Vietnam compulsory business insurance: what the law requires

Vietnam compulsory business insurance covers a short list of risks. The law names vehicle owner liability, fire and explosion cover, and a few professional and construction policies. Most firms need at least one of these. Some need more than one. This guide sets out what each rule says, as of early August 2021.

Sources: Integrated Document No. 12/VBHN-VPQH of 23 July 2013 (Law on Insurance Business), English text on luatvietnam.vn.

The law behind the list

The base rule is the Law on Insurance Business, No. 24/2000/QH10. The National Assembly amended it with Law No. 61/2010/QH12, which took effect on 1 July 2011. The official integrated text defines compulsory insurance. It is a type of insurance whose conditions, premium rates and minimum insurance sum are set by law.

The same text names five compulsory types. They are motor vehicle owners' civil liability insurance, air carriers' liability toward passengers, professional liability insurance for legal consultancy, professional liability insurance for insurance brokerage firms, and fire and explosion insurance. The Government may propose more types to the National Assembly Standing Committee. That is how other policies, such as the construction ones below, came to be required.

Sources: Integrated Document No. 12/VBHN-VPQH (2013), Article 8.

Vehicle liability insurance

If your business owns cars, trucks or motorbikes, you must hold vehicle liability cover. Decree No. 03/2021/ND-CP governs it. The Government issued the decree on 15 January 2021, and it took effect on 1 March 2021. It replaced Decree No. 103/2008/ND-CP and Decree No. 214/2013/ND-CP.

The cover pays for harm that a vehicle does to other people and their property. It also covers harm to passengers. Each vehicle can be covered by only one compulsory contract. Each vehicle gets its own certificate.

The policy must run for at least one year. For motorbikes and similar vehicles, the term can be as long as three years. For other vehicles, the longest term follows the validity of the vehicle's safety and environmental inspection. The decree leaves the payout limits to the Ministry of Finance, so check the ministry's current rules for the exact figures.

Sources: Decree No. 03/2021/ND-CP of 15 January 2021, English text (Articles 4, 5, 6, 8 and 9), on viet-jo.com and luatvietnam.vn.

Fire and explosion insurance

Decree No. 23/2018/ND-CP sets the rules for fire and explosion cover. The Government issued it on 23 February 2018, and it took effect on 15 April 2018. It replaced Decree No. 130/2006/ND-CP and some articles of Decree No. 46/2012/ND-CP.

It applies to organizations and individuals that own premises with a fire hazard. A list of such premises comes in an annex to the decree. Read that annex for your own site, because the list decides who must buy.

The cover reaches the buildings, machines, equipment, goods and supplies at the site. The insured property and its location must be written into the contract and the certificate. The minimum sum insured is the market value of the property. If the value is hard to fix, the remaining or replacement value on the start date is used.

For sites with a total insured value under VND 1,000 billion, the premium follows the annex tables. Insurer and client may raise it for higher risk. The decree also lists losses that the policy does not pay. They include earthquakes, volcanic eruptions, deliberate breaches of fire safety rules and damage to data or software.

Sources: Decree No. 23/2018/ND-CP of 23 February 2018, English text (Articles 2 to 7 and 17), on luatvietnam.vn; Conventus Law report of 10 July 2018.

Construction and professional cover

Firms that build, design or advise on building work face a third group of rules. Decree No. 119/2015/ND-CP covers compulsory insurance in construction investment. The Government issued it on 13 November 2015, and it took effect on 10 February 2016. It names three policies.

• Work insurance: project owners or contractors buy it for certain works, such as those that affect public safety or the environment. The minimum sum is the full value of the finished work.
• Consultancy professional liability: consultants doing survey or design for works of grade II or higher must buy it. The minimum sum equals the value of the consultancy or design contract.
• Worker insurance: contractors must insure workers on site. The minimum sum is VND 100 million per person per case.

Outside construction, the Law on Insurance Business also requires professional liability cover for insurance brokerage firms and for legal consultancy.

Sources: Decree No. 119/2015/ND-CP of 13 November 2015, English text (Articles 4, 10, 16 and 17), on luatvietnam.vn; Integrated Document No. 12/VBHN-VPQH (2013), Article 8.

How to check what your firm needs

Start with what you own and what you do. A firm with a delivery van needs vehicle cover. A firm with a factory, shop or warehouse should check the fire annex. A builder or designer should check Decree 119/2015. A firm with a mix of these may need several policies.

Then ask an insurer for the certificate or contract for each policy and keep it on file. Match the insured property and its location to what is on the ground. Note the end date of each policy, since terms differ. Finally, treat these rules as a floor. The law sets minimum sums, and many firms choose to add cover above them. A licensed insurer or a local lawyer can confirm the details for a specific business.

Sources: Decrees No. 03/2021/ND-CP, No. 23/2018/ND-CP and No. 119/2015/ND-CP, as cited above.