Precedent no. 23/2018/AL on validity of life insurance policy upon policyholder’s failure to pay insurance premiums due to insurer’s faults

The application for life insurance indicates that the policyholder chose to pay insurance premiums at his house address. When the payment of insurance premium was due and during the payment extension period thereafter, none of the insurer’s employee came to the collect the insurance premium from the policyholder.

Representation of the plaintiff Mrs. Pham Thi T: His husband, Mr. Tran Huu L, took out insurance with P Life Insurance Co., Co., Ltd. Then his husband died in an incident. Relied on the policy, she is the beneficiary. Now, she requests the defendant to make the insurance payout of VND 300 million and interest of VND 126 million, calculated according to the basic interest rate since August 20005, totaling VND 426 million.

Representation of authorized representative of the defendant, P Life Insurance Co., Ltd, Mr. Nguyen Quoc T: Mr. L had to pay the 2^nd installment on insurance premium on June 24, 2005 and within 2-month extension following that due date, but he did not pay it. Mr. L died on August 27, 2005, 3 days after the insurance policy was invalid. Thus, the defendant refused to make the insurance payout at the request of the plaintiff.

Representation of person with relevant rights and obligations, Mrs. Vu Thi Minh N: As an agent of the defendant, she sold insurance to Mr. L. She mutually agreed with Mr. L to collect his payment of insurance premiums at his house in person. But she was attending in a political class in a province when that payment of insurance premiums was due, so she failed to come to his house to collect the premium. The failure of premium payment came from an objective cause, hence she requests the defendant to make insurance payout to the plaintiff.

[1] After consideration of the case files assessed and the adversarial process at the court hearing, the Trial Panel judges as follows:  

[2] With reference to format: The appeal of Mrs. Pham Thi T was valid and filed within the statutory time limit.  

[3] With reference to content: 

[4] According to the application for life insurance policy (case file p. 15-17), P Life Insurance Co., Ltd is obliged to collect insurance premiums of Mr. L at his house, at the address No. 231, Village 3, Commune B, District G, Ben Tre Province. This indication is consistent with statement of Mrs. N who is delegated by P Life Insurance Co., Ltd to sell insurance and collect premiums.

[5] The appeal of Mrs. T, citing insurer’s premium collection failure as the reason for her non-payment, is well-grounded and consistent with mentioned evidence.  

[6] The certificate of Police of Commune B states that Mr. L died on August 27, 2005 from traumatic brain injury because he carelessly fell down and hit his head. 

[7] Considering that Mr. L signed an insurance policy based on his application for life insurance with VND 300,000,000 of coverage and his non-payment of second installment of premium was not his fault. Therefore, the appeal of Mrs. T claiming P Life Insurance Co., Ltd to make the insurance payout according to the insured event that Mr. L died in an incident is well-grounded to accept. 

[8] Considering request of the representative of P Life Insurance Co., Ltd that Mr. L’s non-payment of the second installment of premium which was due on August 24, 2005 and his death on August 27, 2005 lead to the fact that Mr. L’s insurance policy is invalid, it is not grounded. Based on the foregoing analysis, Mr. L’s non-payment may be attributed to company’s collection failure.  This is also specified in page 5 of the book "what customers need to know” that collection at home consists of quarterly, biannual and annual collection, and at the same address of at least 2 policies, consistent with the case of Mr. L who bought 3 insurance policies from P Life Insurance Co., Ltd for Mr. L, Ms. T and Ms. H. Therefore, the Trial Panel does not accept the request of the representative of P Life Insurance Co., Ltd and proposal of its lawyer.

[9] Considering claim of Mrs. T requesting P Life Insurance Co., Ltd to pay the late payment interest from August 27, 2005 to the date on which the Court brought the case to trial, it is not grounded because the Certificate of Insurance issued to Mr. P by P Life Insurance Co., Ltd does not have the term of interest. So, the Trial Panel does not accept this claim.

[10] Thus, the Trial Panel accept partial appeal of Mrs. T, correct the First Instance Judgment that P Life Insurance Co., Ltd shall be compelled to make the insurance payout of VND 300,000,000 based on the insured event that Mr. L died in an incident and Mrs. T is the beneficiary.

[11] Mrs. T and P Life Insurance Co., Ltd have to pay the first instance civil court fee as prescribed in Clause 2 Article 7 of Decree No. 70/CP. In specific, Mrs. T has to pay the court fee of VND 6,040,000 for the non-accepted interest. P Life Insurance Co., Ltd has to pay the court fee of VND 12,000,000 for the insurance payout payable to Mrs. T. 

[12] As the First Instance Judgment shall be corrected, Mrs. T is not required to pay the appellate civil court fee as prescribed in Clause 2 Article 132 of the Civil Procedure Code. 

Pursuant to facts and matters mentioned above:

[4] According to the application for life insurance policy (case file p. 15-17), P Life Insurance Co., Ltd is obliged to collect insurance premiums of Mr. L at his house, at the address No. 231, Village 3, Commune B, District G, Ben Tre Province. This indication is consistent with statement of Mrs. N who is delegated by P Life Insurance Co., Ltd to sell insurance and collect premiums.

[7] Considering that Mr. L signed an insurance policy based on his application for life insurance with VND 300,000,000 of coverage and his non-payment of second installment of premium was not his fault. Therefore, the appeal of Mrs. T claiming P Life Insurance Co., Ltd to make the insurance payout according to the insured event that Mr. L died in an incident is well-grounded to accept.  

[8] Considering request of the representative of P Life Insurance Co., Ltd that Mr. L’s non-payment of the second installment of premium which was due on August 24, 2005 and his death on August 27, 2005 lead to the fact that Mr. L’s insurance policy is invalid, it is not grounded. Based on the foregoing analysis, Mr. L’s non-payment may be attributed to company’s collection failure.  This is also specified in page 5 of the book "what customers need to know” that collection at home consists of quarterly, biannual and annual collection, and at the same address of at least 2 policies, consistent with the case of Mr. L who bought 3 insurance policies from P Life Insurance Co., Ltd for Mr. L, Ms. T and Ms. H. Therefore, the Trial Panel does not accept the request of the representative of P Life Insurance Co., Ltd and proposal of its lawyer.”

Pursuant to Clause 2 Article 275 of the Civil Procedure Code. 

Hereby judges:   

- Accept partial appeal of Mrs. Pham Thi T.
- Correct the First Instance Judgment No. 38/2008/DS-ST dated August 21, 2008 of People’s Court of District 1, Ho Chi Minh City. 

1. Accept partial claim of Mrs. Pham Thi T.
* Compel P Life Insurance Co., Ltd to make the insurance payout of VND 300,000,000 (Three hundred million dong) to Mrs. Pham Thi T as soon as possible after the Judgment takes effect. 

* From the date on which the plaintiff files a request for judgment enforcement, if the defendant fails to enforce the Judgment, the defendant must bear the interest according to the basic interest rate quoted by the State Bank for the period of delayed enforcement. 

2. First instance civil court fee: Mrs. Pham Thi T has to pay VND 6,040,000 (Six million forty thousand dong), which is deducted from the paid court fee advance of VND 600,000,000 (Six million dong) according to the receipt No. 002185 dated June 9, 2016 of the Sub-department of Civil Judgment Enforcement of Ho Chi Minh City. Mrs. T has to pay an additional amount of VND 40,000 (Forty thousand dong). 

P Life Insurance Co., Ltd has to pay the court fee of VND 12,000,000 (Twelve million dong). 

3. Mrs. T does not have to pay the appellate civil court fee, so she will be refunded VND 50,000 (Fifty thousand dong) of the paid court fee advance according to the receipt No. 004852 dated September 9, 2008 of Sub-department of Civil Judgment Enforcement of Ho Chi Minh City. 

The Appellate Judgment shall take legal effect from the date of pronouncement.