Study On The Principles Of Interpretation Of Insurance Contracts

As the core content of insurance, insurance contract provides the rights and obligations between insurer and insured. When accident happens, whether to grant compensation, the amount of compensation, what limitations etc, are closely related to insurance contracts. Thus it is very important to determine the interpretation principles of the insurance contract.In this paper, I start from the reasons, nature and the general principles of the explanation principles of insurance contract, combing different theories and doctrines of the explanation principle and comparing the different national legislative norms with China's current system, attempting to reconstruct a new system of doctrine in ChinaIn addition to this introduction and conclusion, there are six parts in this paper. The first part is about the general theory of explanation principles of insurance contract. The reason why insurance contracts need to be explained is that sometimes they are vague and ambiguous. Regarding the concept of explanation principles of insurance contract, there are broad and narrow sense, this article is said to be taking a narrow sense. Concerning the nature of the explanation principle, the common law treats it as a question of fact. While there are three kinds of viewpoints, including the factual issues, legal issues, and compromise issues in civil law system. This paper argues that compromise issues would be more appropriate. Finally, this section reviews the general traditional interpretation principles of contract briefly.The second part focus on the traditional interpretation principle of insurance contract, namely unfavorably explained principle. There are three theoretical bases: Firstly, the theory of standard form of contract which means insurance contract is prepared in advance by the insurer, the insured cannot make substantial changes in it. The second one is the theory of professional. The insured cannot understand the insurance contract in depth due to the high technology in the insurance industry. The theory of protection of the weak is the third theory. The scales of justice should tend to the insured that is much weaker than insurer. In practice, both common law countries and civil law countries, most of them have the legislation of the unfavorably explained principle.The third chapter primarily indicates the shortcomings of the unfavorably explained principle. Those three theoretical grounds cannot provide a solid foundation to the unfavorably explained principle. In practice, paradox happens occasionally. For example, there is no universal standard about how to find the doubtful terms of the insurance contract.The fourth part attempts to specify the possible ways of the unfavorably explained principle. The vitality of this principle is demonstrated strongly as it exists for hundreds of years. This paper tries to limit the scope of the unfavorably explained principle and applies as a subsidiary principle. In addition, the paper tries to use the type of analytical method to distinguish the after-application and non-application.The fifth part explores the doctrine of reasonable expectations. Although it can be traced back as early as the late nineteenth century, it is widely used in nineties last century in the US. The U.S. courts apply this doctrine very proficient and develop as an idea that when the court determines the doubt terms it should meet the reasonable expectations of one of the parties when they reached the agreement. This is the beyond and departure from the traditional principle of explanation. Judges are given considerable discretion to make decisions without referring to the original meaning of the agreement which incurs numerous criticisms.The sixth section mainly concentrates on the current system of the explanation principle in China. This article will analyze China's current legal provisions and practice of the explanation principle of insurance contract and then attempt to establish a new module in place of the traditional one. Firstly, this article will divide the insurance contract into unilateral commercial act insurance contract and bilateral commercial act insurance contract. In the latter situation, both parties are commercial subject; the difference between the statuses of both parties is relatively small. Thus it will be inappropriate if the principle of unfavorable explanation applies. For the former position, since one party in the contract is not a business subject, there is a huge disparity between the statuses of the parties. In order to safeguard the interests of the weak side, the unfavorably explained principle is applicable. Further, under this circumstance, it is not applicable to all the situations. This paper introduces a new concept of"the degree of weak"which means how weak of one party who is not a business subject and explains to what extent of weakness does the unfavorably explained principle apply? This article will utilize western jurisprudence which has developed a relatively sophisticated set of criteria to address this problem.