Guidance on implementation of compulsory insurance in construction investment in Vietnam

1. Construction works insurance

- According to Circular No. 329/2016/TT-BTC of the Ministry of Finance of Vietnam, project owners or contractors that fall within the case in which construction insurance premiums have been included in the contractual price must buy construction insurance which is valid during the construction period with respect to the following construction works:

+ Construction projects or project items which have certain impacts on public safety;

+ Construction projects having significant environmental impacts that belong to the list of projects subject to environmental impact assessment;

+ Construction projects which have particular technical specifications and are subject to complicated construction requirements.

The sum assured of a construction works in the construction period is the full value of that work as it is completed and shall not be lower than the total value of the construction contract, including the additional and adjusted prices ( if any).

Regarding the insurance coverage, the insurer shall compensate for loss and damage to the construction works in the construction period caused by all risks other than those prescribed by law.

- The premium of construction works in the construction period is determined in Annex 7 attached hereto. Depending on the risk level of the project, the insurance company can increase the insurance premium by a maximum of 25%.

2. Professional liability insurance

- Consultancies are obliged to buy compulsory professional liability insurance in connection to the construction surveying and design of construction works ranked grade II or higher for the third party. The minimum sum insured must be equal to the value of the consulting contract for construction surveying and/or consulting contract for construction design.

- The insurer shall reimburse the consultancy for indemnities which the contractors shall legally indemnify the third party for their loss and all related costs incurred from construction consultancy services.

- The premiums of professional liability insurance are prescribed in Annex 8 attached hereto.

3. Construction workers’ compensation insurance

- The construction contractors are legally obligated to purchase the construction workers’ compensation insurance for their workers who are assigned to work on construction sites. The minimum sum assured for construction workers’ compensation insurance shall be VND 100,000,000/person/occurrence.

- The premiums of workers’ compensation insurance are defined by Annex 9 attached hereto. Every policyholder shall be obliged to purchase the compulsory workers’ compensation insurance for construction workers on construction sites.

- When a construction worker suffers a labor accident or occupational disease, the insurance buyer must notify the insurance company within 14 days from the date of the incident. In addition, all measures must be taken to limit losses and create conditions for insurance enterprises to fulfill their insurance responsibilities.

Circular No. 329/2016/TT-BTC of the Ministry of Finance of Vietnam takes effect from March 01, 2017. Construction insurance policies signed before the effective date of this Circular shall be continued to be executed in accordance with the applicable laws at the time of signature.

Source: Finance Magazine

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