Vietnam: Insurance contract and 5 things you should know

Vietnam: Insurance contract and 5 things you should know (Internet image)

1. What is an insurance contract?

According to Clause 1, Article 12 of the Law on Insurance Business 2000 (amended in 2010, 2019), an insurance contract is the agreement reached between the insurance buyer and an insurance enterprise whereby the insurance buyer shall have to pay premiums while the insurance enterprise shall have to pay insurance money to the beneficiary or the indemnity to the insured upon the occurrence of the insured event.

Specifically, types of insurance contract shall include:

- Person insurance contracts;

- Property insurance contracts;

- Civil liability insurance contracts.

Maritime insurance contracts shall comply with the provisions of the Vietnam Maritime Code 2015; for matters not prescribed by the Vietnam Maritime Code 2015, the provisions of the Law on Insurance Business 2000 shall apply.

(Clause 2, 3, Article 12 of the Law on Insurance Business 2000 (amended in 2010, 2019))

2. Form and content of insurance contract

2.1. Forms of insurance contract

The insurance contracts must be made in writing.

The evidence of conclusion of insurance contracts shall be the insurance certificates, insurance applications, telegrams, telexes, faxes and other forms prescribed by law.

(Article 14 of the Law on Insurance Business 2000 (amended in 2010, 2019))

2.2. Contents of the insurance contract

Specifically, in Clause 1, Article 13 of the Law on Insurance Business 2000 (amended in 2010, 2019), an insurance contract must contain the following details:

- Names and addresses of the insurance enterprise, the insurance buyer, the insured or the beneficiary;

- The object of insurance;

- The sum insured, the value of the insured property for property insurance;

- The insurance scope, insurance conditions, insurance terms;

- Terms on exclusion of insurance liability;

- Insurance duration;

- Premium rate, mode of premium payment;

- Time limit and mode of paying insurance money or indemnity;

- Provisions on settlement of disputes;

- Day, month and year of concluding the contract.

In addition to the above content, an insurance contract may also contain other details mutually agreed upon by the parties concerned.

3. Cases of null and void insurance contracts in Vietnam

According to Clause 1, Article 22 of the Law on Insurance Business 2000 (amended in 2010, 2019), an insurance contract shall become null and void in the following cases:

- The insurance buyer has no interests which can be insured;

- The object of insurance no longer exists at the time of entering into the insurance contract;

- The insurance buyer, at the time of entering into the insurance contract, knows the insured event has already occurred;

- The insurance buyer or the insurance enterprise commits acts of deception when entering into the insurance contract;

- Other cases prescribed by law.

The handling of null and void insurance contracts shall comply with the provisions of the Civil Code and other relevant law provisions.

4. Cases of termination of insurance contracts in Vietnam

Apart from cases of contract termination under the provisions of the Civil Code 2015, an insurance contract shall also be terminated in the following circumstances:

(1) The insurance buyer no longer has the interests which can be insured;

(2) The insurance buyer fails to fully pay the premium or fails to pay the premium within the time limit agreed upon in the insurance contract, except otherwise agreed upon by the parties;

(3) The insurance buyer fails to fully pay the premium during the extended time limit for premium payment as agreed upon in the insurance contract.

(Article 23 of the Law on Insurance Business 2000 (amended in 2010, 2019))

5. Legal consequences of the termination of insurance contracts in Vietnam

According to Article 24 of the of the Law on Insurance Business 2000 (amended in 2010, 2019), the legal consequences of the termination of an insurance contract are specified as follows:

- In cases where an insurance contract is terminated under the provisions in item (1), the insurance enterprise shall have to refund the premium to the insurance buyer corresponding to the remaining period of the insurance contract for which the insurance buyer has paid the premium, after subtracting the reasonable expenses related to the insurance contract.

- Where an insurance contract is terminated under the provisions in item (1), the insurance buyer shall still have to fully pay the premium to the time of terminating the insurance contract. This provision shall not apply to person insurance contracts.

- Where an insurance contract is terminated under the provisions in item (1), the insurance enterprise shall still have to indemnify the insured when the insured event occurs within the premium paying time limit; the insurance buyer shall still have to pay the premium to the end of the extension period as agreed upon in the insurance contract. This provision shall not apply to person insurance contracts.

- The legal consequences of the termination of insurance contracts in other cases shall comply with the provisions of the Civil Code 2015 and other relevant law provisions.

Thanh Rin

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE