Regulations on the Compulsory Insurance for Liability for Traffic Accidents of Motor Vehicles (Revised in 2016)

Order of the State Council of the People's Republic of China No.666

February 6, 2016

(Promulgated by the Order of the State Council No.462 on March 21, 2006; revised for the first time in accordance with the Decision of the State Council on Revising the Regulations on the Compulsory Insurance for Liability for Traffic Accidents of Motor Vehicles on March 30, 2012; revised for the second time in accordance with the Decision of the State Council on Revising the Regulations on the Compulsory Insurance for Liability for Traffic Accidents of Motor Vehicles on December 17, 2012 by the Order of the State Council No.630; and amended in accordance with the Decision of the State Council on Revising Certain Administrative Regulations on February 6, 2016)

Chapter I General Provisions

Article 1 With a view to ensuring that the victims of road traffic accidents of motor vehicles may be compensated according to law and promoting road traffic safety, the Regulations is formulated in accordance with the Law of the People's Republic of China on Road Traffic Safety and the Insurance Law of the People's Republic of China.

Article 2 The owners or managers of the motor vehicles driving on the roads within the People's Republic of China shall purchase the compulsory insurance for liability for traffic accidents of motor vehicles in accordance with the provisions of the Law of the People's Republic of China on Road Traffic Safety.
The Regulations shall be applicable to the purchase of and compensation for the compulsory insurance for liability for traffic accidents of motor vehicles, and the supervision and administration thereof.

Article 3 The compulsory insurance for liability for traffic accidents of motor vehicles as mentioned in the Regulations refers to the compulsory liability insurance of an insurance company which compensates the victims other than the personnel in the motor vehicles and the insured for their personal injuries and death as well as property losses arising from the road traffic accidents caused by the insured motor vehicles within the scope of limit of liability for the compulsory insurance for liability for traffic accidents of motor vehicles.

Article 4 The insurance regulatory institution under the State Council (hereinafter referred to as the CIRC) shall conduct supervision and administration of insurance companies' business of the compulsory insurance for liability for traffic accidents of motor vehicles according to law.
The traffic control departments of the public security organs and the competent departments of agriculture (farm machinery) (hereinafter uniformly referred to as the competent departments of motor vehicles) shall conduct supervision and inspection of motor vehicles on their purchase of the compulsory insurance for liability for traffic accidents of motor vehicles according to law. The competent department of motor vehicles will not register those motor vehicles not involved in the compulsory insurance for liability for traffic accidents of motor vehicles, and the motor vehicle safety technical inspection organs shall not conduct inspection of them.
The traffic control departments of the public security organs and the traffic police shall, when investigating and handling acts against laws on road traffic safety and road traffic accidents, check the marks of the compulsory insurance for liability for traffic accidents of motor vehicles according to law.

Chapter II Insurance Purchase

Article 5 Insurance companies may engage in the business of the compulsory insurance for liability for traffic accidents of motor vehicles.
In order to ensure the implementation of the system of the compulsory insurance for liability for traffic accidents of motor vehicles, the CIRC shall be entitled to require insurance companies to engage in the business of the compulsory insurance for liability for traffic accidents of motor vehicles.
No unit or individual may engage in the compulsory insurance for liability for traffic accidents of motor vehicles except for insurance companies.

Article 6 The compulsory insurance for liability for traffic accidents of motor vehicles shall apply the uniform insurance clauses and basic premium rates. The CIRC shall examine and approve the premium rates under the principle of making no profit or loss in general for the business of the compulsory insurance for liability for traffic accidents of motor vehicles.
When the CIRC examines and approves the premium rates, it may retain the relevant professional institution to make assessment, and may hold hearings to solicit the public opinions.

Article 7 An insurance company shall separate its business of the compulsory insurance for liability for traffic accidents of motor vehicles from other insurance businesses for independent accounting.
The CIRC shall verify the business of the compulsory insurance for liability for traffic accidents of motor vehicles of insurance companies and announce the results to the society on an annual basis. The CIRC may require or allow insurance companies to adjust the premium rates accordingly on the basis of their overall profits or losses from the business of the compulsory insurance for liability for traffic accidents of motor vehicles.
Where there is any major adjustment on the premium rates, the CIRC shall hold a hearing.

Article 8 Where an insured motor vehicle has no act against laws on road traffic safety or has no road traffic accidents, the insurance company shall reduce its premium rate in the next year. Where the insured motor vehicle still has no act against laws on road traffic safety or has no road traffic accidents in the following years, the insurance company shall continue to reduce its premium rate till the minimum standards. Where the insured motor vehicle has any act against laws on has no road traffic safety or road traffic accident, the insurance company shall raise its premium rate in the next year. Where any act against laws on road traffic safety or any road traffic accident occurs frequently, or any serious road traffic accident occurs, the insurance company shall raise the range of increase in the premium rate. Where the insured is found faultless in road traffic accidents, the premium rate shall not be raised. The standards for reducing or raising the premium rate shall be formulated by the CIRC in association with the public security department under the State Council.

Article 9 The CIRC, the public security department under the State Council, the competent department of agriculture under the State Council, and other relevant departments shall establish, step by step, the mechanism for sharing the relevant information about the compulsory insurance for liability for traffic accidents of motor vehicles, acts against laws on road traffic safety and road traffic accidents.

Article 10 A policyholder shall choose an insurance company engaging in the business of the compulsory insurance for liability for traffic accidents of motor vehicles when purchasing the insurance and the chosen insurance company shall not refuse to undertake or delay in undertaking the insurance.
The CIRC shall announce to the society the insurance companies engaging in the business of the compulsory insurance for liability for traffic accidents of motor vehicles.

Article 11 A policyholder shall, when purchasing the insurance, honestly inform the insurance company of the important matters.
The important matters shall include: type, model, identification number, plate number and use nature of the motor vehicle, and name (title), sex, age, domicile, identity card or license number (organization code) of the owner or manager of the motor vehicle, information about the accidents of the motor vehicle before insurance renewal, and other matters prescribed by the CIRC.

Article 12 When a policyholder signs a contract for the compulsory insurance for liability for traffic accidents of motor vehicles, it shall pay the insurance premium in full; the insurance company shall issue an insurance policy and an insurance mark to the policyholder. The insurance policy and the insurance mark shall indicate the insurance policy number, plate number, insurance period, as well as the insurance company's name, address and telephone number for compensation.
The insured shall place the insurance mark on the insured motor vehicle.
The patterns of insurance marks shall be uniform nationwide. Insurance policies and insurance marks shall be made under the supervision of the CIRC. No unit or individual may forge or alter insurance policies or insurance marks, or use forged or altered insurance policies or insurance marks.

Article 13 When signing a contract for the compulsory insurance for liability for traffic accidents of motor vehicles, a policyholder may not request the insurance company to affix other conditions to the insurance clauses and the premium rate.
When signing a contract for the compulsory insurance for liability for traffic accidents of motor vehicles, an insurance company shall not force the policyholder to sign a commercial insurance contract or make a request for adding other conditions.

Article 14 An insurance company shall not rescind the contract for the compulsory insurance for liability for traffic accidents of motor vehicles, unless the policyholder fails to perform the obligation of honestly informing the insurance company of the important matters.
If a policyholder fails to perform the obligation of honestly informing the insurance company of the important matters, the insurance company shall inform the policyholder in writing before rescinding the contract, and the policyholder shall perform the obligation of honestly informing the insurance company of the important matters within 5 days as of the date of receiving the notice; if the policyholder has performed the obligation of honestly informing the insurance company of the important matters within the time limit, the insurance company shall not rescind the contract.

Article 15 An insurance company shall, when rescinding the contract for the compulsory insurance for liability for traffic accidents of motor vehicles, withdraw the insurance policy and the insurance mark, and inform the competent department of motor vehicles in writing.

Article 16 A policyholder shall not rescind the contract for the compulsory insurance for liability for traffic accidents of motor vehicles, except under any of the following circumstances:
1. the registration of the insured motor vehicle is canceled according to law;
2. formalities have been gone through for the drive stop of the insured motor vehicle; or
3. the insured motor vehicle is proved lost by the public security organ.

Article 17 Before rescinding a contract for the compulsory insurance for liability for traffic accidents of motor vehicles, an insurance company shall assume the insurance liability in accordance with the contract.
When the contract is rescinded, the insurance company may collect the insurance premium from the day when the insurance liability commences till the day when the contract is rescinded, and the remaining amount of the premium shall be returned to the policyholder.

Article 18 Where the ownership of an insured motor vehicle is transferred, the owner of the motor vehicle shall go through the formalities for alteration of the contract for the compulsory insurance for liability for traffic accidents of motor vehicles.

Article 19 At the expiry of the contract for the compulsory insurance for liability for traffic accidents of motor vehicles, a policyholder shall duly renew the insurance and provide the insurance policy of the previous year.

Article 20 The insurance period of the compulsory insurance for liability for traffic accidents of motor vehicles shall be 1 year, but a policyholder may purchase the short-term compulsory insurance for liability for traffic accidents of motor vehicles under any of the following circumstances:
1. a foreign motor vehicle enters the territory of China temporarily;
2. a motor vehicle drives on the road temporarily;
3. there is less than 1 year to the retirement of a motor vehicle; or
4. other circumstances prescribed by the CIRC.

Chapter III Compensation

Article 21 Where any road traffic accident occurring to an insured motor vehicle results in personal injury or death and property loss of any victim other than the personnel in the motor vehicle or the insured, the insurance company shall compensate him within the scope of limit of liability for the compulsory insurance for liability for traffic accidents of motor vehicles according to law.
Where any loss from a road traffic accident is caused by a victim on purpose, the insurance company may not make any compensation.

Article 22 Under any of the following circumstances, the insurance company shall make an advance payment of the rescue expenses within the scope of limit of liability for the compulsory insurance for liability for traffic accidents of motor vehicles, and shall be entitled to recover the rescue expenses from the person causing the injury:
1. the driver has not obtained a qualification for driving or is drunk;
2. the insured motor vehicle causes an accident during the period when it is stolen or robbed; or
3. the insured creates a road traffic accident on purpose.
Under any of the circumstances as mentioned in the previous paragraph, where any property loss of a victim is caused by a road traffic accident, the insurance company shall not be liable for compensation.

Article 23 The compulsory insurance for liability for traffic accidents of motor vehicles exercises a uniform limit of liability nationwide. The limit of liability includes limit of compensation for death, injury and disability, limit of compensation for medical treatment, limit of compensation for property loss and limit of compensation for exemption of the insured from liability for road traffic accidents.
The limit of liability for the compulsory insurance for liability for traffic accidents of motor vehicles shall be prescribed by the CIRC in association with the public security department, the competent department of health and the competent department of agriculture under the State Council.

Article 24 The State has established the social relief fund for road traffic accidents (hereinafter referred to as the relief fund).Under any of the following circumstances, the relief fund shall be used as the advance for the funeral expenses and part or entire of the rescue expenses for dead and injured victims in road traffic accidents, and the relief fund administrative authority shall be entitled to recover the expenses from the persons that shall be liable for the road traffic accidents:
1. the rescue expenses exceed the limit of liability for the compulsory insurance for liability for traffic accidents of motor vehicles;
2. the motor vehicles causing road traffic accidents are not involved in the compulsory insurance for liability for traffic accidents of motor vehicles; or
3. the motor vehicles flee after causing road traffic accidents.

Article 25 The sources of the relief fund include:
1. a certain proportion of the premium on the compulsory insurance for liability for traffic accidents of motor vehicles;
2. a fine on the owners or managers of the motor vehicles not involved in the compulsory insurance for liability for traffic accidents of motor vehicles in accordance with the relevant regulations;
3. the fund recovered by the relief fund administrative authority from the persons that shall be liable for road traffic accidents according to law;
4. fruits of the relief fund; and
5. other funds.

Article 26 The specific measures for the administration of the relief fund shall be formulated and tried out by the financial department under the State Council in association with the CIRC as well as the public security department, the competent department of health and the competent department of agriculture under the State Council.

Article 27 Where the insured or victim informs the insurance company of the road traffic accident of the insured motor vehicle, the insurance company shall immediately give a reply informing the insured or victim of the relevant matters such as specific compensation procedures.

Article 28 Where a motor vehicle is involved in a road traffic accident, the insured may apply to the insurance company for compensation. The insurance company shall, within 1 day as of the date of receiving the compensation application, inform the insured in writing of submitting the evidence and data related to the compensation.

Article 29 The insurance company shall, within 5 days as of the date of receiving the evidence and data provided by the insured, verify whether it is an insurance liability and inform the insured of the result; where it is not an insurance liability, the insurance company shall explain the reason in writing; where it is an insurance liability, the insurance company shall, within 10 days as of concluding an agreement on the compensation premium with the insured, compensate the premium.

Article 30 In case of any compensation dispute between the insured and the insurance company, either party may apply for arbitration or file a lawsuit with the people's court according to law.

Article 31 An insurance company may compensate the insured the premium, or directly compensate the victim the premium. Nevertheless, where a payment or advance payment from the insurance company is necessitated by rescuing the injured, the insurance company shall, upon receipt of the notice from the traffic control department of the public security organ and verification, duly make an payment or advance payment to the medical institution as the rescue expenses.
Where an advance payment from the relief fund administrative authority is necessitated by rescuing the injured, the relief fund administrative authority shall, upon receipt of the notice from the traffic control department of the public security organ and verification, duly make an advance payment to the medical institution as the rescue expenses.

Article 32 A medical institution shall rescue and treat the injured in road traffic accidents in reference to the relevant guide on clinical diagnosis and treatment formulated under the organization of the competent department of health under the State Council.

Article 33 Where an insurance company or relief fund administrative authority needs to check with the relevant department and medical institution about the relevant information before making a payment or advance payment, the relevant department and medical institution shall give assistance.

Article 34 The working staff of an insurance company or the relief fund administrative authority shall keep secret the privacy of the party involved.

Article 35 The compensation items and standards of road traffic accidents shall be implemented in accordance with the provisions of the relevant laws.

Chapter IV Punishment

Article 36 Any entities or individuals other than insurance companies which illegally engage in the business of the compulsory insurance for liability for traffic accidents of motor vehicles shall be banned by the CIRC; where a crime is constituted, its criminal liability shall be investigated according to law; where a crime is not constituted, the CIRC shall confiscate its illegal earnings, where its illegal earnings are more than RMB200,000, a fine of more than once as much as its illegal earnings and not more than 5 times as much as its illegal earnings shall be imposed concurrently; where its illegal earnings are less than RMB200,000, a fine of RMB200,000 up to RMB1million shall be imposed.

Article 37 Where an insurance company violates the provisions of the Regulations, falls into any of the following circumstances, the CIRC shall order it to make correction, impose a fine from RMB50,000 up to RMB300,000; where in a serious case, the CIRC may restrict operating scopes of the insurance company, order the insurance company to stop accepting new businesses or revoke license for operating insurance business:
1. the insurance company refuses to undertake or delays in undertaking the compulsory insurance for liability for traffic accidents of motor vehicles;
2. the insurance company fails to engage in the business of the compulsory insurance for liability for traffic accidents of motor vehicles on the basis of the uniform insurance clauses and basic premium rates;
3. the insurance company fails to separate the business of the compulsory insurance for liability for traffic accidents of motor vehicles from other insurance businesses for independent accounting;
4. the insurance company forces the policyholder to conclude a commercial insurance contract;
5. the insurance company rescinds the contract for the compulsory insurance for liability for traffic accidents of motor vehicles against the relevant regulations;
6. the insurance company refuses to perform the agreed obligations for premium compensation; or
7. the insurance company fails to make a payment or advance payment as the rescue expenses in accordance with the relevant regulations.

Article 38 Where the owner or manager of a motor vehicle fails to purchase the compulsory insurance for liability for traffic accidents of motor vehicles in accordance with the relevant regulations, the traffic control department of the public security organ shall detain the motor vehicle, inform the owner or manager of the motor vehicle of purchasing the insurance in accordance with the relevant regulations, and impose a fine of twice as much as the premium that shall be paid within the minimum limit of liability in accordance with the relevant regulations.
Where the owner or manager of the motor vehicle makes up the compulsory insurance for liability for traffic accidents of motor vehicles in accordance with the relevant regulations, his motor vehicle shall be duly returned.

Article 39 Where no insurance mark is placed on a motor vehicle driving on the road, the traffic control department of the public security organ shall detain the motor vehicle and inform the person involved of providing the insurance mark or making up the corresponding formalities, and may give a warning or impose a fine of more than RMB20 up to RMB200.
Where the person involved provides the insurance mark or makes up the corresponding formalities, his motor vehicle shall be duly returned.

Article 40 Where the owner or manager of a motor vehicle forges or alters the insurance mark, or uses a forged or altered insurance mark, or uses the insurance mark of any other motor vehicle, the traffic control department of the public security organ shall confiscate the mark and detain the motor vehicle, and impose a fine of more than RMB200 up to RMB2, 000; where a crime is constituted, his criminal liability shall be investigated according to law.
Where the person involved provides the corresponding legal evidence or makes up the corresponding formalities, his motor vehicle shall be duly returned.

Chapter V Supplementary Provisions

Article 41 Meanings of the following terms specified by the Regulations:
1. a policyholder refers to the owner or manager of a motor vehicle that concludes a contract for the compulsory insurance for liability for traffic accidents of motor vehicles with an insurance company and is obliged to pay the insurance premium in accordance with the contract;
2. the insured refers to the policyholder and the legal driver allowed by the policyholder; and
3. rescue expenses refer to the medical expenses used by a medical institution to take necessary measures in reference to the relevant guide on clinical diagnosis and treatment formulated under the organization of the competent department of health under the State Council, for treating the injured in road traffic accidents caused by motor vehicles whose vital signs are unstable and who will be in grave danger, or be led to disabled or suffer from organ dysfunction, or whose course of disease will be prolonged evidently in spite of stable vital signs if no treatment measures are taken.

Article 42 The owner of the trailer may not purchase the compulsory insurance for liability for traffic accidents of motor vehicles. For the personal injuries and death as well as property losses arising from the road traffic accidents, the insurance company from which the owner purchased the compulsory insurance for liability for traffic accidents of motor vehicles shall make compensation within the scope of limit of liability for the compulsory insurance for liability for traffic accidents of motor vehicles; and the insufficient part shall be compensated by the owner of the tractor and the owner of the trailer according to the law."

Article 43 The compensation for any personal injury or death and property loss caused by an accident of a motor vehicle happening in a place other than road shall be based on the Regulations.

Article 44 The measures for involvement in the compulsory insurance for liability for traffic accidents of motor vehicles by enlisted motor vehicles of the Chinese People's Liberation Army and the Chinese People's Armed Police Force shall be formulated by the Chinese People's Liberation Army and the Chinese People's Armed Police Force separately.

Article 45 The owner or manager of a motor vehicle shall, within 3 months as of the date of the implementation of the Regulations, purchase the compulsory insurance for liability for traffic accidents of motor vehicles; where the commercial motor vehicle third party liability insurance has been purchased before the implementation of the Regulations, the owner or manager of the motor vehicle shall, after the expiration of the period of the commercial motor vehicle third party liability insurance, purchase the compulsory insurance for liability for traffic accidents of motor vehicles.

Article 46 The Regulations shall be implemented as of July 1, 2006.