Exemption clauses are restrictions on the insurer’s insurance liability, and define the scope within which an insurer bears no liability to compensate or pay the insurance proceeds. Article 19 of new Insurance Law provides that the insurer shall, when concluding an insurance contract, provide on the application form, insurance policy document or other insurance certificate a reminder sufficient to draw the attention of the proposer to the exemption clauses in the insurance contract and shall expressly explain the contents of such clauses to the proposer in writing or orally. If no such reminder or express explanation is given, such clauses shall not enter into effect. The old Insurance Law provided a similar provision on this issue, but less practicable. This provision, in practical, has become an ultimate weapon to insurance companies. As of the occurrence of accident which is included in exemption clauses, lots insureds use this provision to claim their rights. They claim that the insurance company did not give them sufficient notice to draw their attention to the exemption clauses. The court, in practical, also adopts strict interpretation on these clauses to insurance companies.Continue Reading Legal Case Study:Sufficient Explanation Obligation on Exemption Clauses for Insurance Companies