What is scope of compulsory insurance coverage in construction investment operations?Which cases is compulsory insurance liability in construction investment operations excluded?
What is the compulsory insurance period in construction investment operations in Vietnam?
According to the provisions of Article 5 of Decree 119/2015/ND-CP and Clause 4, Article 1 of Decree 20/2022/ND-CP on compulsory insurance period in construction investment operations as follows:
"Article 5. Insurance validity period
1. The validity period of construction insurance during the construction progress means the specific time period from the opening date to the closing date of construction activities with reference to the investment decision (even including any modification or amendment if possible) issued by a competent authority and agreed upon in an insurance contract
2. Professional liability insurance for construction consultancy service shall be valid from the date on which agreed construction consultancy service is rendered to the date on which the warranty term of construction works ends in accordance with laws.
3. Insurance for employees working at construction sites shall be valid from the date on which they start performing their work to the date on which the warranty term of construction works ends in accordance with laws. The determination of specific validity period of insurance for employees working at construction sites shall be consistent with their employment contracts
4. Compulsory third-party civil liability insurance shall be a specific period, from the start date to the end date of the construction time according to the construction contract and included in the insurance policy."
What is scope of compulsory insurance coverage in construction investment operations?
According to the provisions of Clause 1, Article 6 of Decree 119/2015/ND-CP (supplemented by Clause 5, Article 1 of Decree 20/2022/ND-CP) on scope of compulsory insurance coverage in construction investment operations as follows:
"1. Scope of insurance coverage
a) With respect to insurance for works in progress: An insurance enterprise shall perform its duty to provide insurance cover against losses, claims or damages that may arise from all risks, except for losses referred to in paragraph 2 of this Article.
b) With respect to professional liability insurance for construction investment consultancy: An insurance enterprise shall pay a construction consultancy contractor sums as an insurance cover which such contractor has its duty to provide a damage against losses or claims for a third party and pay related statutory costs incurred from provision of a construction consultancy service, except for losses or damages stipulated in paragraph 2 of this Article;
c) With respect to insurance for employees working at construction sites: An insurance enterprise shall be liable to pay a construction contractor sums as an insurance cover which such contractor has its duty to provide damages for these employees who suffer injury or death caused by work accidents or occupational diseases that fall within the scope of insurance coverage.
d) With respect to compulsory third-party civil liability insurance: An insurance enterprise shall be liable to pay a construction contractor sums as an insurance cover which such contractor has its duty to provide compensation for the third party regarding damage outside of the insurance policy in terms of health, life, assets generated during construction and related legal costs (if any) that fall within the scope of insurance coverage in the insurance policy."
Which cases is compulsory insurance liability in construction investment operations excluded?
According to the provisions of Clause 2, Article 6 of Decree 119/2015/ND-CP (added by Clause 6, Article 1 of Decree 20/2022/ND-CP) and Article 5 of Circular 329/2016/TT-BTC, insurance enterprises is not liability to pay for the following losses:
+ Denial of coverage
Insurance enterprises shall not have duties to pay insurance cover against the following losses or damages
a) Those that arise from intentional acts;
b) Those which are not incidental ones;
c) Those which are not quantified by monetary amounts;
d) Catastrophic losses or damages;
dd) Those that arise from the case in which insurance buyers have no insurable interests.
e) Damage or losses in accordance with international practices agreed to apply by parties that participate in the insurance if such practices are not contrary to the law of Vietnam
3. The Ministry of Finance shall provide guidance on implementation of paragraph 1 and 2 of this Article.
+ Exclusions
1. The insurer shall be freed from the liability to indemnify for the following loss:
a) Loss caused by intentional acts. To be specific:
- Loss incurred due to riots, strikes and hostilities
- Loss caused by intentionally illegal acts committed by the policyholder or the insured ( this provision shall not apply to construction workers’ compensation insurance in case any construction worker takes any self-defense act or takes actions to save people, asset or uses stimulants under doctor's prescription).
- Loss caused by the consultants’ errors in design ( this provision shall only apply to construction works insurance).
- Loss caused by consultancy’ intentional acts of selecting untested methods of construction, measurement, calculation and design, and untested materials; or consultancy’ advice on use of asbestos or materials containing asbestos ( this provision shall only apply to the professional liability insurance for consultants).
b) Loss caused by the nature. To be specific:
- Loss due to corrosion, abrasion, redox, rot, hardness (such as rust, scaling and the like), material defects ( this provision shall only apply to construction works specified in point a clause 1 Article 15 hereof).
- Loss due to corrosion, abrasion, redox, and material defects ( this provision shall only apply to the construction works specified in point b clause 1 Article 15 hereof).
c) Loss not quantifiable in money
Loss of data, software and computer programs applied to carry out construction survey and design according to the consultancy’s expert advice (this provision shall only apply to the professional liability insurance).
d) Loss dues to catastrophic events:
- Loss caused by wars, terrorism, nuclear reaction, nuclear radiation and radioactive contamination.
- Loss caused by construction survey and design consulting that leads to environment contamination and affects the third party ( this provision shall only apply to the professional liability insurance).
dd) Loss beyond the coverage of the insurance as stipulated in clause 9 Article 3 of the Law on Insurance Business.
2. The insurer shall negotiate with the policyholder and shall specify the Exclusion Clause in the insurance policy in accordance with clause 1 of this Article and other exclusion (if any) of liability for loss prescribed in clause 2 Article 6 of the Decree No.119/2015/ND-CP.
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