Comment On The Case Of The Renewal Of An Insurance Contract

In recent years, insurance products which attached to the basic insurance(additional risk) have become more and more diversified. As those insurance productsare mostly short-term, insurance companies tend to set the conditions and methods torenew the insurance contract through certain terms, making the issues caused by thoseterms being increasingly eye-catching. In those issues, policy-holders usually takeadvantage of their weak position to lead to the understanding of the terms of renewal,which is favorable for the renewal of the contract. In this case, whether the insurancecompany has the right to deny the renewal of the contract is the key focus. Thepolicy-holder holds the point of view that terms about the renewal led to the unilateralbreach of the contract. The part which denies the renewal of the contract is escapeclause.As the company failed to perform the duties of prompting and explainingwhich are bound to such clause, it is valid to both parties. To sum up, the companyshould accept her application of renewal. Meanwhile, the company is obliged toprotect her reliance interests under the principle of good faith in contract law. In fact,terms about renewal consist a pre-contract of the insurance contract, stipulating thetime and conditions of a new contract. Renewing an insurance contract representativesa new insurance contract, whose terms are almost the same as the old one, which leadsthe misunderstanding of the renewal terms. As renewal means signing a new contract,the company has the right to sign it or not according to the principle of contractfreedom. In a word, the solution of the conflict of the two principles is the keysolution to the find out whether the company has the right to deny the renewal of thecontract. In this case, after weighing different legal interests, the court reached averdict of rejecting the claims of the plaintiff by the application of the principle ofcontract freedom, which may be instructive to the subsequent cases.