DeHeng Won Major Insurance Contract Dispute Case, Establishing “Direct Loss” Compensation Boundary for Similar Cases

2025-03-18

Recently, DeHeng represented a property insurance company in a property insurance contract dispute case against a Hebei-based company. The Tangshan Intermediate People’s Court of Hebei Province made a final judgment, rejecting the appeal of the Hebei company and upholding the original judgment. The case involved a substantial amount in dispute, and the second-instance court determined that the insurance contract liability is limited to direct losses, with indirect and consequential losses not being covered. This ruling provides an important reference for the adjudication of similar insurance contract disputes. 

The core controversy in this case was whether the insurance contract covers indirect losses and whether the insurance company was negligent in claims processing. The Hebei company argued that the insurance company’s refusal to compensate prevented it from timely repairing its kiln, leading to expanded losses from production suspension, for which the insurance company should be liable. The insurance company countered that the insurance contract explicitly states that the insurance liability is limited to “physical damage or loss of the insured property itself,” and indirect losses are not covered. It also argued that it had fulfilled its legal obligations for loss assessment, and the entry of the dispute into litigation does not constitute “negligence in compensation.”

The DeHeng team was hired to assist the insurance company in this case, led by partner Jia Hui from its Beijing Office and partner Zheng Huizhong from Shijiazhuang Office, with support from lawyer Zhang Youran of the Beijing Office and intern lawyer Gao Mengjin of the Xiongan Office.