Disparities between the country's new traffic safety legislation and outdated insurance rules were exposed in a lawsuit Thursday in Beijing.

The Road Traffic Safety Law, passed in May, was pitted against older regulations after an insurance company refused to pay compensation for a fatal road accident.

Liu Binghua knocked down and killed a Sichuan Province farmer last August while operating a crane at night in Beijing. At the time local officials said it was impossible to determine whether the area was clearly marked, so no decision was reached on the cause of the accident.

Chaoyang District traffic control department nevertheless ordered Liu to pay 100,000 yuan (US$12,100) to compensate the victim's family.

According to the Road Traffic Safety Law, when accidents resulting in injuries occur between motor vehicles and pedestrians, insurance companies should pay compensation within the parameters of compulsory third party insurance. Any compensation beyond that is the responsibility of the driver.

The crane driver was insured for 50,000 yuan (US$6,000) and Liu asked his insurer to pay 40,000 yuan (US$4,800).

However, the Beijing Branch of the Property and Casualty Company Limited of the People's Insurance Company of China refused and Liu sued the insurance company, demanding that it pay up. The case’s first hearing was held yesterday and no decision was reached.

Zhang Yong, an insurance company representative, said it had not paid out because officials had not found Liu responsible for the accident. He told the court that, although Liu had personally shouldered full responsibility for the accident, there was no confirmation of this as the official position.

According to his insurance policy, which was approved by the China Insurance Regulatory Commission, the amount of compensation is fixed in relation to the insured's responsibility for an accident.

"The traffic control department is obligated to identify responsibility for the accident. It is their omission that has resulted in the current dispute," said Zhang.

But Liu says the new Road Traffic Safety Law makes the issue black and white. "When there is contradiction between the law and a contract item, the law should be enforced," he said yesterday.

Zhang said he hoped new municipal regulations relating to the law’s implementation will resolve disputes. The Standing Committee of the Beijing Municipal People's Congress was due to vote on these today.

According to Jiao Hongchang, a law professor at the China University of Political Science and Law, "The two laws are not currently harmonious, which endangers the interests of vehicle owners."

Jiao called for more financial assistance from the government. "Establishing a social insurance fund to deal with compensation toward victims in accidents should be our goal," he said.

(China Daily October 22, 2004)