What are the principles of conclusion and execution of an insurance contract in Vietnam? In which case is the insurance contract null and void?
What is an insurance contract in Vietnam?
According to the provisions of Clause 16, Article 4 of the 2022 Law on Insurance Business in Vietnam as follows:
16. Insurance contract (also insurance policy) refers to an arrangement between a policyholder and an insurer or a foreign non-life insurer’s branch or a mutual providing microinsurance product whereunder the policyholder is bound to pay insurance premiums; the insurer, the foreign non-life insurer’s branch or the mutual providing microinsurance service is bound to pay indemnity or insurance benefits or coverage under contractual terms and conditions.
Thus, insurance contract (also insurance policy) refers to an arrangement between a policyholder and an insurer or a foreign non-life insurer’s branch or a mutual providing microinsurance product whereunder the policyholder is bound to pay insurance premiums; the insurer, the foreign non-life insurer’s branch or the mutual providing microinsurance service is bound to pay indemnity or insurance benefits or coverage under contractual terms and conditions.
What are the principles of conclusion and execution of an insurance contract in Vietnam? In which case is the insurance contract null and void?
In which case is the insurance contract null and void?
Pursuant to Clause 1, Article 25 of the 2022 Law on Insurance Business in Vietnam, an insurance contract shall be made null and void in the following cases:
(1) The policyholder has no insurable interest at the time of conclusion of an insurance contract;
(2) No subject matter of insurance exists at the time of conclusion of an insurance contract;
(3) At the time of conclusion of the insurance contract, the policyholder has the knowledge of the policy event that occurs;
(4) Objectives and contents of an insurance contract are in contravention of prohibition clauses and social ethics;
(5) The insurer, the foreign non-life insurer’s branch and the policyholder enter into the fraudulent insurance policy;
(6) The policyholder is a minor; the person who is incapable of civil acts; the person who have cognitive and behavioral difficulties; the person whose capacity to perform civil acts is restricted;
(7) When being entered into, an insurance contract contains any confusion that causes one or more parties to fail to achieve the purposes of entering into that contract, unless the contractual purposes of the contracting parties have been achieved, or the contracting parties can take immediate remedial actions against such confusion to make the purposes of entering into the contract successfully achieved;
(8) The insurance contract is concluded by fraud, except as provided in Article 22 of the 2022 Law on Insurance Business in Vietnam;
(9) The insurance contract is concluded under threat or pressure;
(10) The policyholder lives with health condition related to cognitive disability and impulse control disorder when entering into the insurance contract;
(11) The insurance contract is in contravention of regulations on presentation of insurance contracts laid down in Article 18 of the 2022 Law on Insurance Business in Vietnam.
What are the principles of conclusion and execution of an insurance contract in Vietnam?
Conclusion and execution of insurance contracts must adhere to the fundamental principles in civil law and the principles specified in Article 16 of the 2022 Law on Insurance Business in Vietnam. To be specific:
- Principle of utmost good faith: Parties to an insurance contract must provide information and implement contractual rights and obligations in a most honest and trustful manner, and must place the absolute mutual trust in each other during the period of conclusion and implementation of insurance contracts;
- Principle of insurable interest: Policyholders must be entitled to the insurable benefit varying according to specific types of insurance contract under this Law;
- Principle of indemnity: The amount of coverage or indemnity that the insured can get shall not exceed the actual loss incurred in a policy event, unless otherwise agreed upon in the insurance contract;
- Principle of subrogation: the insured shall be responsible for giving the insurer or foreign non-life insurer the right to claim the amount of loss from the third party responsible for such loss if such amount falls within the permissible loss limit. This principle shall not apply to life and health insurance contracts;
- Principle of unpredictable risk: in order for a risk to be covered or insured against, it must be a sudden or unanticipated one.
What are the contents of an insurance contract in Vietnam?
Article 17 of the 2022 Law on Insurance Business in Vietnam stipulates the main contents of an insurance contract as follows:
- The policyholder, the insured, the beneficiary (if any), the insurer or the foreign non-life insurer's branch;
- Subject matter insured;
- Sum insured or value of property insured or covered property value or insurance policy limit;
- Scope of insurance coverage and insurance benefits; insurance rules, terms and conditions;
- Rights and obligations of the insurer, the foreign non-life insurer’s branch and the policyholder;
- Insurance policy period, date of entry into force of the insurance contract;
- Insurance premium, premium payment option;
- Insurance coverage and payment option;
- Dispute resolution method.
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