Regulation on Compulsory Auto Liability Insurance (2016 Edition)

 2018-05-13  15


Regulation on Compulsory Auto Liability Insurance (2016 Edition)

  • Document NumberOrder No. 666 of the State Council
  • Area of Law Traffic and Transport
  • Level of Authority Administrative Regulations
  • Date issued02-06-2016
  • Effective Date07-01-2006
  • Status Effective
  • Issuing Authority State Council


Regulation on Compulsory Auto Liability Insurance
(Issued by Order No. 462 of the State Council of the People's Republic of China on March 21, 2006; amended for the first time in accordance with the Decision of the State Council to Amend the Regulation on Compulsory Auto Liability Insurance on March 30, 2012; amended for the second time in accordance with the Decision of the State Council to Amend the Regulation on Compulsory Auto Liability Insurance on December 17, 2012, by Order No. 630 of the State Council; and amended for the third time in accordance with the Decision of the State Council to Amend Certain Administrative Regulations by Order No. 666 of the State Council on February 6, 2016)
Chapter I General Provisions
Article 1 This Regulation is developed in accordance with the Road Traffic Safety Law of the People's Republic of China and the Insurance Law of the People's Republic of China for the purposes of ensuring the indemnification of victims in road motor vehicle traffic accidents according to the law and promoting road traffic safety.
Article 2 The owners or managers of motor vehicles driving on the roads within the territory of the People's Republic of China shall take out compulsory auto liability insurance in accordance with the provisions of the Road Traffic Safety Law of the People's Republic of China.
The insurance application, compensation, and regulation of compulsory auto liability insurance shall be governed by this Regulation.
Article 3 For the purposes of this Regulation, “compulsory auto liability insurance” means the compulsory liability insurance in which an insurance company compensates, within the limit of indemnity, the victims other than the persons in the insured motor vehicles and the insured for their bodily injuries or deaths and property losses arising from road traffic accidents involving the insured motor vehicles.
Article 4 The insurance regulatory authority of the State Council (hereinafter referred to as the “CIRC”) shall, according to the law, regulate the compulsory auto liability insurance business of insurance companies.
The traffic control divisions of the public security authorities and the departments of agriculture (farm machinery) (hereinafter collectively referred to as the “administrative departments of motor vehicles”) shall conduct supervisory inspection on motor vehicles' participation in compulsory auto liability insurance. The administrative departments of motor vehicles shall not register motor vehicles which have not participated in compulsory auto liability insurance, and the technical inspection institutions for motor vehicle safety shall not inspect such motor vehicles.
The traffic control divisions of the public security authorities and the traffic police shall, in the investigation and handling of road traffic safety illegal acts and road traffic accidents, check the insurance marks of compulsory auto liability insurance according to the law.
Chapter II Insurance Application
Article 5 Insurance companies may engage in compulsory auto liability insurance business.
To ensure the implementation of the compulsory auto liability insurance system, the CIRC shall have the authority to require insurance companies to engage in compulsory auto liability insurance business.
No entity or individual except insurance companies may engage in compulsory auto liability insurance business.
Article 6 Compulsory auto liability insurance shall adopt uniform insurance clauses and base premium rates. The CIRC shall approve premium rates under the principle of “no profit and no loss in general” in compulsory auto liability insurance business.
In the process of approving premium rates, the CIRC may retain relevant professional institutions to conduct assessment, and hold public hearings to solicit public opinions.
Article 7 An insurance company shall manage its compulsory auto liability insurance business separately from other insurance business, and conduct accounting separately.
The CIRC shall annually review the compulsory auto liability insurance business of insurance companies, and disclose the results to the public; and may require or allow insurance companies to adjust premium rates according to the profit or loss in general of the compulsory auto liability insurance business of insurance companies.
The CIRC shall hold a public hearing for relatively significant adjustment of premium rates.
Article 8 Where an insured motor vehicle is not involved in any road traffic safety illegal act or any road traffic accident, the insurance company shall reduce its premium rate in the following year. If, in the following years, the insured motor vehicle is still not involved in any road traffic safety illegal act or any road traffic accident, the insurance company shall continue to reduce its premium rate until the minimum standard. Where an insured motor vehicle is involved in any road traffic safety illegal act or any road traffic accident, the insurance company shall raise its premium rate in the following year. If the insured motor vehicle is involved in multiple road traffic safety illegal acts or road traffic accidents or is involved in any major road traffic accident, the insurance company shall significantly raise its premium rate. If the insured has no fault in road traffic accidents, the premium rate shall not be raised. The standards for reducing or raising premium rates shall be determined by the CIRC in conjunction with the public security department of the State Council.
Article 9 The CIRC, the public security department of the State Council, the agriculture department of the State Council, and other relevant departments shall gradually establish an information sharing system of compulsory auto liability insurance, road traffic safety illegal acts, and road traffic accidents.
Article 10 An insurance applicant shall choose an insurance company engaging in the compulsory auto liability insurance business when taking out the insurance, and the insurance company chosen shall not refuse to underwrite or delay underwriting the insurance.
The CIRC shall disclose to the public the insurance companies that engage in the compulsory auto liability insurance business.
Article 11 An insurance applicant shall, when taking out the insurance, honestly provide the insurance company with important information.
The important information shall include: the type, factory brand and model, identification number, license plate number, and nature of use of the motor vehicle, the name, sex, age, domicile, and identity card or driver's license number (or organization code) of the owner or manager of the vehicle, information on accidents involved with the motor vehicle before renewal of insurance, and other information prescribed by the CIRC.
Article 12 When a contract on compulsory auto liability insurance is concluded, the insurance applicant shall pay all the insurance premium in a lump sum; the insurance company shall issue an insurance policy and an insurance mark to the insurance applicant. The insurance policy and insurance mark shall indicate the policy number, license plate number, policy period, name and address of the insurance company, and telephone number for filing a claim.
The insured shall place the insurance mark onto the insured motor vehicle.
The design of insurance marks shall be uniform across the country. The insurance policy and insurance mark shall be produced under the supervision of the CIRC. No entity or individual may forge, alter, or use forged or altered insurance policies or insurance marks.
Article 13 When a contract on compulsory auto liability insurance is concluded, the insurance applicant shall not require an insurance company to attach any conditions other than the insurance clauses and premium rate to the contract.
When a contract on compulsory auto liability insurance is concluded, the insurance company shall not force the insurance applicant to sign a commercial insurance contract or require additional conditions to be attached to the contract.
Article 14 An insurance company shall not rescind a contract on compulsory auto liability insurance, unless the insurance applicant fails to perform the obligation of honestly providing important information.
Where an insurance applicant fails to perform the obligation of honestly providing important information, the insurance company shall, before rescinding the contract, notify in writing the insurance applicant, and the insurance applicant shall perform the obligation of honestly providing important information within five days of receipt of the notice; and if the insurance applicant performs the obligation of honestly providing important information during the aforesaid period, the insurance company shall not rescind the contract.
Article 15 An insurance company which rescinds a contract on compulsory auto liability insurance shall retract the insurance policy and insurance mark, and notify in writing the administration department of motor vehicles.
Article 16 An insurance applicant shall not rescind a contract on compulsory auto liability insurance, except under any of the following circumstances:
(1) The registration of the insured motor vehicle is legally cancelled.
(2) The insured motor vehicle has undergone the non-use formalities.
(3) The loss of the insured motor vehicle is certified by the public security authority.
Article 17 Before a contract on compulsory auto liability insurance is rescinded, the insurance company shall assume insurance liability under the contract.
When the contract is rescinded, the insurance company may collect the insurance premium from the day when its insurance liability begins until day when the contract is rescinded, and the remaining premium shall be refunded to the insurance applicant.
Article 18 Where the title to an insured motor vehicle is transferred, the formalities for modification of the contract on compulsory auto liability insurance shall be undergone.
Article 19 Where a contract on compulsory auto liability insurance expires, the insurance applicant shall renew the insurance in a timely manner, and provide the insurance policy for the prior year.
Article 20 The insurance period of compulsory auto liability insurance shall be one year, but under any of the following circumstances, an insurance applicant may take out short-term compulsory auto liability insurance:
(1) An overseas motor vehicle enters China temporarily.
(2) A motor vehicle drives on the road temporarily.
(3) It is less than one year for a motor vehicle to be retired.
(4) Other circumstances as set out by the CIRC.
Chapter III Compensation
Article 21 Where an insured motor vehicle is involved in any road traffic accident, causing any bodily injuries to, deaths of, or property losses to the victims other than the persons in the motor vehicle and the insured, the insurance company shall compensate them within the limit of indemnity of compulsory auto liability insurance.
If the losses in a road traffic accident are caused by the victims on purpose, the insurance company shall compensate them for such losses.
Article 22 Under any of the following circumstances, an insurance company shall advance rescue expenses within the limit of indemnity of compulsory auto liability insurance, and be entitled to recover such expenses from the tortfeasor:
(1) The driver fails to obtain a qualification for driving or drives under the influence of alcohol.
(2) The insured motor vehicle causing the accident is a stolen one.
(3) The insured creates a road traffic accident on purpose.
Where a road traffic accident under any of the aforesaid circumstances occurs, causing property losses to the victims, the insurance company shall not assume compensatory liabilities.
Article 23 The limit of indemnity of compulsory auto liability insurance shall be uniform across the country. The limit of indemnity shall include limit of indemnity for death, injury, or disability, limit of indemnity for medical expenses, limit of indemnity for property losses, and limit of indemnity for a no-fault insured in a road traffic accident.
The limit of indemnity for compulsory auto liability insurance shall be prescribed by the CIRC in conjunction with the public security department of the State Council, health department of the State Council, and the agriculture department of the State Council.
Article 24 The state shall establish a Social Assistance Fund for Road Traffic Accidents (hereinafter referred to as the “Assistance Fund”). Under any of the following circumstances, the Assistance Fund shall advance the funeral expenses and part or all of the rescue expenses for the bodily injuries to and deaths of the victims in road traffic accidents, and the Assistance Fund management institutions shall be entitled to recover such expenses from those liable for the road traffic accidents:
(1) The rescue expenses exceed the limit of indemnity of compulsory auto liability insurance.
(2) The motor vehicles causing the accidents have not participated in compulsory auto liability insurance.
(3) The motor vehicles escape after causing the accidents.
Article 25 The funds of the Assistance Fund shall come from:
(1) The funds set aside at a certain percentage of the insurance premiums for compulsory auto liability insurance.
(2) The fines imposed on the owners or managers of motor vehicles which fail to take out compulsory auto liability insurance as required.
(3) The funds recovered by the Assistance Fund management institutions from those liable for road traffic accidents.
(4) Fruits accruing to the Assistance Fund.
(5) Other funds.
Article 26 The specific measures for the administration of the Assistance Fund shall be developed by the finance department of the State Council in conjunction with the CIRC, the public security department of the State Council, the health department of the State Council, and the agriculture department of the State Council for trial implementation.
Article 27 Where an insured motor vehicle is involved in any road traffic accident, and the insured or the victim notifies the insurance company, the insurance company shall response immediately, informing the insured or the victim of the specific compensation procedures and other relevant matters.
Article 28 Where an insured motor vehicle is involved in a road traffic accident, an application for compensation shall be submitted to the insurance company by the insured. The insurance company shall, within one day of receipt of the application for compensation, notify in writing the insured of the certificates and materials related to compensation that need to be provided to the insurance company.
Article 29 An insurance company shall, within five days of receipt of the certificates and materials provided by the insured, confirm whether the accident falls within the coverage, and notify the insured of the result. If it is outside the coverage, it shall provide a written explanation of the reasons; or if it falls within the coverage, it shall pay indemnity within ten days after concluding an agreement on claim payment with the insured.
Article 30 Where the insured and the insurance company are in dispute over compensation, they may apply for arbitration or institute an action in the people's court.
Article 31 An insurance company may pay indemnity to the insured or directly to the victims. However, where it is necessity for the insurance company to pay or advance rescue expenses to rescue the injured, the insurance company shall, after receiving a notice from the traffic control division of the public security authority, pay or advance rescue expenses to the medical institutions in a timely manner upon verification.
Where it is necessity for an Assistance Fund management institution to advance rescue expenses to rescue the injured, the Assistance Fund management institution shall, after receiving a notice from the traffic control division of the public security authority, advance rescue expenses to the medical institutions in a timely manner upon verification.
Article 32 Medical institutions shall rescue and treat the persons injured in road traffic accidents by referring to the relevant clinical practice guidelines formulated under the organization of the health department of the State Council.
Article 33 Where an insurance company which is to pay indemnity or advance rescue expenses or an Assistance Fund management institution which is to advance rescue expenses needs to verify relevant information with the relevant department or medical institution, the relevant department or medical institution shall provide cooperation.
Article 34 The staff members of an insurance company or an Assistance Fund management institution shall keep the individual privacy of the parties confidential.
Article 35 The items and standards of damages in road traffic accidents shall be governed by the provisions of relevant laws.
Chapter IV Punishment Provisions
Article 36 Where any entity other than an insurance company or any individual illegally engages in compulsory auto liability insurance business, the CIRC shall ban the operation; if it is criminally punishable, the entity or individual shall be held criminally liable according to the law; or if it is not criminally punishable, the CIRC shall confiscate the illegal income, and impose a fine of not less than one nor more than five times the illegal income on the entity or individual if the illegal income is more than 200,000 yuan or a fine of not less than 200,000 yuan nor more than 1 million yuan on the entity or individual if there is no illegal income or the illegal income is less than 200,000 yuan.
Article 37 Where an insurance company engages in compulsory auto liability insurance business without the approval of the CIRC, the CIRC shall order it to take corrective action, order it to refund the insurance premiums collected, confiscate the illegal income, and impose a fine of not less than one nor more than five times the illegal income on it if the illegal income is more than 100,000 yuan or a fine of not less than 100,000 yuan nor more than 500,000 yuan on it if there is no illegal income or the illegal income is less than 100,000 yuan; and if it fails to take corrective action during the specified period or there are serious consequences, order it to cease operation for an overhaul or revoke its insurance business permit. (Deleted)
Article 38 Where an insurance company commits any of the following conduct in violation of the provisions of this Regulation, the CIRC shall order it to take corrective action, and impose a fine of not less than 50,000 yuan nor more than 300,000 yuan on it; and if the circumstances are serious, may restrict its business scope, and order it to stop accepting new business or revoke its insurance business permit:
(1) Refusing to underwrite or delaying underwriting compulsory auto liability insurance.
(2) Failing to provide compulsory auto liability insurance in accordance with the uniform insurance clauses and base premium rates.
(3) Failing to manage compulsory auto liability insurance business separately from other insurance business or failing to conduct accounting separately.
(4) Forcing insurance applicants to conclude commercial insurance contracts.
(5) Rescinding contracts on compulsory auto liability insurance in violation of relevant provisions.
(6) Refusing to perform the agreed obligations of paying indemnities.
(7) Failing to pay or advance rescue expenses in a timely manner as required.
Article 39 Where any owner or manager of a motor vehicle fails to take out compulsory auto liability insurance as required, the traffic control division of the public security authority shall impound the motor vehicle, notify the owner or manager of the motor vehicle of taking out the insurance as required, and impose a fine of two times the insurance premium payable for the minimum limit of indemnity as required.
If the owner or manager of the motor vehicle has taken out compulsory auto liability insurance afterwards as required, the traffic control division of the public security authority shall return the motor vehicle in a timely manner.
Article 40 Where no insurance mark is placed onto a motor vehicle driving on the road, the traffic control division of the public security authority shall impound the motor vehicle, and notify the party of providing the insurance mark or undergoing the corresponding formalities, and may issue a warning to or impose a fine of not less than 20 yuan nor more than 200 yuan on the party.
If the party has provided the insurance mark or undergone the corresponding formalities afterwards, the traffic control division of the public security authority shall return the motor vehicle in a timely manner.
Article 41 Whoever forges, alters, or uses any forged or altered insurance mark or uses the insurance mark of any other motor vehicle shall be fined not less than 200 yuan nor more than 2,000 yuan by the traffic control division of the public security authority, with the insurance mark confiscated and the motor vehicle impounded; and if it is criminally punishable, shall be held criminally liable according to the law.
If the party has provided the corresponding legal certificate or undergone the corresponding formalities afterwards, the traffic control division of the public security authority shall return the motor vehicle in a timely manner.
Chapter V Supplemental Provisions
Article 42 The following terms in this Regulation shall have the following meanings:
(1) “Insurance applicant” means the owner or manager of a motor vehicle who concludes a contract on compulsory auto liability insurance with an insurance company and has the obligation to pay the insurance premium under the contract.
(2) “Insured” means the insurance applicant and the lawful drivers allowed by the insurance applicant.
(3) “Rescue expenses” means the medical expenses on the necessary treating measures taken by medical institutions by referring to the relevant clinical practice guidelines formulated under the organization of the health department of the State Council, when there are persons injured in road traffic accidents, for injured persons whose vital signs are unstable and injured persons whose vital signs are stable but who may die or sustain disability, organ dysfunction, or substantial extension of the course of treatment if such measures are not taken.
Article 43 Compulsory auto liability insurance is not required for trailers. Where a road traffic accident causes any bodily injuries or deaths or property losses, the insurance company for the tractor shall make compensation within the limit of indemnity of compulsory auto liability insurance; and for any deficit, the tractor side and the trailer side shall assume compensatory liabilities according to the law.
Article 44 This Regulation shall apply, mutatis mutandis, to the compensation for bodily injuries, deaths, and property losses caused by motor vehicle accidents that occur off road.
Article 45 The measures for the in-service motor vehicles of the Chinese People's Liberation Army and the Chinese People's Armed Police Forces to participate in compulsory auto liability insurance shall be additionally developed by the Chinese People's Liberation Army and the Chinese People's Armed Police Forces.
Article 46 The owners and managers of motor vehicles shall take out compulsory auto liability insurance within three months after this Regulation comes into force; and those that have taken out the third party liability commercial insurance for motor vehicles before this Regulation comes into force shall take out compulsory auto liability insurance upon expiry of the insurance period.
Article 47 This Regulation shall come into force on July 1, 2006.