In April 2012, Mr. Yuan bought an auto insurance policy for his car, in which such categories as compulsory liability for auto accidents, property damage liability, personal injury protection for drivers and passengers and third-party liability were covered. Five months later, Yuan had a road accident and his car was wrecked. The police found Yuan was the one at fault, while the insurance company confirmed the car was completely destroyed. Yuan, however, met with trouble in the course of seeking indemnification from the insurer. According to the insurance policy, the insured amount for vehicle damage was 65, 000 yuan. Since the car was destroyed, Yuan took it for granted that the insurer would pay full amount. However, the insurer only offered 44,330 yuan as indemnification on the basis of a calculation customarily applied in such instances. After a few rounds of fruitless negotiations with the insurer, Mr.Yuan entrusted Dacheng attorneys Xiong Yanhong and Zhu Chenyi from the Kunming office to represent him in pursuing a claim.
 
After analyzing relevant legal issues and clauses of the insurance policy, the two attorneys found that there were ambiguities when Yuan bought the policy and when the insurance company settled the claim: on the one hand, the insurance company had not expressly informed Yuan of the calculating method of the amount of indemnification when the two sides entered into the insurance contract; on the other hand, the purchase price for the insured vehicle documented in the contract had obviously based on a depreciation of the car. When the car had an accident and the amount of indemnification was to be determined, the insurer should not depreciate the car once again. Besides, there was neither contractual nor legal basis for the insurer to refuse to pay the insured amount. The case illustrates a typical phenomenon of “high premium, low indemnification” in the insurance sector, which is deemed a customary practice by the insurers.
 
On March 18, 2013, the People’s Court of Wuhua District, Kunming held a public trial of the case. At the trial, Xiong Yanhong and Zhu Chenyi expounded on the facts and law application involved in the case and presented an in-depth analysis of the unfair terms policyholders have long entered into with insurance companies. On April 15 2013, the court ruled that the insurance company should pay the insured amount of 65,000 yuan to Mr. Yuan for the car damage.
 
The customary practices of “high premium, low indemnification” and “zero liability, zero indemnification” that long exist in the insurance sector pose a threat to the interests of policyholders, who often do not know how such terms and clauses as “new vehicle purchase price”, “actual price of the insured vehicle”, “the insured amount” and “liability limits” are defined. The revision and unveiling of The Insurance Law and Model Clauses for Commercial Auto Insurance also sort to root out those unfair practices of the insurance companies. This successful lawsuit will set a precedent for future cases where an insurance claim dispute is involved.