What are the cases where insurer may refuse to sell compulsory fire and explosion insurance in Vietnam?

What are the cases where insurer may refuse to sell compulsory fire and explosion insurance in Vietnam? (Internet image)

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

1. What are the cases where insurer may refuse to sell compulsory fire and explosion insurance in Vietnam?

According to Clause 3, Article 3 of Decree 23/2018/ND-CP (amended in Decree 97/2021/ND-CP), 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 ompetent police authority 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.

2. Subjects of compulsory fire and explosion insurance in Vietnam

Pursuant to Article 4 of Decree 23/2018/ND-CP stipulating the subject of compulsory fire and explosion insurance in Vietnam as follows:

- 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).

- The insured property and its location must be specified in the insurance contract and insurance certificate.

3. Minimum sum insured in Vietnam

Minimum sum insured is specified in Article 5 of Decree 23/2018/ND-CP as follows:

-  The minimum sum insured is the market value of the properties specified in Clause 1, Article 4 of Decree 23/2018/ND-CP on the inception date.

- In case of failure to determine the market value of the properties, the sum insured shall be agreed upon by the parties as follows:

+ For the properties specified in Point a, Clause 1, Article 4 of Decree 23/2018/ND-CP, the sum insured is the remaining value or the replacement value of the properties on the inception date.

+ For the properties specified in Point b, Clause 1, Article 4 of Decree 23/2018/ND-CP, the sum insured is the monetary value of the properties according to valid vouchers or relevant documents.

4. Compulsory fire and explosion insurance coverage and insurance exclusions in Vietnam

According to Article 6 of Decree 23/2018/ND-CP, the compulsory fire and explosion insurance coverage and insurance exclusions are as follows:

- Insurance coverage

The insurer shall indemnify for any damage to the policyholder specified in Clause 1, Article 4 of Decree 23/2018/ND-CP, which arises from fire and explosion risk, except those specified in Clause 2 of Article 6 of Decree 23/2018/ND-CP.

- Insurance exclusions

+ 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.

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

Ho Quoc Tuan

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