The Protection Of Insured Vehicle Mortgagee’s Interests Under Insurance Law

Nowadays, China has officially entered the automobile society. The number of carannual production and sales and the number of car ownership continue to increase. Asa special commodity, car has been progressively integrated into economic exchanges.Auto loan, car finance lease, car mortgage, vehicle insurance and other relatedfinancial markets all rise under the prosperity of vehicle industry..The car mortgage system has played an important role in the development of therelated automobile financial markets, together with vehicle insurance, serving for theprosperity of China’s automobile industry and automobile-related financial markets.Take auto loan as an example. In practice, lenders usually require the borrower totransact the vehicle mortgage, vehicle insurance and guarantee insurance to protectthe security of debt. However, due to the lack of a sound credit system, and the lack ofsound management systems in banks and other financial institutions, even if under thedouble protection mode, the lender’s claims and mortgagee’s interests can not be fullyprotected. This article attempts to analyze the risks facing the lender, as mortgagee,and to seek protection for his mortgagee’s interests in the view of insurance law, inorder to promote the development of the related automobile financial markets.In the first chapter, the author briefly introduced the rights and obligations amongthe parties, in the case when the insured vehicle is mortgaged for car loan, includingloans rights and obligations, mortgage rights and obligations and insurance rights and obligations.In the second chapter, the article focuses the risks facing the mortgagee. First of all,when the pledge is destroyed, the law does not empower the mortgagee to gain theinsurance money directly. At the same time, the mortgagee’s interests are subject tothe constraints of the lease, liens and other interests. Second, the insurer mayterminate the insurance contract or reject the claims for indemnity. What’s more, thereare also risks from the mortgagor, including appointing another beneficiary or anotherprior claimer, delaying in or pre-empting the exercise of claims in compensation.In the third chapter, the author focuses on the measures to protect the interests of themortgagee, in the view of the Insurance Law. First, the mortgagee shall directly insurecredit insurance. Second, appoint the mortgagee as the beneficiary of the insurancecontract. Third, appoint the mortgagee as the transferee of the property interests of theinsurance contract by the insured. Fourth, restrict the rights of the insured, includingrestrictions on its contractual right to terminate the contract or to claim for indemnity.