On March 10th, 2022, the Government issued Decree No. 20/2022/ND-CP (“Decree 20”) amending and supplementing Decree No. 119/2015/ND-CP regulating compulsory insurance in construction activities (“Decree 119), which changes the subject of compulsory civil liability insurance for third parties in construction and supplements several relevant regulations. Decree 20 shall take effect on July 1st, 2022.

Changing the subject to purchase compulsory civil liability insurance for third parties in construction

Currently, according to Decree 119, building contractors are only required to purchase insurance for employees working at construction sites, while contractors are responsible for purchasing compulsory civil liability insurance for third parties.

However, according to Decree 20, in addition to the responsibility to buy insurance for employees working at construction sites, building contractors must also buy compulsory civil liability insurance for contractors.

Supplementing several regulations relating to compulsory civil liability insurance for third parties in construction

Insurance premiums

Similar to insurance for employees working at construction sites, premiums of civil liability insurance for contractor shall also be included in production and business costs.

Insurance policy period

The policy period of compulsory civil liability insurance for a third party is a specific period, from the start date to the end date of the construction period, based on the construction contract and stipulated in the insurance contract.

Scope of insurance coverage

The insurance company shall indemnify building contractor for the amounts that building contractor is responsible for indemnifying a third party for non-contractual damages on health, life, and property directly incurred during the construction process and related legal costs (if any) within the scope of insurance coverage as agreed in the insurance contract.

Sum assured

The sum assured for health and life damage is VND 100 million per person/case, with an unlimited number of cases.

The sum assured for property damage and related legal costs shall be determined as follows:

  • For constructions valued at less than VND 1,000 billion, the sum assured is 10% of the construction’s value for the entire insurance policy period, with an unlimited number of cases.
  • For constructions valued at 1,000 billion VND or more, the sum assured is VND 100 billion for the entire insurance policy period, with an unlimited number of cases.

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