How to handle the dispute in cases where there are differences in contents between the certificate of insurance and the insurance contract in Vietnam?

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Regulations on certificates of insurance and insurance contracts in Vietnam

For certain types of insurance contracts, such as compulsory fire and explosion insurance contracts, in addition to the insurance contract, the insurance buyer must be granted an Certificate of Insurance by the insurance enterprise to supplement the records of management and monitoring of fire prevention and fighting activities.

According to the provisions of Article 4 of Circular 149/2020/TT-BCA:

"Article 4. Documents on management and monitoring of fire safety operations

1. Documents on management and monitoring of fire prevention and fighting operations of facilities included in the list in Appendix III promulgated together with the Government’s Decree No. 136/2020/ND-CP dated November 24, 2020 providing guidelines for a number of Articles of Law on Fire Prevention and Fighting and Law on Amendments to Law on Fire Prevention and Fighting (hereinafter referred to as “Decree No. 136/2020/ND-CP”) shall be prepared and retained by heads of these facilities and include:

...

l) Certificate of compulsory fire and explosion insurance for facilities mentioned in the list in Appendix II enclosed with Decree No. 136/2020/ND-CP.

..."

In the event that the insurance enterprise and the insurance buyer enter into an insurance contract combining compulsory and voluntary fire and explosion insurance, the buyer will still be issued with an Certificate of Insurance to ensure procedures in fire prevention and fighting.

According to the Law on Insurance Business 2022:

“Article 17. Contents of insurance contracts

1. An insurance contract must include but not limited to the followings:

a) The policyholder, the insured, the beneficiary (if any), the insurer or the foreign non-life insurer's branch;

b) Subject matter insured;

c) Sum insured or value of property insured or covered property value or insurance policy limit;

d) Scope of insurance coverage and insurance benefits; insurance rules, terms and conditions;

dd) Rights and obligations of the insurer, the foreign non-life insurer’s branch and the policyholder;

e) Insurance policy period, date of entry into force of the insurance contract;

g) Insurance premium, premium payment option;

h) Insurance coverage and payment option;

i) Dispute resolution method.

2. Minister of Finance shall elaborate on clause 1 of this Article with respect to life and health insurance contracts.”

 

Article 18. Presentation and proof of conclusion of insurance contracts

Insurance contracts must be made in writing. Proof of conclusion of an insurance contract shall comprise insurance contract, certificate of insurance, insurance policy or others prescribed in law.

Generally, when entering into an insurance contract, the parties must make a written insurance contract with the contents specified in Article 17 of the Law on Insurance Business 2022. The Certificate of Insurance is proof of the conclusion of an insurance contract. The Certificate of Insurance does not contain any provisions on the content that must be included in the Law on Insurance Business 2022.

However, in some insurance contracts governed by specialized laws, the Certificate of Insurance still has to comply with some regulations on the content.

Typically, in compulsory fire and explosion insurance, according to Decree 23/2018/ND-CP on compulsory fire and explosion insurance, there are the following provisions:

“Article 4. Insured property

1. Insured property is the property of the insured facility, including:

a) Houses, works and properties on houses and works; machines, equipment.

b) Goods and supplies (including materials, finished goods, semi-finished goods).

2. The insured property and its location must be specified in the insurance contract and Certificate of Insurance.”

According to the above regulations, especially for compulsory fire and explosion insurance, the Certificate of Insurance must clearly state the subject matter insured and the location of the subject insured. However, in reality, not all insurance enterprises comply with this regulation, leading to the case that the scope or benefits of insurance or the insurance rules, conditions and terms in the Certificate of Insurance and in the insurance contract are not identical, so there is a dispute.

The practice of adjudicating disputes over insurance coverage when the Certificate of Insurance's contents are different from the Insurance Contract

Refer to the situation in Judgment 05/2023/KDTM-PT adjudicated by An Giang People's Court on March 20, 2023 on insurance contract disputes:

Summary:

"The Plaintiff - DN Company and the defendant - the Real Estate Insurance Company had signed a contract of fire and special risks insurance, including compulsory fire and explosion insurance No. 0000058/HD/017-03/PHH.TS.3.2/2019, on May 13, 2019. The plaintiff had made full payment of the insurance premium, which has incurred the validity of the contract until April 4, 2020.

On July 23, 2019, DN Company suffered a loss (caused by thunderstorms and storms). The plaintiff - DN Company immediately informed the defendant - Real Estate Insurance Company. The defendant sent an expert to the scene to determine the cause of the loss (according to the minutes of July 24, 2019). However, through inspection, the defendant determined that the plaintiff's property damage caused by thunderstorms and tornadoes were not covered by the insurance policy recorded in the insurance policy. Thus, they decided that it was not necessary to assess the damage and they would not agree to pay the insurance money."

According to the contents of the Insurance Contract:

"Article 2. Insurance conditions

2.1 Insurance rules

- Comply with the Fire and Special Risks Insurance Rules issued together with Decision 268/QD-PTI dated September 16, 2016 of the General Director of BD Insurance Corporation.

- Comply with Decree 23/2018/ND-CP, dated February 23, 2018, of the Government on compulsory fire and explosion insurance.

- Coverage:

+ Risk A: Fire, Lightning, Explosion.

+ Risk B: Explosion."

The insurance rule mentioned above has 10 risks, including: A: Fire; B: Explosion; C: The plane crashed; D: Disruption, strike, closing the workshop; E: Damage caused by malicious action; F: Earthquake or volcanic eruption; G: Thunderstorms and storms; Q: Thunderstorms, storms, and floods; I: Spill from water storage tanks and equipment or pipelines; J: Crashes caused by motor vehicles or animals.

In addition, the fire and special risks insurance contract, including compulsory fire and explosion insurance, No: 0000058/HD/017-03/PHH.TS.3.2/2019, has no content regarding the exclusion clause of insurance liability.

Certificate of Insurance No. 000000058/HD/017-03/PHH.TS.3.2/2019 dated May 13, 2019 shows: "Applicable policy, insured risks: Comply with Decree 23/2018/ND-CP, dated February 23, 2018 of the Government on compulsory fire and explosion insurance."

Certificate of Insurance does not have the contents that comply with the Fire and Special Risks Insurance Rules issued together with Decision 268/QD-PTI dated September 16, 2016 of the General Director of BD Insurance Corporation. Therefore, the plaintiff claims that special risks not stated in the Certificate of Insurance are covered, including "thunderstorms and storms." At the court hearing, the defendant argued that the Certificate of Insurance was only a countermeasure procedure for the competent authority upon inspection.

Judgment of the Court:

"At the court hearing, the defendant argued that the Certificate of Insurance was only a countermeasure procedure for the competent authority upon inspection, this opinion of the defendant was not in accordance with the law. Because according to the Fire and Special Risks Insurance Rules issued together with Decision 268/QD-PTI dated September 16, 2016 of the General Director of BD Insurance Corporation, in the general conditions section, it is stipulated:

"1. Consistency.

This contract, as well as the Certificate and descriptions (which form an integral part of the policy of insurance), shall be deemed to be an insurance policy, and words and phrases that carry a characteristic meaning in each part of the policy, the Certificate of insurance, or the description shall be consistent with this particular meaning throughout the entire contract".

Judgment Comments:

In the case of this judgment, the Insurance contract and the Certificate of Insurance are not identical; Moreover, the Real Estate Insurance Company did not provide the Insurance rules and did not explain the Insurance Rules to the Southeast Company, so the DN Company could not understand and know what a special risk is to buy voluntary insurance to suit their business type and know how to protect their rights and interests. At the court hearing, the defendant - Real Estate Insurance Company failed to prove that it had explained and provided the Insurance Rules to the plaintiff - DN Company as a violation of Point a, Point b, Clause 2, Article 17 of the Law on Insurance Business.

The trial panel found that BD Insurance Company was an insurance business unit and drafted the contract, but the content of the contract was incomplete; the insurance contract and the Certificate of Insurance were not the same; Failure to provide Insurance Rules leaded to insurance buyers lacking information, so they did not understand and did not know the special risks that needed to be purchased. This is the fault of the Real Estate Insurance Company.

From the above evidence, the plaintiff's appeal to the defendant to claim the insurance amount of VND 1,735,859,918 is grounded and should be accepted."

From the above judgment, when the coverage on the Insurance Policy and the Certificate of Insurance is not the same, the court, based on the insurance rules set forth by the insurance enterprises, stipulates that the content of the insurance contract and the Certificate of Insurance must be consistent with the content of the entire contract.

In addition, based on Points a, b, Clause 2, Article 17 of the Law on Insurance Business 2000 (effective at the time of the dispute), there are provisions:

"Article 17. Rights and obligations of insurance enterprises

...

2. An insurance enterprise shall have the following obligations:

a) To explain to the insurance buyer the insurance conditions and provisions; the rights and obligations of the insurance buyers;

b) To issue to the insurance buyer the Certificate of Insurance, the insurance policy immediately after the conclusion of the insurance contract;

.."

The Court found that the insurer's failure to clearly explain the insurance coverage to the insurance buyer was a violation of the obligation to provide information. In addition, the insurance enterprise is the drafter of the contract, but the contents of the insurance contract and the Certificate of Insurance are not the same; Failure to provide sufficient information to the policyholder should be at fault in this dispute.

Key word: insurance contracts | in Vietnam | insurance policies | fire safety | Insurance Business |

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