Compulsory fire and explosion insurance exclusions in Vietnam

Compulsory fire and explosion insurance exclusions in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Insured property in Vietnam

According to Clause 1, Article 4 of Decree 23/2018/ND-CP, insured property is the property of the insured facility, including:

- Houses, works and properties on houses and works; machines, equipment.

- Goods and supplies (including materials, finished goods, semi-finished goods).

2. Compulsory fire and explosion insurance exclusions in Vietnam

Specifically, in Clause 2, Article 6 of Decree 23/2018/ND-CP, cases of compulsory fire and explosion insurance exclusions in Vietnam include:

(1) For the insured facilities mentioned in Clause 1, Article 2 of Decree 23/2018/ND-CP (except nuclear facilities), the insurer shall not be liable to indemnify in the following cases:

- Earthquakes, volcanic eruptions or other convulsions of nature.

- Damage occasioned by unexpected political, security or social order and safety events.

- Damage occasioned by burning or explosion of properties according to regulations of a competent authority.

- Damage occasioned by property’s own fermentation or natural heating; property's undergoing any process involving the application of heat.

- Damage occasioned by direct hit of lightning strike without causing fire or explosion.

- Fire and explosion caused by nuclear weapon materials.

- Damage to any electrical machine, apparatus, or any portion of the electrical installation occasioned by over-running, excessive pressure, short circuiting, self heating, arcing or leakage of electricity arising from whatever cause, lightning included.

- Damage occasioned by malicious act of the insured or by deliberate violation of fire safety regulations and direct cause of fire or explosion.

- Damage to data, software and computer programs.

- Damage occasioned by the burning of forests, bush, prairie or the clearing of lands by fire.

(2) For the nuclear facilities, the insurer and the policyholder shall reach an agreement on insurance exclusions with the reinsurer’s approval.

3. Rules for participation in compulsory fire and explosion insurance in Vietnam

Rules for participation in compulsory fire and explosion insurance specified in Article 3 of Decree 23/2018/ND-CP are as follows:

- Organizations and individuals specified in Clause 1, Article 2 of Decree 23/2018/ND-CP (hereinafter referred to as “the policyholder”) must purchase compulsory fire and explosion insurance from insurers that sell fire and explosion insurance in accordance with regulations of law.

- The conditions for purchase and sale of insurance, insurance premiums and minimum sum insured are specified in this Decree.

In addition to compulsory fire and explosion insurance specified in Decree 23/2018/ND-CP, the policyholder and the insurer may agree on additional insurance conditions or increase in the sum insured and insurance premiums. In this case, the insurer shall separate the compulsory fire and explosion insurance in the insurance contract.

- The insurer may refuse to sell compulsory fire and explosion insurance in the following cases:

+ The facility has not undergone fire safety inspection in accordance with regulations of law.

+ The facility does not have a record on fire safety inspection by the fire department or the record expires 01 year from the date on which it is made to the date on which compulsory fire and explosion insurance is purchased.

+ The facility is temporarily suspended or suspended due to violations of fire safety regulations.

- The policyholder may include the expenses for purchase of compulsory fire fighting and prevention in the prices of products and services (applicable to manufacturing and trading facilities) or in recurrent expenditures (applicable to state administrative authorities, public service providers, socio-political organizations and other organizations).

- Organizations and individuals that are not required to purchase compulsory fire and explosion insurance in accordance with regulations of this Decree should purchase fire and explosion insurance under a contract with the insurer and in accordance with regulations of law.

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