What is insurance contract? What are the types of insurance contracts in Vietnam?

What is insurance contract?

According to the provisions of the Law on Insurance Business 2022, insurance contract (also insurance policy) refers to an arrangement between a policyholder and an insurer or a foreign non-life insurer’s branch or a mutual providing microinsurance product whereunder the policyholder is bound to pay insurance premiums; the insurer, the foreign non-life insurer’s branch or the mutual providing microinsurance service is bound to pay indemnity or insurance benefits or coverage under contractual terms and conditions.

What is insurance contract? What are the types of insurance contracts in Vietnam? (Internet image)

What are the types of insurance contracts in Vietnam?

According to the provisions of Article 15 of the Law on Insurance Business 2022, there are the following types of insurance contract:

- Life insurance contract;

- Health insurance contract;

- Property insurance contract;

- Property damage liability insurance contract;

- Liability insurance contract.

Those specified in point c, d and dd of this clause are classified into the type of non-life insurance.

Insurance companies, branches of foreign non-life insurance companies and policyholders may agree to enter into a single or combined type of insurance contracts prescribed in clause 1 of this Article and ensure conformance to clause 3 of Article 63 of the Law on Insurance Business 2022.

Contents of insurance contracts in Vietnam

According to Article 17 of the Law on Insurance Business 2022, an insurance contract must include but not limited to the followings:

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

- Subject matter insured;

- Sum insured or value of property insured or covered property value or insurance policy limit;

- Scope of insurance coverage and insurance benefits; insurance rules, terms and conditions;

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

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

- Insurance premium, premium payment option;

- Insurance coverage and payment option;

- Dispute resolution method.

Principles of conclusion and execution of insurance contracts in Vietnam 

According to Article 16 of the Law on Insurance Business 2022, the conclusion and implementation of insurance contracts must adhere to the fundamental principles in civil law and the following principles:

- Principle of utmost good faith: Parties to an insurance contract must provide information and implement contractual rights and obligations in a most honest and trustful manner, and must place the absolute mutual trust in each other during the period of conclusion and implementation of insurance contracts; 

- Principle of insurable interest: Policyholders must be entitled to the insurable benefit varying according to specific types of insurance contract under the Law on Insurance Business 2022;

- Principle of indemnity: The amount of coverage or indemnity that the insured can get shall not exceed the actual loss incurred in a policy event, unless otherwise agreed upon in the insurance contract;

- Principle of subrogation: the insured shall be responsible for giving the insurer or foreign non-life insurer the right to claim the amount of loss from the third party responsible for such loss if such amount falls within the permissible loss limit. This principle shall not apply to life and health insurance contracts;

- Principle of unpredictable risk: in order for a risk to be covered or insured against, it must be a sudden or unanticipated one.

Mai Thanh Loi

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