When a man named Zhang in the city of Meizhou, Guangdong province accidentally ran over his two-year-old daughter when backing up his car and trying to avoid hitting some cattle, killing the girl, Xiao Li, on the scene.

The police investigating the accident decided that Zhang and Xiao were both responsible, but Zhang and his wife, after getting over their grief, applied for compensation from the insurance company, which denied their demand.

Zhang's truck was registered under his wife Chen's name and was covered by two insurance policies. The insurance company said that the insurance had a clause saying that the insurer can refuse claims for death of an insured person or a family member and since the victim was a family member, it should not compensate the couple as much as they have demanded. It only agreed to pay 110,000 yuan for the policy covering a traffic accident.

The couple didn’t agree to the settlement and took the insurance company to court, asking for more than 330,000 yuan in compensation for the daughter’s death, as well as funeral expenses and suffering.

At the first trial, a Wuhua court held that the insurance company didn’t offer evidence suggesting the insured was informed of the deductible range beforehand. Besides, the third-party liability insurance aims to protect the interests of nonspecific third party. In this instance, Xiao Li’s death was no different from any third-party death and if the insurance company were free of compensation just because Xiao was the insured party’s daughter, it would contradict the third-party liability clause in the policy.

A judge from the Meizhou intermediate people's court said that he believed that this kind of clause could lead to varying results in these types of accidents and could lead to unequal decisions and should be considered invalid. And even if the insurance company had informed the insured of its lack of coverage in certain situations, this type of clause won’t be protected by law and the company in question will still be held accountable for insurance claims.

Therefore, in the first trial, the court ruled that in addition to the regular insurance policy, the insurance company should pay more than 70,000 yuan for the loss of life and funeral expenses. The company didn’t accept that ruling and appealed to the Meizhou intermediate court, which upheld the ruling.