mr. L died on August 27, 2005 due to a careless fall and head injury that caused death.

[7] Considering that Mr. L signed an insurance contract through the form of a life insurance application with an insurance coverage of 300,000,000 VND, the fact that Mr. L has not paid the second installment as analyzed above is not Mr. L's fault, therefore, Ms. T's appeal request to force P Life Insurance Company Limited to pay the insurance money when Mr. L dies due to an accident has a basis for acceptance.

[8] Considering the request of the representative of P Life Insurance Company Limited that Mr. L did not pay the second insurance premium by the deadline of August 24, 2005 and Mr. L died on August 27, 2005, thus Mr. L's insurance contract has expired, there is no basis. Because as analyzed above, the reason Mr. L did not pay the insurance premium was because the company's staff did not come to collect the premium.

This is also clearly shown on page 5 of the customer information book, which clearly states that home fee collection includes quarterly, 6-monthly, annual fees, or the same address has 2 or more contracts, consistent with the case of Mr. L who purchased 03 contracts from P Life Insurance Company Limited, which belonged to Mr. L, Ms. T, and Ms. H. Therefore, the Trial Panel did not accept the request of the representative of P Life Insurance Company Limited, as well as the request of the lawyer to protect the legal rights and interests of P Life Insurance Company Limited.  

[9] The request of Ms. T to force P Life Insurance Company Limited to pay late interest from August 27, 2005 to the date of the Court's trial is unfounded. Because the insurance certificate issued by P Life Insurance Company Limited to Mr. L does not show the interest clause, the Trial Panel therefore does not accept this request of Ms. T.

[10] Therefore, the Trial Panel partially accepted Ms. T's appeal request, amended the first instance judgment, forcing P Life Insurance Company Limited to pay the insurance money under the accidental death contract of Mr. L, which was 300,000,000 VND, with Ms. T as the beneficiary.

[11] The civil court fees at first instance that Ms. T and P Life Insurance Company Limited must pay are prescribed in Clause 2, Article 7 of Decree 70/CP. Specifically, Ms. T must pay court fees on the amount of unacceptable interest of VND 6,040,000. P Life Insurance Company Limited must pay court fees on the amount to be paid to Ms. T of VND 12,000,000.

[12] Due to the amendment of the first instance judgment, Ms. T does not have to pay civil appeal fees as prescribed in Clause 2, Article 132 of the Civil Procedure Code.

For the above reasons,  

DECISION

Apply Article 275, Clause 2 of the Civil Procedure Code. 

Verdict:

- Partially accept the appeal request of Ms. Pham Thi T.

- Amending First Instance Judgment No. 38/2008/DS-ST dated August 21, 2008 of the People's Court of District 1, Ho Chi Minh City.

1. Partially accept the request of Ms. Pham Thi T.

* Compel P Life Insurance Company Limited to pay insurance money of 300,000,000 VND (Three hundred million VND) to Ms. Pham Thi T immediately after the judgment comes into legal effect.

* From the date of the plaintiff's request for enforcement, if the defendant fails to enforce the above amounts, it must pay interest at the basic interest rate prescribed by the State Bank corresponding to the period of non-enforcement.   

2. Regarding the first instance civil court fees: Ms. Pham Thi T must pay the court fees of VND 6,040,000 (Six million forty thousand dong), but the advance payment of VND 6,000,000 (Six million dong) according to receipt No. 002185 dated June 9, 2006 of the Ho Chi Minh City Civil Judgment Enforcement Agency is deducted. Ms. T must also pay VND 40,000 (Forty thousand dong).

P Life Insurance Limited Liability Company must pay court fees of VND 12,000,000 (Twelve million VND).

3. Ms. T does not have to pay the civil appeal court fees, and will refund Ms. T 50,000 VND (Fifty thousand VND) in advance court fees according to receipt number 004852 dated September 9, 2008 of the Civil Judgment Enforcement Department of District 1, Ho Chi Minh City.  

The appellate judgment takes legal effect from the date of judgment.

CONTENT OF PRECEDENT

“ [4] Based on the life insurance claim file (record 15-17), the address for P Life Insurance Company Limited to collect fees is at house number 231, Hamlet 3, Commune B, District G, Ben Tre Province, which is the home of Mr. L. This is also consistent with the statement of Ms. N, who is an insurance sales and fee collection agent for P Life Insurance Company Limited.

 [7] Considering that Mr. L signed an insurance contract through the form of a life insurance application with an insurance coverage of 300,000,000 VND, the fact that Mr. L has not paid the second installment as analyzed above is not Mr. L's fault, therefore, Ms. T's appeal request to force P Life Insurance Company Limited to pay the insurance money when Mr. L dies due to an accident has a basis for acceptance.

[8] Considering the request of the representative of P Life Insurance Company Limited that Mr. L did not pay the second insurance premium by the deadline of August 24, 2005 and Mr. L died on August 27, 2005, thus Mr. L's insurance contract has expired, there is no basis. Because as analyzed above, the reason Mr. L did not pay the insurance premium was because the company's staff did not come to collect the premium.

This is also clearly shown on page 5 of the customer information book, which clearly states that home fee collection includes quarterly, 6-monthly, annual fees, or the same address has 2 or more contracts, consistent with the case of Mr. L who purchased 03 contracts from P Life Insurance Company Limited, which belonged to Mr. L, Ms. T, and Ms. H. Therefore, the Trial Panel does not accept the request of the representative of P Life Insurance Company Limited, as well as the proposal of the lawyer to protect the legal rights and interests of P Life Insurance Company Limited.”

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