The Tainan Branch of the Taiwan High Court rendered the 104-Bao-Xian-Shang-Yi-7 of March 24, 2016 (hereinafter, the “Decision”), holding that if a contract is renewed based on an automatic renewal provision in the original contract, the applicant is no longer required to fulfill the obligation to state the facts truthfully upon execution of the contract after the information communicated by the applicant when the original contract is executed is accepted by the insurer.
According to the facts underlying this Decision, the Appellee entered into the insurance contract at issue with the Appellant with himself as the applicant and beneficiary and his mother the insured. The insurance contract at issue contained a provision on automatic renewal and the insurance contract was automatically renewed upon expiration of the term of the insurance each year and was renewed automatically three times. The Appellee’s mother subsequently died of toxic shock after drinking a pesticide by accident. The Appellee applied to the Appellant for insurance indemnification based on the provisions of the insurance contract at issue. The Appellant rescinded the contract and refused to indemnify on the ground that the Appellee had failed to faithfully communicate his mother’s medical history of dementia. However, the Appellee asserted that he did not violate the obligation to inform because his mother had not suffered from dementia when the insurance was obtained and filed this lawsuit to seek insurance indemnification from the Appellant.
According to the Decision, contract renewal means re-execution of a contract in a legal sense and basically the obligation to inform should be fulfilled. However, if the renewal of the contract is based on the existing automatic renewal provision in the original contract between the parties, this obviously means that the parties intend to continue the effectiveness of the original contract without modification. In addition, since the insurer in this case accepted the information communicated by the applicant when the original contract was executed, the applicant is no longer required to fulfill the obligation to inform when the contract was renewed. It was further held in the Decision that the Appellant did not require the notification matters at issue to be specified again during the second and subsequent renewal. Under such circumstances, it shall be deemed that the Appellee and his mother were no longer required to fulfill the obligation to provide further information. In addition, since the Appellant failed to substantiate whether the condition of the insured’s dementia reached the threshold by which the insurer should increase the insurance premium or terminate the contract under Article 59 of the Insurance Law, it was held in the Decision that the Appellant’s contention that the contract was rescinded because the Appellee and his mother had violated their obligation to inform was obvious groundless.
However, it was finally held in the Decision that the Appellee’s mother committed suicide rather than died of accidental drinking of a pesticide and that the Appellee shall not make any insurance claim on such basis. Therefore, the original decision was reversed and a new decision was rendered to reject the Appellee’s first instance complaint.