Issuing Decree on compulsory civil liability insurance for motor vehicles in construction activities in Vietnam

Issuing Decree on compulsory civil liability insurance for motor vehicles in construction activities in Vietnam

On September 6, 2023, the Government of Vietnam issued Decree 67/2023/ND-CP on compulsory liability insurance for motor vehicle owners, mandatory fire and explosion insurance, and mandatory insurance in investment and construction activities.

Decree 67/2023/ND-CP on compulsory liability insurance for motor vehicles in construction activities applies to:

- Motor vehicle owners participating in traffic and operating on the territory of the Socialist Republic of Vietnam for compulsory liability insurance for motor vehicle owners.

- Agencies, organizations and individuals with facilities with fire and explosion hazards under the regulations of the fire prevention and fighting law for mandatory fire and explosion insurance.

- Investors and contractors under the regulations of the construction law for compulsory insurance in investment and construction activities.

- Non-life insurance companies, foreign branches of non-life insurance companies (insurance companies); reinsurance companies, foreign branches of reinsurance companies (reinsurance companies).

- Other agencies, organizations, and individuals related to compulsory liability insurance for motor vehicle owners, mandatory fire and explosion insurance, and mandatory insurance in investment and construction activities.

What damages shall the insurance companies in Vietnam pay compensation for?

Pursuant to Clause 1 Article 7 of the Decree 67/2023/ND-CP, the insurance companies in Vietnam shall pay compensation for following damages:

- Damages outside of contract, including damages to the health, life, and property of third parties caused by motor vehicles participating in traffic and activities.

- Damages to the health and life of passengers on that vehicle caused by motor vehicles participating in traffic and activities.

When shall insurance companies in Vietnam not responsible for fire and explosion insurance compensation?

Pursuant to Clause 2 Article 7 of the Decree 67/2023/ND-CP, insurance companies in Vietnam shall not responsible for fire and explosion insurance compensation for following damages:

- Intentional acts causing damage by the owner of the motor vehicle, the driver, or the damaged person.

- The driver causing the accident deliberately flees and does not fulfill the civil liability of the owner of the motor vehicle. However, if the driver causing the accident deliberately flees but has fulfilled the civil liability of the owner of the motor vehicle, it is not a case of exclusion of insurance liability.

- The driver does not meet the age requirements under the Road Traffic Law; the driver does not have a driver's license or uses an invalid driver's license under the law on training, testing, and issuing driver's licenses for motor vehicles, a driver's license is erased or used an expired driver's license at the time of the accident or using an invalid driver's license for a motor vehicle that is required to have a driver's license.

In the case that the driver is deprived of the right to use the driver's license for a certain period of time or has the driver's license revoked, it is considered to be without a driver's license.

- Indirect damage caused, including: decrease in commercial value, damage associated with the use and exploitation of damaged property.

- Damage to property caused by a driver operating a motor vehicle with a blood or breath alcohol content exceeding the normal level as instructed by the Ministry of Health; use of drugs and stimulants prohibited by law.

- Damage to property that is stolen or robbed in an accident.

- Damage to special property including: gold, silver, jewelry, valuable documents such as money, antiques, rare paintings and photographs, corpses, and bones.

- Damage due to war, terrorism, or earthquakes.

What is the compulsory civil liability insurance period for motor vehicles in Vietnam?

Pursuant to Article 9 of the Decree 67/2023/ND-CP stipualting the compulsory civil liability insurance period for motor vehicles in Vietnam as follows:

Insurance period

1. The compulsory civil liability insurance period for motor vehicle owners is at least 1 year and up to 3 years, except for the following cases with a period of less than 1 year:

a. Foreign motor vehicles temporarily imported and re-exported with a period of participating in traffic on the territory of the Socialist Republic of Vietnam under 1 year.

b. Motor vehicles with a service life of less than 1 year under the law.

c. Motor vehicles subject to temporary registration according to the regulations of the Minister of Public Security.

2. In case the owner of a motor vehicle has multiple vehicles participating in insurance at different times of the year but in the following year, if there is a need to bring them to the same insurance period for management, the insurance period of these vehicles may be less than 1 year and equal to the remaining effective time of the first contract of the year. The insurance period of the following year for the insurance contracts, insurance certificates after being brought to the same time period is carried out according to the provisions of Clause 1 of this Article.

3. Within the remaining effective period stated on the insurance certificate, if there is a transfer of ownership of the motor vehicle, the old owner of the motor vehicle has the right to terminate the performance of the insurance contract according to the provisions of Article 11 of this Decree.

Therefore, the compulsory civil liability insurance period for motor vehicles is at least 01 year and at most 03 years.

However, the compulsory civil liability insurance period for motor vehicles is less than 1 year in the following cases:

- Foreign motor vehicles temporarily imported and re-exported with a period of participating in traffic on the territory of the Socialist Republic of Vietnam under 1 year.

- Motor vehicles with a service life of less than 1 year under the law.

- Motor vehicles subject to temporary registration according to the regulations of the Minister of Public Security.

Note: If the owner of a motor vehicle has multiple vehicles participating in compulsory civil liability insurance at different times of the year, they can still be brought to the same time to make it easier to manage (including cases where the insurance period of the vehicle is less than 1 year and equal to the remaining insurance period for the first insurance contract of the year).

Best regards!