In the process of dealing with property insurance claims, the understanding and application of “gross negligence” has always been a critical and delicate issue. When searching online for judicial precedents with the keywords “property insurance dispute” and “gross negligence” in Chinese, there are more than 6,000 relevant cases popping out. Therefore, accurately grasping the connotation and extension of gross negligence is of great significance to the protection of the rights and interests of both insurers and insureds and the rational resolution of insurance claim disputes. This article will briefly analyze the definition of gross negligence in property insurance claims in combination with the relevant provisions of the Chinses Insurance Law, the stipulations of insurance terms, and typical cases in China judicial practice.
I. The Provisions and Interpretations of Gross Negligence in the Chinese Insurance Law
Articles 16, 21, and 61 of the Chinese Insurance Law all involve the concept of gross negligence. For example, Article 16 explicitly states that if the applicant intentionally or due to gross negligence fails to fulfill the obligation to inform truthfully, which is sufficient to affect the insurer’s decision on whether to agree to underwrite or increase the insurance premium, the insurer has the right to rescind the contract. Article 21 stipulates that if the applicant, the insured, or the beneficiary fails to notify the insurer of the occurrence of an insurance accident in a timely manner intentionally or due to gross negligence, resulting in the nature, cause, extent of loss, etc. of the insurance accident being difficult to determine, the insurer shall not bear the responsibility for compensation or payment of the undetermined part.
Although the above-mentioned articles of the Chinese Insurance Law involve gross negligence, they do not provide a clear definition or analysis of what constitutes gross negligence.
The Supreme People’s Court’s “Understanding and Application of the Fourth Judicial Interpretation of the PRC Insurance Law” has expounded on the classification of fault, dividing it into the intentional and the negligent. The Supreme Court believes that gross negligence refers to a subjective mentality where a person, lacking the degree of care that an ordinary person should have, not only fails to meet the higher requirements set by law for a certain behavior but also falls short of the general standards that normal people should and can pay attention to, and thus causes an accident or loss by recklessly believing that it will not happen. This interpretation provides an important legal basis and theoretical foundation for understanding and defining gross negligence.
However, how to apply the above interpretation of the Supreme Court to property insurance claims and how the people’s courts analyze and apply gross negligence in individual cases still need further analysis.
II. The Definition of Gross Negligence in Insurance Terms
The definition of gross negligence in insurance terms also has important reference value. However, according to current research, there are still few insurance terms that define “gross negligence.”
For example, in the all-risk insurance terms of an insurance company, gross negligent behavior is defined as behavior where the actor not only fails to meet the higher requirements set by law but also fails to reach the general standards that normal people should and can pay attention to. This definition is somewhat similar to the determination of the Supreme Court.
In the additional terms for intentional acts and gross negligence in property insurance policy wording , it is further clarified that “gross negligence” refers to behavior that intentionally and extremely violates the usual and reasonable code of conduct, and does not include any unintentional errors, omissions, and oversights.
These provisions of insurance terms have to some extent refined the connotation of gross negligence and provided specific basis for the determination of gross negligence in the process of insurance claims. However, there may still be different understandings in the actual claims cases, and the people’s courts may have the full discretion to interpret.
III. Scenarios Constituting Gross Negligence in Judicial Practice
In order to demonstrate the concrete “gross negligence” applications in the practice of property insurance claims, this article attempts to conduct case searches and tries to summarize the application logic of the People’s Court, as follows:
- In the cases where relevant responsible persons of the insured commit criminal offenses, it is generally determined that the insured has committed gross negligence.
In judicial practice, if relevant responsible persons of the insured are found guilty of a criminal offense, the court will usually determine that the insured has committed gross negligence based on a fortiori reasoning.
For example, in case (2016) Su Min Zai No. 32, Kong Shuangbao, the person in charge of the insured company, violated the special hoisting plan, resulting in the death of a third party. Kong Shuangbao was found guilty of Crime of Major Liability Accident. Therefore, the court determined that the insured also had major faults in the occurrence of the case-related accident, and the insurance company was not responsible for compensating for the losses caused by the accident. This case shows that when the responsible persons of the insured violate relevant laws and regulations and commit criminal offenses, their behavior often has a serious nature of fault and meets the standard of gross negligence.
- In the cases where the insured is subject to administrative penalties and the violating behavior has a direct impact on the occurrence of the accident, it is generally determined that the insured has committed gross negligence.
When the insured is subject to administrative penalties, the court will analyze the reasons for the administrative penalties and determine whether the behavior has a direct impact on the occurrence of the accident and other related factors, and then determine whether it constitutes the exclusionary liability scenario due to gross negligence.
For example, in case (2019) Hu 74 Min Zhong No. 1098 of the Shanghai Financial Court, the insured, Qi Xinke Company, was administratively penalized for chaotic construction process management, illegal contracting, and inadequate supervision. The court found that these violations had a direct impact on the occurrence of the accident. Therefore, it was determined that this accident was caused by the gross negligence of the insured and was an exclusionary liability scenario stipulated in the insurance contract.
However, in case (2016) Su Min Zai No. 32 of the Jiangsu Provincial Higher People’s Court, although the contractor was administratively penalized for illegal subcontracting, the court found that this behavior did not have a direct impact on the occurrence of the case-related accident. The direct cause of the accident was the actual construction personnel’s violation of safety management regulations. Therefore, it was not determined that the insured had committed gross negligence. This shows that when the insured is subject to administrative penalties, whether it constitutes gross negligence needs to be comprehensively considered in combination with the causality between the violation and the occurrence of the accident, as well as the nature and severity of the violation.
- In the cases where the insured should have the corresponding professional knowledge and experience, industry standards, or the contract has agreed on the obligations that should be performed, but the insured not only failed to meet the professional requirements but also failed to reach the general duty of care, the court essentially treats gross negligence as equivalent to intentional wrongdoing under this circumstance.
In case (2024) Ning 01 Min Zhong No. 2567, an environmental protection technology company, as a key fire protection entity specializing in the operation of hazardous waste, had many serious problems in the operation process, such as failing to provide pre-job safety education and training for on-site workers, welders not having special operation certificates for welding and thermal cutting operations, and not isolating during electric welding operations above the flammable material storage pool. Eventually, a fire accident occurred. The court held that as a key fire protection entity specializing in the operation of hazardous waste, the company should have professional knowledge on how to manage hazardous waste and prevent fire accidents. Its outsourcing of projects could not exempt or reduce its responsibilities for fire safety in the factory area and the supervision and management of the operation site and personnel. However, the company failed to fulfill the necessary safety obligations and did not even reach the standards that ordinary people should pay attention to. The company’s behavior fell within the “gross negligence” exemption clause of the insurance terms.
In addition, in case (2019) Su 02 Min Zhong No. 431, the insured knew that the special cleaning oil for the digital printer should be used. The staff of the insured had received professional training on how to clean the printer, but the insured did not strictly follow the operating rules. In order to improve cleaning efficiency, they used car wash water to clean the rubber cloth of the machine, resulting in car wash water mixing into the cleaning oil and eventually causing the digital printer to catch fire due to high temperature during operation. The court determined that this behavior was gross negligence. These cases show that when the insured should have the corresponding professional knowledge and experience, industry standards, or the insurance contract has agreed on the obligations that should be performed, but the insured not only failed to meet the professional requirements but also failed to reach the general degree of care, its behavior can be determined as gross negligence.
IV. Conclusion
The understanding and application of gross negligence in property insurance claims is a complex issue that requires the consideration of multiple factors. The Chinese Insurance Law and relevant judicial interpretations provide a basic legal framework for the determination of gross negligence. In judicial practice, the court will, based on the facts and evidence of a specific case, take into account factors such as the nature of the insured’s actions, the causality between the violation and the occurrence of the accident, and whether the insured has fulfilled the corresponding obligations to determine whether gross negligence exists. For insurers and the insured, an accurate understanding and grasp of the criteria for defining gross negligence helps to better protect their legitimate rights and interests in the signing, performance, and claims process of insurance contracts, and reduces the occurrence of claims disputes.