Previously, contractors were encouraged by law to purchase third-party civil liability insurance. However, from July 1, 2022, when Decree No. 20/2022/ND-CP dated March 10, 2022 of (hereinafter referred to as “Decree 20”) revising a number of articles of Decree 119/2015/ND-CP (“Decree 119”) comes into force, the purchase of civil liability insurance for third parties has become a mandatory obligation for contractors in the field of construction investment activities.
Decree 20 also stipulated detailed contents related to compulsory insurance of civil liability for third parties as follows:
1. Insurance coverage
An insurance enterprise shall be liable to pay a construction contractor sums as an insurance cover which such contractor has its duty to provide compensation for the third party regarding damage outside of the insurance policy in terms of health, life, assets generated during construction and related legal costs (if any) that fall within the scope of insurance coverage in the insurance policy.
2. Minimum insurance amount
(1) For damage to health or life: VND 100 million/person/case, not limiting the number of cases of damage or losses.
(2) regarding damage of assets or related legal costs (if any) is:
- 10% of the value of the works for the entire valid duration of the insurance regarding works valued at less than VND 1.000 billion, not limiting the number of cases of damage or losses.
- VND 100 billion for the entire valid duration of the insurance regarding works valued at VND 1.000 billion or more, not limiting the number of cases of damage or losses.
3. Insurance period
Calculated from the start date to the end date of the construction time according to the construction contract and included in the insurance policy.
4. Premiums of compulsory insurance for third parties’ civil liability
Article 1.1 of Decree 20 amending and supplementing Article 3.4(c) of Decree 119 on this issue. Accordingly, insurance premiums shall be included in production and business costs. This regulation will help construction contractors be proactive in estimating expenses when participating in the bidding.
Comment: