Term of compulsory insurance for professional liability for construction and investment consultancy service in Vietnam

Term of compulsory insurance for professional liability for construction and investment consultancy service in Vietnam (Internet image)

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

1. Insurance subjects and the minimum insurance payout with compulsory insurance for professional liability for construction and investment consultancy service in Vietnam 

Insurance subjects and the minimum insurance payout with compulsory insurance for professional liability for construction and investment consultancy service in Vietnam according to Article 14 of Circular 50/2022/TT-BTC are as follows:

- Subjects of compulsory insurance for professional liability for construction and investment consultancy services are civil liabilities of investment and construction advisory contractors for third parties generated from the implementation of construction surveys and construction design of construction works from grade II or higher.

- The minimum insurance payout is equal to the value of the construction survey consultancy contract and the construction design consultancy contract.

2. Insurance scope and exclusion of insurance responsibility with compulsory insurance for professional liability for construction and investment consultancy service in Vietnam 

Insurance scope and exclusion of insurance responsibility with compulsory insurance for professional liability for construction and investment consultancy service in Vietnam according to Article 15 of Circular 50/2022/TT-BTC are as follows:

* Insurance scope

Insurers shall indemnify advisory contractors for the amounts that such advisory contractors are responsible for indemnifying for losses of third parties generated from the implementation of construction consultancy services and relevant costs according to regulations of the law, except for cases prescribed in Clause 2 of Article 15 of Circular 50/2022/TT-BTC.

* Exclusion of insurance responsibilities

Cases of exclusion of insurance responsibilities for compulsory insurance for professional liability for construction and investment consultancy services:

- Exclusion of the general insurance responsibility according to regulations prescribed in Article 5 of Circular 50/2022/TT-BTC.

- Losses caused by untested measures to construct, calculate, measure, design, and use materials intentionally selected by advisory contractors.

- Costs of redesigning or correcting drawings, plans, and technical manuals or catalogs of technical manuals.

- Losses caused by mold.

- Losses caused by pollution and contamination to the environment and third parties due to the construction survey consultancy and construction design.

- Losses related to asbestos or any material containing asbestos.

- Losses caused by violations of intellectual property rights.

3. Indemnification principles of compulsory insurance for professional liability for construction and investment consultancy service in Vietnam 

Indemnification principles of compulsory insurance for professional liability for construction and investment consultancy service according to Article 19 of Circular 50/2022/TT-BTC are as follows:

- Insurers shall indemnify advisory contractors for the amounts that such advisory contractors are responsible for indemnifying for losses of third parties and relevant costs according to regulations of the law, specifically:

+ Losses of third parties and related costs generated by negligent actions of the insured as a result of the implementation of construction surveys and construction design within the scope of insurance.

+ Indemnification request of third parties (from an insurance event) regarding the insured and have been notified to insurers by policyholders within the insurance duration, including:

Expenses to be paid to lawyers appointed by insurers or the insured (with the written consent of insurers), other fees and charges generated from the investigation, correction, and defense related to insurance events but not including the salary to be paid to workers or managers concluding labor contracts with the insured.

+ Other relevant costs according to regulations of the law.

- The total liability of insurers for all indemnification requests during the insurance duration shall not exceed the insurance payout agreed on in insurance policies.

- If policyholders conclude compulsory insurance policies for professional liabilities for construction and investment consultancy services during construction time with 2 or more insurers to insure the same subject, with the same conditions and insurance events, when insurance events occur, each insurer is only responsible for indemnification according to the ratio between the agreed insurance payout to the total insurance payout of all insurance policies concluded by policyholders.

- Insurers are not responsible for indemnifying the amounts that occurred or increased due to acts of insurance fraud according to regulations of the Criminal Code.

- When there are indemnification requests from third parties, policyholders and insurers shall cooperate in settling the indemnification as follows:

+ Policyholders shall:

++ Immediately notify insurers via means of communication and notify insurers in writing of such matters within 14 days after receiving indemnification requests from third parties.

++ Adopt every measure within their capacity to minimize losses.

++ Provide documents in indemnification documents according to regulations prescribed in Clauses 1, 2, 3, 4, 5, and 7 of Article 20 of Circular 50/2022/TT-BTC and facilitate insurers during the process of verifying such documents.

++ Implement, cooperate, and permit insurers to perform actions and measures that are necessary or requested by insurers to protect the rights of insurers after the indemnification of losses subject to indemnification responsibilities according to regulations of Circular 50/2022/TT-BTC.

+ Insurers shall:

++ Conduct loss assessment according to regulations of the law and prepare records of the assessment of causes and the extent of damage according to regulations prescribed in Clause 6 Article 20 of Circular 50/2022/TT-BTC.

++ Guide and cooperate with policyholders and relevant agencies, organizations, and individuals in sufficiently collecting documents to prepare indemnification documents.

++ Cooperate with policyholders in settling requests for loss indemnification of third parties subject to insurance responsibilities when insurance events occur.

++ In case of accepting the indemnification, insurers shall prepare written notifications on the indemnification.

++ In case of refusing the indemnification, insurers shall provide explanations in writing.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE