China Pacific Property Insurance Co., Ltd.
Product Liability Insurance Clauses
This Insurance Contract consists of Insurance Clauses, Insurance Application, Insurance Policy, Certificate of Insurance and endorsements. Any and all such arrangements as involved hereunder shall be made in writing.
Any and all manufacturing, marketing and maintenance service enterprises that are legally established within the territory of the People’s Republic of China (exclusive of HKSAR, Macao SAR and Taiwan, the same applies below) are deemed to be qualified enough to be the Insured hereunder.
During the insurance period or retroactive period and within such scope of insured areas as specified herein, in case of any third-party personal injuries and/or property damages as a result of the Insured’s product defects and the Insured is claimed against the first time ever during the insurance period, the Insurer shall undertake to pay the indemnifications hereunder against any such indemnification liability as to be borne by the Insured in accordance with the laws of the People’s Republic of China (exclusive the laws of HKSAR, Macao SAR and Taiwan, the same applies below).
In the event of any insured accident, as a result of which either arbitration or litigation has been raised against the Insured, the Insurer shall also take such liability as to make indemnifications hereunder against any such arbitration or litigation expenses as imposed on the Insured as well as those other necessary and reasonable fees (hereinafter referred to as “Legal Fees”), which shall be paid by the Insurer as per the consent of the contract.
In case of any of the following circumstances, the Insurer shall not undertake to pay any indemnification:
(I) The losses of the insured products themselves or any such losses and expenses as incurred by any repairing, refitting, modifications, replacements, recalling and/or retrieving etc. of the said products
(II) Any such indemnification liability as incurred by any failure of the product to meet the expected functionality, improper use by any third party or incorrect delivery by either the Insured or its employees;
(III) Any such indemnification liability as occurred when the insured products have not yet been carried away from the scope of either control or management of either the Insured or its distributors etc.
(IV) The losses and damages of any other products due to the using of the insured products as materials, components and/or packages etc. thereof, unless as otherwise set forth in the Contract;
(V) That the Insured or its distributors have either discovered or been aware of the defects existing in the insured products before they are carried away from the scope of either control or management of either the Insured or its distributors etc.
(VI) The use of the insured products in vessels, airplane or other aircrafts;
(VII) Any such liability as incurred by asbestos, electro-magnetic field, mould, lead poisoning or any other problems related thereto.
The Insurer shall not undertake to pay any indemnification for any claims against such losses and damages as a result of:
(I) Any willful misconduct or gross negligence of the Applicant, the Insured and/or any of its representatives;
(II) Wars, hostile actions, military actions, armed conflicts, strikes, riots, commotions, terrorism activities, malicious act, impropriation or expropriation;
(III) Nuclear radiation, nuclear explosion, nuclear pollution and/or other radioactive contaminations;
(IV) Air/land/water pollutions and other contaminations;
(V) Any damage to the data and/or software programs in any computer set or other electronic devices or loss of usable functions thereof;
The Insurer shall not undertake to pay any indemnification for any claims against such losses and damages as a result of:
(I) Personal injuries of both the Insured and its employees and losses of the properties either owned or managed by them;
(II) Any contract liability that shall be borne by the Insured hereunder, excluding, however, any such indemnifications to be borne by the Insured even in absence of such Contract;
(III) Any such liability as incurred by the Y2K-related problems;
(IV) Fines, penalties or punitive damages;
(V) Indemnifications for mental injuries;
(VI) Indirect losses.
The Insurer shall not undertake to pay any indemnification in case of any and all such other losses, damages, costs and expenses as uncovered by the insurance liability.
Period of Insurance
The insurance period of this contract is one year from 0:00 of the starting date of insurance liability to 24:00 of the expiry date of insurance liability as specified in the Insurance Policy.
The Insured shall make the advance premium according to the estimated annual sales revenue of the insured products. After the insurance period, the premium receivable shall be calculated based on the actual sales revenue, while the overcharge shall be returned and the shortage shall be made up. However, the premium receivable shall be no less than the
minimum annual premium as required.
The Insured shall pay the advance premium before the contract takes effect if the contract provides for lump-sum advance premium or there is no stipulation about the method and time of payment, and shall pay the first installment in time if the contract provides for regular advance premium. The Insurer shall not be liable for any insurance liability until the advance premium is made as required by this paragraph.
In failure of the Insured to either pay the advance premium in time or in full, or pay the second installment of advance premium or any installment thereafter, the Insurer shall, 10-day after the starting date of insurance liability, be entitled to terminate this Contract and further to charge back both such accumulated premium plus interest as of such period for which the Insurer has undertaken the insurance liability, with this Contract to be cancelled upon notice of cancellation to the Insured, provided, however, the Insurer shall undertake the insurance liability for any such insured accident as having occurred prior to the cancellation hereof pro rata as per the percentage of the paid advance premium in the advance premium receivable.
Limits of Indemnity and Deductibles
The Limits of Indemnity hereunder include Limit of Indemnity for Any One Accident and Accumulated Limit of Indemnity of the Insurance Policy. In addition, the Limits of Indemnity can be calculated according to other specific method as agreed. Each Limit of Indemnity shall be decided upon agreement between the Insured and the Insurer and specified in the Insurance Policy.
Deductible for Any One Accident shall be decided upon agreement between the Insured and the Insurer and specified in the Insurance Policy.
Obligations of the Insurer
The Insurer shall issue insurance policy or other certificates of insurance to the Applicant in a timely manner upon the execution of this contract.
The Insurer shall make verifications in a timely manner upon receipt of the Insured’s claims. Further verifications may be taken by the Insurer as reasonably necessary to deal with the complicated situations. And such various ways of making compensations as set forth when applying for the insurance shall be performed by the Insurer seriously.
The Insurer shall have the Applicant and the Insured notified collectively and in a timely manner as of any missing and/or incomplete claim evidences and materials, which should have been submitted by the Insured hereunder.
The Insurer shall pay in advance the amount that can be determined by the existing evidences or materials if the compensation amount cannot be determined within 60 days upon the date of receiving the notice of claim and related evidences and materials. The differences shall be made up for after the Insurer finally determines the compensation amount.
Obligations of the Applicant and the Insured
Upon establishment hereof, the Applicant shall be obliged to providing the faithful data when completing the Insurance Application and clarifying such relevant inquiries as raised by the Insurer.
If the Applicant conceals facts deliberately or fails to perform the duty of disclosure due to gross negligence that would be enough to affect the Insurer from making the decision of whether or not to agree to accept the insurance or to raise the premium rate, the Insurer has the right to terminate the contract.
If the Applicant deliberately refuses to perform the duty of disclosure, the Insurer shall not undertake to pay indemnity or insurance money for insured accident that occurs before the contract is terminated and shall not return the insurance premium.
If the Applicant fails to perform the duty of disclosure due to gross negligence, thereby seriously affecting the occurrence of insured accident, the Insurer shall not undertake to pay indemnity or insurance money for the insured accident that occurs before the contract is terminated but shall return the insurance premium.
The Insurer shall not cancel this Contract if it’s been aware, upon establishment hereof, of any such conditions as not having been faithfully disclosed by the Applicant; in the event of any insured accident, the Insurer shall undertake to pay either indemnity or insurance money.
Within the Term of this contract, the Insured shall notify the Insurer of any increased level of danger of the insurance subject in writing timely, and the Insurer shall have the right to either charge higher premium or cancel this Contract depending on the specific situation. The Insurer shall not undertake to pay any indemnification in case of any such insured accident as incurred by the failure of the Insured to give any notice and apparently increased level of danger.
The Insured shall prevent any such incidents from taking place by remaining in strict conformity with the regulations, standards or technical specifications on product safety as of both the State and industrial levels and shall seriously implement such demands and proposals raised by the competent administrative authorities or the Insurer against potential dangers and incidents.
If the Insured fails to fulfill the above obligation, the Insurer shall have the right to either charge higher premium or cancel this Contract. The Insurer shall be entitled to refuse to make any indemnification in the event of any insured accident hence incurred. The Insurer shall be further entitled to refuse to make any indemnification for any such expanded part of the indemnification liability hence incurred.
In case of any claim raised by a third party, the Insured shall strive to take the necessary and reasonable measures to avoid and/or mitigate the indemnification liability. The Insurer shall have the right to refuse to pay any indemnification for any such expanded part of the indemnification liability as a result of any failure of the Insured to fulfill the afore-said obligation.
Upon receipt of a claim notice from a third party, the Insured shall：
(I) Try to take necessary and reasonable measures to prevent and mitigate the losses. Otherwise, the Insurer shall not undertake to pay any indemnification for the expanded losses hence incurred;
(II) Notify the Insurer in no delay and make available such written statements as to clarify the cause(s) of the accident, what has happened and the losses hence incurred. The Insurer shall not undertake to pay any indemnification for any such undeterminable part of the insured accident as of which the nature, causes and losses etc. can hardly be determined due to either willful reluctance or failure of the Insured to give such notice in a timely manner though in absence of any material misconduct, unless, however, the Insurer has otherwise promptly known, or shall have promptly known, of the occurrence of such insured accident;
(III) Keep the accident scene or relevant records under proper protection and allow the Insurer to conduct investigations and provide assistance. The Insurer shall not undertake to pay any indemnification for any such undeterminable or unverifiable part of the insured accident as of which the causes can hardly be determined and the losses can hardly be verified due to such fact as that the Insurer is either not allowed to conduct, or prevented from conducting, any investigation.
The Insured shall, upon learning of any such litigation or arbitration as to probably occur, keep the Insurer forthwith notified thereof in writing. Upon receipt of any summons or other legal documents as served by a court, the Insured shall have the copies thereof submitted to the Insurer. The Insurer shall have the right to deal with such issues as related to the litigation or arbitration in the name of the Insured, in which case the Insured shall furnish the relevant documents and assistance as necessary.
The Insurer shall not undertake to pay any indemnification in case of any such losses and damages as expanded due to failure of the Insured to furnish the above-mentioned notice or other necessary assistance.
The Insured shall furnish in a timely manner any and all claim-relevant data and certificates to the Insurer and shall ensure that they are complete and truthful.
The Insurer shall not undertake to pay any indemnification for any such undeterminable part of the insured accident as of which the insurance liability in whole or in part can hardly be determined due to failure of the Insured to fulfill the above obligation.
When making a claim, the Insured shall provide the documents as follows:
(I) Original Insurance Policy and Certificate of premium collection;
(II) Certificate of legal production as well as the production and sales record of the insured product;
(III) Proof of accident and the accident settlement report;
(IV) Attestation of disability degree, certificate of death, accident settlement report or other certificates issued by the relevant department; in case of an insures accident taking place outside the territory of the People’s Republic of China, proof of accident and certificate of losses issued by the official authorities or authorized organizations of Chinese government in such foreign countries shall be furnished;
(V) Medical expense receipt, certificate of diagnosis and medical record issued by such medical institution as of second-class and up or recognized by the Insurer;
(VI) List of property losses;
(VII) The validated legal documents, including the award, court decisions, judgments and mediations etc.
(VIII) Other necessary certificates and documents related with the claim provided by the Applicant or the Insured that can be used to identify the nature, cause and seriousness of the loss.
In event of the same defect of the insured products resulting in personal injuries or property losses of several third parties, one single claim or civil litigation, or one series of such claims or litigations within the scope of insurance liability hereunder raised by the aggrieved parties separately or jointly against the Insured shall be considered as losses caused by one accident.
Indemnity made by the Insurer for any insured accident shall be subject to the economic compensation liability of the Insured decided by one of following ways:
(I) Negotiation between the Insured and the third party or other claimants with consent of the Insurer.
(II) Final award of arbitration agency.
(III) Final judgment of the people’s court.
(IV) Other settlement approved by the Insurer.
After the economic compensation liability is decided by one of above-mentioned ways, the actual amount to be indemnified by the Insurer for any one accident shall minus the Deductible for Any One Accident as set forth in the insurance policy, and the total amount to be indemnified for any one accident shall not exceed the Limit of Indemnity for Any One Accident as set forth in the insurance policy. Where the Limit of Indemnity per person for Any One Accident is defined, the total amount indemnified to each and every third party shall not exceed the Limit of Indemnity for Any One Accident.
During the insurance period, the accumulated amount of indemnity made by the Insurer shall not exceed the accumulated Limit of Indemnity.
Such legal fees as to be indemnified for any one accident shall be separately calculated apart from the amount of indemnity calculated in the preceding clause, with no such Deductible to be deducted from the indemnity, provided, however, that the Limit of Indemnity for legal fees shall not exceed the Limit of Indemnity as set forth in the insurance application.
In the event of any insured accident, if the Insured has access to multiple indemnities for its losses under any other insurance policies bearing the equal guarantees, the Insurer shall bear such liability for indemnity pro rata as per the percentage of the Limit of Indemnity hereunder in the total Limit of Indemnity based on the other insurance contracts as well as this one.
The Insurer shall bear no liability for any payment of such indemnifications as confirmed to be duly payable by any other Insurer. The Insurer shall have the right to charge back any such amount of insurance money as paid excessively as a result of failure of the Insured to make faithful disclosures.
When the insurance liability hereunder involves other responsible party, the Insurer shall, starting from the date of payment of the insurance money to the Insured, exercise the right of claiming such relevant responsible party on behalf of the Insured. Should the Insured have obtained indemnifications from the relevant responsible party, the Insurer may have such amount as equivalent to the indemnities having been obtained by the Insured from the relevant responsible party deducted pro rata when paying the insurance money hereunder.
In the event of an insured accident, the Insurer shall bear no liability for indemnification if the insured has waived any claim against the relevant responsible party even before the Insurer has not paid any insurance money. Once the Insurer has paid the Insured the insurance money, any such action taken by the Insured as to have waived any claim against the relevant responsible party without the Insurer’s consent shall be deemed null and void. The Insurer may either deduct or request refunding of the equivalent amount of such insurance money in the event of the Insurer’s failure to exercise the claiming right on behalf of the Insured due to the latter’s willful reluctance or gross negligence.
When the Insurer exercises the right of claiming other relevant responsible party on behalf of the Insured, the Insured shall actively assist the Insurer to claim compensation by furnishing the necessary evidences and documents to the Insurer together with any other relevant information to its knowledge.
The Insurer shall not be liable for any increased losses, expenses or compensation liability concerned with the insured accident after the case has been closed;
Where one insured accident involves several claimants, the Insurer may make compensation first to certain claimants for whom the amounts of indemnification have been decided by the Insurer and the Insured. After the compensation, the Insurer shall not be liable for any increased indemnity related with such claimants.
Dispute Settlement and Applicable Law
Any dispute arising from the performance of this Contract shall be solved through consultation by both Parties; in case of failure of consultation, both Parties agree to refer the dispute to arbitration agency as set forth in the insurance policy for arbitration. If no arbitration agency is appointed by the both Parties in the insurance policy and no arbitral agreement reached afterwards, the both Parties may opt to institute an action to the Courts of the People’s Republic of China ( exclusive of the courts in HKSAR, Macao SAR and Taiwan).
The laws of the People’s Republic of China are applicable to any dispute arising from this Contract.
Unless as otherwise set forth herein, the following terms as applied herein shall bear such meanings as given below:
Products refer to the products processed and manufactured for sale, which includes the actual components and parts as well as the installation instruction, packing materials, instruction manual and safety warnings.
Defect refers to that products have unreasonable dangers, fail to achieve the reasonable safety expectations or don’t comply with the relevant technical standards in the countries or regions where the accidents take place, which are unpredictable and will endanger the safety of person or property of any third party.
Third Party refers to any one of such personnel suffering either personal injuries or property losses due to any product defect including those who consume, use and/or operate such product or any other people so involved, excluding, however the Insured and the Insured’s employees and/or representatives.
The Insured’s representative refers to any such other person or organization, who/which performs such relevant activities as either delegated by the Insured or under an agreement concluded with the Insured, sharing direct relations with the scope or nature as of the Insured’s business or activities, even though such person or organization may not be the Insured’s employee or part of its business organization.
Personal injuries refer to death, disability of limbs, organ functional failures and other injuries causing impacts on the healthy human bodies.
Property losses refer to the material damages of the tangible assets, including the consequential un-usability of the property involved and/or loss of the value-in-use of any tangible assets even without any material damage thereupon.
Retroactive period refers to such a period of time as prior to and connected with the insurance period. In the event of any accident involving the insured product which has incurred losses and damages during such retroactive period, and if the aggrieved third party has raised claim against the Insured for the first time during the insurance period, the Insurer shall handle according to the insurance policy, provided, however, that such accident has to be that of which the insurance applicant was not aware when applying for the insurance hereunder. The insurance policy does not cover any such accident as either having taken place prior to the retroactive period or of which the Applicant was aware upon application.
One Accident refers to such one single claim or civil litigation, or one series of such claims or litigations, which are covered by the insurance policy and raised, either individually or collectively, by one or more third parties or other claimants based on the same ground or cause against the Insured during the insurance period.
Limit of Indemnity for Any One Accident refers to such maximum amount of indemnity for any one accident as set forth in the insurance policy. This Contract allows the Limit of Indemnity for each individual person to be set within the said Limit of Indemnity for Any One Accident. In case of multiple third parties or other claimants, the indemnifications for all those who are involved shall be limited by the Limit of Indemnity for Any One Accident as specified in the insurance policy.
Accumulated amount of indemnity refers to such total sum of indemnities as paid by the Insurer hereunder during the Term of this Contract, which shall be the maximum amount of indemnity to be borne by the Insurer hereunder. The accumulated Limit of Indemnity hereunder shall remain to be limited by such accumulated Limit of Indemnity as specified in the insurance policy if the insurance policy contains a list of multiple Insureds.
Indirect Losses refer to any such losses that cannot be categorized as either personal injuries or property losses as defined above.