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Designated Driver Causing Accident Took Full Responsibility Insurer Filed Claims against the Driver’s Company after Covering the LossCourt Ruled in Favor of the Insurer’s Claim for Subrogation Right
[2017-12-25]

designated driver causing accident took full responsibility
insurer filed claims against the driver’s company after covering the loss
court ruled in favor of the insurer’s claim for subrogation right

many car owners have reached consensus to hire a designated driver after drinking alcohol in social occasions. but should the insurer of the owner’s car make compensation without any condition attached in case that the designated driver caused accidenttook full responsibility? shanghai no.1 intermediate people’s court (hereinafter the “court”) recently rendered the ruling for a case that the insurer recovered the loss caused by an “internet + designated driver” on the ground of subrogation right. the court ruled in the second instance that the designated driving company should make compensation to the insurer by law

at 21:33 on october. 22, 2014, mr. zhou called an auto service company for designated driver service after a social occasion. at 21:45, the designated driver mr. tang arrived at the location of mr. zhou. as mr. zhou drank alcohol, his friend surnamed cai signed a designated driver service agreement (hereinafter the “agreement”) with the auto service company chopped with the seal of the said company.

at 21:50, mr. tang had a traffic accident when driving mr. zhous car, resulting in damage to three cars. the traffic police affirmed that mr. tang should take full responsibility. the insurer of mr. zhou’s car compensated rmb53, 300 to mr. zhoubrought a ge against the auto service company requesting it to assume the compensation after obtaining the letter of subrogation from mr. zhou.

the insurer held that the auto service company, as the designated driver service provider, should ensure the safety of the cars,bear the compensation of rmb 53,300 since it was liable for the accident.

the first-instance judgment was in favor of all claims made by the insurer. refusing to accept the judgement, the auto service company appealed the court requesting to revoke the judgmentdismiss the claims of the insurer made in the first instance.

the auto service company argued that it served only as a service platform of designated drivers’ informationshould be an intermediary in nature to provide designated driving service information to both driversclientsfacilitate the conclusion of the agreement between them rather than a party to the agreement. the designated driving relation was established between mr. zhoumr. tang. mr. tang should be liable for the compensation in case of such request.

shanghai no.1 intermediate people’s court held that mr. zhouthe auto service company had reached consensusthe agreement became effective since the auto service company affixed its seal as the entrusted party therein, mr. zhou’s friend surnamed cai signed off as the client partythe company also confirmed that mr. zhou sent the request for designated service to it according to the provision that “the agreement signed by the companion of the client should be deemed as being signed by the client himself” as set forth in the agreement. given the trust relationship established between the two parties, the auto service company should be a party to the agreement. there was nothing inappropriate for the insurer to claim for subrogation right against the company on the ground of the contractual relationship founded between the companymr. zhou.

the company then pointed out the exemption clauses in the agreement had exempted it from the liability. for instance, article 12 of the agreement provided that the client should first claim compensation from the insurer of the vehicle,that the company would only compensate up to “the uncovered part within the insurance coverage”, “the increase of premium in the following year” as well as “traffic compensation”. article 9 stipulated that the company would not be liable for “anyall traffic accidents not caused by personnel operation”, etc. as the above clauses have been informed to the clients when they logged in the company’s registration platform, the company publicized the same on its websiteit also sent a sms specifying relevant clauses to mr. zhou on the day of his order placement, it informed the client in full of the exemption clauses, which were validin line with the lawshould be free from liability.

shanghai no. 1 intermediate peoples court held that the auto service company provided paid designated driving servicethe driver appointed by it was fully liable for the traffic accident that occurred in providing the service. therefore the company had fault in the fulfillment of the contractshould compensate the client mr. zhou for his losses. the agreement was a model contract of the company, in which article 12 limited its own liabilities without calling the client’s attention by blackeningoverstriking, etc. though the company claimed that it had reminded the client through the notice on the registration page of the websitesms, it still failed to produce evidence to prove such action. hence the article was invalid as the company failed to fulfill its obligation of calling for attention. furthermore, as the designated driver mr. tang was fully liable for the traffic accident, this case did not fall under any of the circumstances in which the company would not be liable for “traffic accidents not caused by personnel operation” set forth in article 9 of the agreement. based on these grounds, the auto service company should compensate for the loss caused by the traffic accident.

accordingly, the court rejected the appealaffirmed the original judgment.

insurance law of the people’s republic of china

article 60 when the occurrence of an incident covered by insurance results from lossdamage to the object insured by a third party, the insurer shall, from the date indemnity is paid to the insured, exercise the subrogation right of the insured to demand indemnification against the third party up to the amount of indemnity paid.

contract law of the peoples republic of china

article 39 if standard clauses are used in making a contract, the party that provides the standard clauses shall determine the rightsobligations between the parties in accordance with the principle of fairness,shall call in a reasonable manner the other partys attention to the exemptiblerestrictive clauses regarding its liability,give explanations of such clauses at the request of the other party.

"standard clauses" means the clauses that are formulated in anticipation by a party for the purpose of repeated usagethat are not a result of consultation with the other party in the making of the contract.

article 40 standard clauses shall become invalid if they fall under any of the circumstances set forth in articles 5253 of this lawif the party that provides the standard clauses exempts itself from the liability, imposes heavier liability on the other party,precludes the other party from its main rights.

article 53 the following clauses on liability exemption in a contract shall be invalid:

(i) those causing physical injury to the other party or

(ii) those causing losses to property to the other party by intentiondue to gross negligence.

 

(written by yu feng, shanghai no.1 intermediate peoples court)

 

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