The Kaohsiung Branch of the Taiwan High Court rendered the 105-Bao-Xian-Shang-Yi-4 Civil Decision on January 18, 2017 (the “Decision”) in which it held that it is not necessary to consider whether hospitalization is necessary if the insurance contract stipulated that payouts will be made as long as the insured has to be hospitalized full-time due to illness, has formally completed the hospital stay formalities and has actually received treatment from the hospital.
The Appellant in this case was hospitalized for a neck injury as a result of a car accident and sought an insurance payout from the Appellee..
The Decision first notes that societal changes and competition the insurance industry has led to a constant stream of new insurance products, so insurance policy agreements should be interpreted based on the nature and functionality of the policy, with care towards the principle of good faith, as well as giving the benefit of the doubt to the insured so as to estop the insurer from restricting the scope of insurance and evading its contractual responsibilities, obtaining unjust benefits from collecting insurance premiums, thereby destroying the expected purpose of the insurance policy and undermine the insurance industry at large.
Article 2, Paragraph 7 of the insurance contract at issue stipulates that: ” Hospitalization as set forth in this Agreement shall mean that the insured has been diagnosed by a physician to require full-time hospitalization as a result of illness or injury, and has completed the hospital stay formalities as well as actually received treatment at the hospital.” This means that a payout may be requested once “diagnosis by a physician to require full-time hospitalization”, “completion of the hospital stay formalities”, “received care at the hospital” are all present. The Appellee contended that the reasonableness of the length of hospitalization and of the medical costs, as well as the necessity of hospitalization must all be examined in accordance with the Individual Insurance Indemnification Practice Principles and Professional Ethics Guidelines, but the court noted that such Guidelines were not part of the insurance agreement, nor were the Guidelines enacted to restrict the insured from seeking compensation. Thus the Decision rejects the Appellee’s argument and reversed the original decision to find for the Appellant.