Regulations on compulsory purchase of civil liability insurance for third parties in construction

The Government has just issued Decree 20/2022/ND-CP amending Decree 119/2015/ND-CP stipulating compulsory insurance in construction investment activities. Accordingly, supplementing regulations on compulsory insurance of civil liability for third parties in construction.

Specifically, in Clause 3, Article 1 of Decree 20/2022/ND-CP stipulates:

Construction contractors must purchase compulsory insurance for construction workers on the construction site and compulsory insurance for civil liability (TNDS) for third parties .

Regulations on compulsory purchase of civil liability insurance for third parties in construction

Regulations on buying compulsory insurance for civil liability for third parties in construction (Artwork)

1. Cost of buying compulsory insurance for third parties' civil liability

According to Clause 1, Article 1 of Decree 20/2022/ND-CP , the cost of purchasing compulsory civil liability insurance for third parties is similar to the cost of compulsory insurance for construction workers on the construction site and in accordance with the provisions of Article 1 of Decree No. with the subject to buy insurance is the construction contractor, specifically:

For compulsory insurance for construction workers on the construction site, compulsory CIT insurance for third parties: The premium is included in production and business expenses.

2. Term of compulsory insurance of civil liability for third parties

In Clause 4, Article 1 of Decree 20/2022/ND-CP , the provisions on compulsory civil liability insurance period have been added as follows:

The compulsory civil liability insurance period for third parties is a specific period from the start date to the end date of the construction period based on the construction contract and stated in the insurance contract.

3. Compulsory third party civil liability coverage

Decree 20/2022/ND-CP supplements Point d Clause 1 Article 6 Decree 119/2015/ND-CP on insurance coverage, exclusion of insurance liability. Accordingly, for compulsory CIT insurance for third parties:

The insurance enterprise is responsible for indemnifying the construction contractor for amounts that, according to the law, the construction contractor is responsible for indemnifying a third party for damage outside the contract. health, life, property directly incurred during the construction process and relevant legal costs (if any) within the scope of insurance liability as agreed in the insurance contract.

At the same time, adding the exception of insurance liability where the insurer is not liable to compensate for loss according to the international practice agreed upon by the insurance parties to apply if such practice is not contrary to law of Vietnam.

4. Minimum amount of civil liability insurance

According to Clause 7, Article 1 of Decree 20/2022/ND-CP , the minimum amount of compulsory civil liability insurance for third parties is as follows:

- The minimum insurance amount for damage to health and life is VND 100 million for one person in a case and there is no limit to the number of loss cases.

- The minimum insurance amount for property damage and related legal expenses (if any) is determined as follows:

+ For works valued at under VND 1,000 billion , the minimum insurance amount for property damage and related legal expenses (if any) is 10% of the work value for the entire warranty period. and there is no limit to the number of losses.

+ For works valued at VND 1,000 billion or more , the minimum insurance amount for property damage and related legal costs (if any) is VND 100 billion for the entire insurance period. and unlimited number of losses.

Decree 20/2022/ND-CP takes effect from July 1, 2022.

Civil liability insurance contracts for third parties in construction signed before July 1, 2022 will continue to be performed in accordance with the law at the time of entering into insurance contracts. In case of amending and supplementing an insurance contract with the amended and supplemented contents specified in Decree 20/2022/ND-CP , the provisions of this Decree shall apply.

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