Chapter I. General Principles
Section 1. Definitions and Categories
(Definition of Insurance)
The term "insurance" as used in this Act means an act whereby the parties concerned agree that one party pays a premium to the other party, and the other party is liable for pecuniary indemnification for damage caused by unforeseeable events or force majeure.
A contract entered into on the basis of the preceding paragraph is called an "insurance contract."
(Definition of Insurer)
The term "insurer" as used in this Act means any of various organizations engaged in the business of insurance that has the right to claim a premium upon entering into an insurance contract and is liable for indemnification, in accordance with the contracted insurance obligations, when an insured peril occurs.
(Definition of Proposer)
The term "proposer" as used in this Act means a person having an insurable interest in the subject matter insured who applies to an insurer to enter into an insurance contract and is obligated to pay a premium.
(Definition of Insured)
The term "insured" as used in this Act means a person who, upon incurring damage as the result of an insured peril, enjoys the right to claim indemnification. A proposer may also be the insured.
(Definition of Beneficiary)
The term "beneficiary" as used in this Act means a person stipulated by the insured or the proposer as the person who enjoys the right to claim indemnification. A proposer or insured may also be a beneficiary.
(Definition of Insurance Enterprise and Foreign Insurance Enterprise)
The term "insurance enterprise" as used in this Act means an entity organized and registered pursuant to this Act and engaged in insurance business.
The term "foreign insurance enterprise" as used in this Act means an entity organized and registered pursuant to foreign law and engaged in insurance business in the Republic of China with permission from the competent authority.
(Definition of Responsible Person of an Insurance Enterprise)
The term "responsible person of an insurance enterprise" as used in this Act means a person who shall be held responsible in accordance with the Company Act or the Cooperative Act.
(Definition of Insurance Agent)
The term "insurance agent" as used in this Act means a person who, on the basis of a contract of agency or a letter of authorization, collects remuneration from an insurer and acts as a business agent on the insurer's behalf.
(Definition of Insurance Solicitor)
The term "insurance solicitor" as used in this Act means a person who solicits insurance business on behalf of an insurance enterprise, an insurance broker company, an insurance agent company, or a bank concurrently engaged in operating insurance agent or insurance broker business.
(Definition of Insurance Broker)
The term "insurance broker" as used in this Act means a person who, on the basis of the interests of the insured, negotiates an insurance contract or provides related services and collects a commission or remuneration.
(Definition of Surveyor)
The term "surveyor" as used in this Act means a person who collects remuneration from the insurer or the insured, and on behalf of the hiring party inspects, assesses, and appraises the subject matter insured, adjusts and negotiates indemnification, and gives attestation thereof.
(Types of Reserve Funds)
The reserve funds set out in this Act include policy reserves, unearned premium reserves, special reserves, loss reserves, and other reserve funds as may be specified by the competent authority.
The term "competent authority" as used in this Act means the Financial Supervisory Commission. However, in the case of insurance cooperatives, the Financial Supervisory Commission is the competent authority for the business operated by the cooperatives, while the competent authority in charge of cooperatives is the competent authority for the administrative affairs of the cooperatives.
(Types of Insurance)
Insurance is categorized into non-life insurance and insurance of the person.
Non-life insurance includes fire insurance, marine insurance, land and air insurance, liability insurance, bonding insurance, and any other type of insurance approved by the competent authority.
Insurance of the person includes life insurance, health insurance, personal injury insurance, and annuities.
Section 2. Insurable Interest
(Current Interest and Future Interest in a Property)
A proposer has an insurable interest in current interest in a property, or expected future interest deriving from current interest in a property.
(Liability Interest in a Property)
A transporter or custodian of goods has an insurable interest in goods that it transports or keeps in custody, within the extent to which the transporter or custodian bears liability for the goods.
(Insurable Interest in Life or Body)
A proposer has an insurable interest in the life or body of any of the following persons:
1. The proposer or the proposer's family members.
2. Persons upon whom the proposer depends for living expenses or educational expenses.
3. The proposer's obligors.
4. Persons who manage the proposer's assets or interests on the proposer's behalf.
(Waiver of Right to Dispose Insurable Interest)
When a minor or a parent (father or mother) or guardian of a person under guardianship as ordered by the court pursuant to Paragraph 1, Article 14 of the Civil Code becomes the insured in accordance with Paragraph 2, Article 138-2 of the Act, the proposer, the insured and the beneficiary of an insurance contract may, prior to the occurrence of an insured peril, enter a joint agreement that the payout of benefits after an insured peril occurs shall be remitted into a designated trust account and that the proposer waives the right to dispose his or her insurable interest under Article 111 of the Act.
(Effect of Insurable Interest)
If the proposer or insured has no insurable interest in the subject matter insured, the insurance contract shall become void.
(Transfer of Insurable Interest)
If the insured dies or ownership of the subject matter insured is transferred, the insurance contract remains valid for the benefit of the heir or the transferee unless otherwise stipulated in the contract.
(Transfer of Insurable Interest)
When partners or co-owners are jointly insured, the assignment of one or more insured persons' insurable interest to another does not void the insurance contract.
(Interest Deriving from an In-force Contract)
Any interest deriving from an in-force contract may also be an insurable interest.
Section 3. Premiums
(Payment of Premiums)
Premiums are categorized into two kinds: those to be paid in a lump sum, and those to be paid in installments. A lump-sum premium, if such is stipulated in the insurance contract, or the first installment of the premium, shall be paid before the contract takes effect. However, this requirement does not apply where the premium has not yet been determined at the time the insurance contract is entered into.
(Obligor to Pay Premiums)
Premium shall be paid by the proposer in accordance with the provisions of the insurance contract. Where a trust enterprise is obligated under a trust agreement to pay the insurance premiums, the trust enterprise shall pay the insurance premiums in the proposer's stead.
The insured amount, set forth in the trust agreement referred to in the preceding paragraph, which the insurer is obligated to pay in accordance with the insurance contract shall be deemed to be a trust property of the trust agreement.
When a proposer enters into an insurance contract for the benefit of another person, the insurer may raise the same defense against the beneficiary that it may raise against the proposer.
(Refund of Premium for Double Insurance in Good Faith)
If multiple insurance contracts entered into in good faith cover the same insurable interest and the same insured event, and the total insured amount exceeds the value of the subject matter insured, the proposer may, prior to occurrence of the risk, claim a refund of the premium in proportion to the excess value.
If an insurance contract becomes void due to the circumstances set forth in Article 37, the insurer may still collect premium during the period in which the insurer is unaware that the contract has become void.
(Refund of Premium for Relative Invalidity and Termination of a Contract)
If an insurer is not bound by an insurance contract because of circumstances set forth in Article 51, paragraph 2, the insurer may claim reimbursement of expenses. Premium already collected need not be refunded.
If a proposer is not bound by an insurance contract because of circumstances set forth in Article 51, paragraph 3, the insurer may not claim payment of premium or reimbursement of expenses; where already collected, they shall be refunded.
If an insurance contract is terminated or partially terminated because of circumstances set forth in Article 60 or Article 81, premium paid for the period subsequent to termination shall be refunded, except where the premium is not calculated on the basis of time.
(Refund of Premium for Rescission of a Contract)
If an insurance contract is rescinded because of circumstances set forth in Article 64, paragraph 2, the insurer need not refund premium already collected.
(Reduction of Premium and Refund of Premium for Termination of a Contract)
Where premium is calculated based on special circumstances pertaining to increased risk as stipulated in the insurance contract, and such circumstances cease to exist during the term of the contract, the proposer may demand a pro rata reduction of premium based on the premium rate at the time the contract was entered into, to apply from the time the circumstances ceased to exist.
If the insurer does not agree to a reduction of premium as set forth in the preceding paragraph, the proposer may terminate the contract, and any premium paid for the period subsequent to termination shall be refunded.
(Refund of Premium for Termination of a Contract due to Bankruptcy from Insurer)
If an insurer becomes bankrupt, its insurance contracts terminate on the day that bankruptcy is adjudicated, and any premium paid for the period subsequent to termination shall be refunded by the insurer.
(Refund of Premium for Termination of a Contract due to Bankruptcy of Proposer)
If a proposer becomes bankrupt, the insurance contract remains valid for the benefit of the creditors of the bankrupt party. However, the bankruptcy trustee or insurer may terminate the contract within three months from the day of the bankruptcy adjudication. Any premium paid for the period subsequent to termination shall be refunded.
Section 4. Obligations of the Insurer
(Insurer Liable to Indemnify for Force Majeure or Fault of the Proposer and Insured；Upon Death of the Insured, Proposer or Beneficiary Obliged to Notify Insurer)
An insurer is liable to indemnify for damage caused by unforeseeable events or force majeure. However, this requirement is not applicable when limitations are expressly stated in the insurance contract.
An insurer is liable to indemnify for damage caused by the fault of the proposer or insured. However, this rule is not applicable to loss caused by a willful act of the proposer or insured.
Upon occurrence of death of the insured caused by any insured incident, the proposer or beneficiary shall notify the insurer. Upon receipt of the notice, the insurer shall contact the beneficiary at the latest address or via the contact number provided by the proposer to the insurer.
(Liability to Indemnify for Fulfillment of Moral Obligation)
An insurer shall be liable to indemnify for damage caused by the fulfillment of a moral obligation.
(Liability to Indemnify for Damage Caused by Employees or Animals)
An insurer shall be liable to indemnify for damage caused by employees, objects, or animals of the proposer or the insured.
(Liability to Indemnify for War)
The insurer shall be liable to indemnify for damage caused by war unless the insurance contract stipulates otherwise.
(Liability to Reimburse Expenses for Avoiding or Mitigating Damage)
The insurer is liable to reimburse the proposer or insured for expenses resulting from any necessary action taken to avoid or mitigate damage. Even if the combined total of reimbursement and indemnification exceeds the total insured amount, the insurer shall pay the full combined amount.
When an insurer makes reimbursement for expenses referred to in the preceding paragraph, such reimbursement is to be determined according to the ratio of the insured amount to the value of the subject matter insured.
(Time Period to Pay Indemnification)
After a proposer or insured has submitted all supporting documents for a claim, the insurer shall pay indemnification within the stipulated time period. Where no time period has been stipulated, payment shall be effected within 15 days from receipt of notification.
If, for reasons attributable to itself, the insurer fails to make payment within the time period referred to in the preceding paragraph, it shall pay default interest at the rate of 10% per annum.
Section 5. Double Insurance
(Definition of Double Insurance)
The term "double insurance" means an act of contracting whereby a proposer separately enters into multiple insurance contracts with multiple insurers covering the same insurable interest and the same insured event.
(Notice of Double Insurance)
In double insurance, a proposer shall, unless otherwise stipulated, notify each insurer of the names of the other insurers and the amounts insured thereby.
(Voidance of Double Insurance in Bad Faith)
If a proposer willfully fails to make the notification referred to in the preceding Article, or obtains double insurance with the intent to acquire undue profit, the contract shall be void.
(Effect of Double Insurance in Good Faith)
Where double insurance has been obtained in good faith and the total insured amount exceeds the value of the subject matter insured, each insurer, unless otherwise stipulated, is liable only to provide a share of the indemnification for the total value of the subject matter insured pro rata to the amount it has insured. However, the total indemnification may not exceed the value of the subject matter insured.
Section 6. Reinsurance
(Definition of Reinsurance)
The term "reinsurance" means an act of contracting whereby an insurer effects insurance with another insurer to cede risk that it has insured.
(Rights and Obligations between the Insured of the Original Insurance Contract and Reinsurer)
The insured of the original insurance contract has no right to claim indemnification from a reinsurer. However, this restriction does not apply where otherwise provided by the original insurance contract or the reinsurance contract.
(Relations between Reinsurer and the Proposer of the Original Insurance Contract)
A reinsurer may not claim payment of premium from the proposer of the original insurance contract.
(Relations between Original Insurer and the Insured)
An original insurer may not refuse or delay fulfillment of its obligations to the insured on the grounds that a reinsurer has failed to fulfill its obligation to make reinsurance payment.