Xiaomi Auto has issued a warning to its car owners to be cautious when purchasing auto insurance and encountering situations where “insurance” is described as “protection” or “service”, especially when the premium is significantly lower than that of ordinary auto insurance.
Recently, a user attempted to file a claim with an insurance company using a “commercial electronic slip” labeled with “Motor Vehicle Loss Protection” and “Motor Vehicle Third-Party Liability Protection” but was denied. This was because the product was a service protection product offered by an auto service company, not a standard commercial insurance policy underwritten by an insurance company.
Xiaomi Auto highlighted that the main characteristics of such fraudulent car insurance include high-quality imitation of legitimate car insurance, low-price inducements, and in reality, risk-sharing services provided by non-insurance institutions. The signed contracts do not qualify as insurance contracts and are not protected or regulated by insurance laws. These contracts often have strict terms, a cumbersome claims settlement process, and a high risk of claim rejection.
The institutions offering these products have not been approved by the insurance regulatory authority of the State Council, lack the qualifications to operate insurance business, have no capital reserve requirements, and are not subject to effective solvency supervision. In the event of large-scale payouts, these institutions may disappear at any time.
Xiaomi Auto advises that if you have insurance needs, you should definitely purchase compulsory traffic insurance and commercial motor vehicle insurance from an insurance institution that has the legal qualifications to conduct auto insurance business.
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