China's top court issued a judicial interpretation on Friday, specifying provisions to prevent insurance companies from unreasonably repudiating claims.
The explanation, which will take effect on June 8, is aimed at better regulating insurers' business conduct and controlling insurants' risks in obtaining due compensation, the Supreme People's Court (SPC) said in a statement.
Many Chinese insurance companies deny compensation by citing insurants' failure to fulfill their obligation to inform, according to the SPC.
To prevent insurers from wantonly using this excuse, the interpretation prescribes that insurants only have the obligation to disclose facts that insurers inquire about, thus setting a limit for the duty of disclosure.
To protect insurants' interests, the new rules encourage them to sign contracts by themselves by nullifying contracts signed by insurers on their behalf. However, such contracts can be effective if relevant insurants have paid their insurance premium.
China has witnessed increasing insurance disputes in recent years.
Courts at multiple levels took on 76,430 insurance contract dispute cases in 2012, nearly three times as many as in 2008, according to SPC figures.