16 December, 2017
(1) When does the limitation period start to run for insurance contract?
For life insurance, the limitation period is five (5) years, counting from the date when the claimant knows or should have known that its rights have been infringed upon. For non-life insurance, the limitation period is two (2) years, counting from the date when the claimant knows or should have known that its rights have been infringed upon.
For instance, if the insured pursues a claim against the insurer, the time limit should start running from the date of occurrence of the insurance incident.
(2) When does the limitation period start to run for reinsurance contracts?
The limitation period is two (2) years, counting from the date when the claimant knows or should have known that its rights have been infringed upon. For instance, if the reinsured pursues a claim against the reinsurer, the time limit may start running from the date when the reinsured's (original insurer) liability under the original insurance policy is ascertained.
(3) Can the limitation period be suspended and/or interrupted, and if so, how?
Yes. Under Chinese law, the limitation period can be discontinued and / or interrupted by the following way:
- The claimant lodges a claim against the liable party;
- The liable party agrees to perform its obligation or assume its liability;
- The claimant starts legal action or arbitration.
(4) Can the express terms of the insurance policy and/or reinsurance contract have the effect of altering the start date for the limitation period?
No. The time limit issue is mandatory under Chinese law and cannot be amended or extended via parties' voluntary agreement.
For further information, please contact:
Ik Wei leads, Partner / Managing Director, Asia, Clyde & Co
ikwei.chong@clydeco.com
