Chương II Luật kinh doanh bảo hiểm 2022: Hợp đồng bảo hiểm

Chapter II

INSURANCE CONTRACTS

Section 1. GENERAL STIPULATIONS ABOUT INSURANCE CONTRACTS

Article 15. Insurance contracts

1. There are the following types of insurance contract:

a) Life insurance contract;

b) Health insurance contract;

c) Property insurance contract;

d) Property damage liability insurance contract;

dd) Liability insurance contract.

Those specified in point c, d and dd of this clause are classified into the type of non-life insurance.

2. Insurance companies, branches of foreign non-life insurance companies and policyholders may agree to enter into a single or combined type of insurance contracts prescribed in clause 1 of this Article and ensure conformance to clause 3 of Article 63 in this Law.

3. Marine insurance contracts shall be subject to the Maritime Code; parts of these contracts that are not prescribed in the Maritime Code shall be subject to regulatory provisions of this Law. 

4. Insurance contract-related matters that are not covered herein shall be subject to the Civil Code.

Article 16. Principles of conclusion and execution of insurance contracts 

Conclusion and implementation of insurance contracts must adhere to the fundamental principles in civil law and the following principles:

1. Principle of utmost good faith: Parties to an insurance contract must provide information and implement contractual rights and obligations in a most honest and trustful manner, and must place the absolute mutual trust in each other during the period of conclusion and implementation of insurance contracts; 

2. Principle of insurable interest: Policyholders must be entitled to the insurable benefit varying according to specific types of insurance contract under this Law;

3. Principle of indemnity: The amount of coverage or indemnity that the insured can get shall not exceed the actual loss incurred in a policy event, unless otherwise agreed upon in the insurance contract;

4. Principle of subrogation: the insured shall be responsible for giving the insurer or foreign non-life insurer the right to claim the amount of loss from the third party responsible for such loss if such amount falls within the permissible loss limit. This principle shall not apply to life and health insurance contracts;

5. Principle of unpredictable risk: in order for a risk to be covered or insured against, it must be a sudden or unanticipated one.

Article 17. Contents of insurance contracts

1. An insurance contract must include but not limited to the followings:

a) The policyholder, the insured, the beneficiary (if any), the insurer or the foreign non-life insurer's branch;

b) Subject matter insured;

c) Sum insured or value of property insured or covered property value or insurance policy limit;

d) Scope of insurance coverage and insurance benefits; insurance rules, terms and conditions;

dd) Rights and obligations of the insurer, the foreign non-life insurer’s branch and the policyholder;

e) Insurance policy period, date of entry into force of the insurance contract;

g) Insurance premium, premium payment option;

h) Insurance coverage and payment option;

i) Dispute resolution method.

2. Minister of Finance shall elaborate on clause 1 of this Article with respect to life and health insurance contracts.

Article 18. Presentation and proof of conclusion of insurance contracts

Insurance contracts must be made in writing. Proof of conclusion of an insurance contract shall comprise insurance contract, certificate of insurance, insurance policy or others prescribed in law.

Article 19. Disclaimer clauses

1. Disclaimer clauses shall prescribe cases in which insurers or foreign non-life insurers’ branches can refuse to pay claims and insurance.

2. In the presence of clauses on disclaimer of insured liability, insurers and foreign non-life insurers’ branches must clearly elaborate them in insurance contracts, give explicit, adequate explanations and evidence about the fact that insurers have already received full and clear explanations of these disclaimer clauses by insurers and foreign non-life insurers’ branches when concluding insurance contracts.

3. Where any force majeure event or circumstantial obstacle results in the policyholder's late notice of any policy event, the insurer or foreign non-life insurer’s branch is not allowed to apply disclaimer clauses.

Article 20. Rights and obligations of insurers and foreign non-life insurers’ branches

1. An insurer and foreign non-life insurer’s branch shall have the following rights:

a) Collect insurance premiums under contractual terms and conditions;

b) Request the policyholder to provide full and accurate information related to conclusion and execution of the insurance contract;

c) Revoke the insurance contract as per clause 2 of Article 22 or unilaterally terminate the insurance contract under Article 26 herein;

d) Reject payment of insurance claims or insurance if insurance claims fall outside of the limit of insured liability or fall within the scope of application of the disclaimer clause as provided in the insurance contract;

dd) Request the policyholder to apply loss prevention and control measures under this Law and other regulatory provisions of relevant law;

e) Request the third party to repay the amount that the insurer or the foreign non-life insurer’s branch pay as indemnity or coverage to the insured in case of loss or damage to property; economic interests or contractual or lawful obligations; civil liability that the third party causes;

g) Other rights prescribed by law.

2. An insurer and a foreign non-life insurer’s branch shall take on the following obligations:

a) Provide the policyholder with proposal and questionnaire related to insurable risks, subject matters insured, rules, terms and conditions of insurance;

b) Give the policyholder with clear and full explanations about insurance benefits, clauses on disclaimer of insured liability, rights and obligations of the policyholder when concluding the insurance contract;

c) Provide the policyholder with the proof of conclusion of the insurance contract prescribed in Article 18 herein;

d) Issue premium invoices to the policyholder as agreed upon in the insurance contract and stipulated in regulatory provisions of relevant law;

dd) Pay indemnity and insurance in case of policy event that occurs;

e) Give written explanations as to why payment of any insurance claim or coverage is rejected;

g) Cooperate with the policyholder on settling third-party claims for compensation for any losses falling within the limit of insured liability in case of any policy event that occurs;

h) Store and retain insurance contract-related documents and records under law;

i) Ensure confidentiality and security for information provided by the policyholder or the insured, except as requested by competent regulatory authorities or agreed by the policyholder or the insured;

k) Other obligations prescribed by law.

Article 21. Rights and obligations of the policyholder

1. The policyholder shall have the following rights:

a) Decide on the insurer or the foreign non-life insurer’s branch with which the policyholder may conclude the insurance contract;

b) Request the insurer or the foreign non-life insurer’s branch to provide proposal and questionnaire related to risks covered against, subject matters insured, rules, terms and conditions of insurance, and interpret contractual terms and conditions;

c) Request the insurer or the foreign non-life insurer's branch to provide proof of conclusion of the insurance contract referred to in Article 18 herein;

d) Request the insurer or the foreign non-life insurer's branch to issue premium invoices as agreed upon in the insurance contract and stipulated in regulatory provisions of relevant law;

dd) Revoke the insurance contract under clause 3 of Article 22 and 35 or unilaterally terminate the insurance contract under Article 26 herein;

e) Request the insurer or the foreign non-life insurer's branch to pay insurance claims or coverage or indemnity in case of any policy event that occurs;

g) Transfer the insurance contract under contractual terms and conditions or as provided by law;

h) Other rights stipulated by law.

2. The policyholder shall take on the following obligations:

a) Provide all full and accurate information related to the insurance contract upon the request of the insurer or the foreign non-life insurer's branch;

b) Carefully read and understand policy terms and conditions, rights and obligations of the policyholder when entering into the insurance contract, and other contents of the insurance contract;

c) Pay insurance premiums in full and on time under contractual terms and conditions;

d) Inform the insurer or the foreign non-life insurer’s branch of cases in which it is likely to assume aggregated or alleviated risks or additional liability during the contract term as agreed upon in the insurance contract;

dd) Inform the insurer or the foreign non-life insurer’s branch of occurrence of any policy event as agreed upon in the insurance contract; cooperate with the insurer or the foreign non-life insurer’s branch on insurance loss assessment;

e) Apply loss prevention and control measures in accordance with this Law and other regulatory provisions of relevant law;

g) Other obligations prescribed by law.

Article 22. Responsibilities and legal consequences for breach of information disclosure obligations

1. When entering into insurance contracts, insurers and foreign non-life insurers’ branches shall have the burden of providing full and accurate information related to insurance contracts; give explanations about contractual terms and conditions to policyholders. Meanwhile, policyholders shall have the burden of providing full and accurate information related to subject matters of insurance for insurers and foreign non-life insurers’ branches.

2. Where any policyholder deliberately provides inadequate or untrue information with the aim of concluding an insurance contract to receive insurance indemnity or coverage, the insurer or foreign non-life insurer’s branch may nullify the insurance contract. To such extent, the insurer or the foreign non-life insurer’s branch shall not be obliged to pay insurance indemnity or coverage and must reimburse insurance premiums that the policyholder pays after deducting reasonable expenses (if any) under contractual terms and conditions. The policyholder is bound to compensate for any possible loss that the insurer or the foreign non-life insurer's branch incurs due to such act.

3. Where the insurer or the foreign non-life insurer’s branch deliberately fails to discharge its information disclosure obligations or provides untrue information with the intention of obtaining the insurance contract, the policyholder can terminate the insurance contract and be repaid insurance premiums. The insurer or the foreign non-life insurer’s branch is bound to compensate for any loss that the policyholder may suffer due to such act.

Article 23. Changes in levels of insurable risks

1. Whenever there is any change in threshold factors used for calculation of insurance premium that leads to any decrease in risks insured, under contractual terms and conditions, the policyholder may request the insurer or the foreign non-life insurer’s branch to perform one of the following tasks:

a) Reduce insurance premiums during days left to the expiry date of the insurance contract;

b) Increase the sum insured during days left to the expiry date of the insurance contract;

c) Extend the insurance policy period;

d) Expand the scope of insurance cover during days left to the expiry date of the insurance contract.

2. Where the insurer or the foreign non-life insurer’s branch fails to accept the request specified in clause 1 of this Article, the policyholder may unilaterally terminate the insurance contract by promptly notifying it of the intention of such termination.

3. Whenever there is any change in threshold factors used for calculation of insurance premium that results in any increase in insurable risks, under contractual terms and conditions, the insurer or the foreign non-life insurer’s branch may take one of the following actions:

a) Re-compute insurance premiums during days left to the expiry date of the insurance contract;

b) Decrease the sum insured during days left to the expiry date of the insurance contract;

c) Shorten the insurance policy period;

d) Limit the scope of insurance cover during days left to the expiry date of the insurance contract.

4. Where the policyholder refuses to accept the request specified in clause 3 of this Article, the insurer or the foreign non-life insurer’s branch may unilaterally terminate the insurance contract by promptly notifying the policyholder of the intention of such termination.

Article 24. Interpretation of insurance contracts

Where any insurance contract has vague terms and conditions that are open to misinterpretation, they may be explained to the policyholder’s advantage.

Article 25. Null and void insurance contracts

1. An insurance contract shall be made null and void in the following cases:

a) The policyholder has no insurable interest at the time of conclusion of an insurance contract;

b) No subject matter of insurance exists at the time of conclusion of an insurance contract;

c) At the time of conclusion of the insurance contract, the policyholder has the knowledge of the policy event that occurs;

d) Objectives and contents of an insurance contract are in contravention of prohibition clauses and social ethics;

dd) The insurer, the foreign non-life insurer’s branch and the policyholder enter into the fraudulent insurance policy;

e) The policyholder is a minor; the person who is incapable of civil acts; the person who have cognitive and behavioral difficulties; the person whose capacity to perform civil acts is restricted;

g) When being entered into, an insurance contract contains any confusion that causes one or more parties to fail to achieve the purposes of entering into that contract, unless the contractual purposes of the contracting parties have been achieved, or the contracting parties can take immediate remedial actions against such confusion to make the purposes of entering into the contract successfully achieved;

h) The insurance contract is concluded by fraud, except as provided in Article 22 herein;

i) The insurance contract is concluded under threat or pressure;

k) The policyholder lives with health condition related to cognitive disability and impulse control disorder when entering into the insurance contract;

l) The insurance contract is in contravention of regulations on presentation of insurance contracts laid down in Article 18 herein.

2. When an insurance contract is null and void, it is no longer in effect from the date of conclusion. The insurer or the foreign non-life insurer’s branch and the policyholder shall be obliged to return what they have received to each other. The party at fault must be liable to pay compensation.

Article 26. Unilateral termination of insurance contracts

The insurer, the foreign non-life insurer’s branch or the policyholder may unilaterally terminate the insurance contract in the following cases:

1. The policyholder defaults on insurance premiums or does not pay insurance premiums in full by the agreed due date or after the extended due date;

2. The insurer, the foreign non-life insurer’s branch or the policyholder does not accept the request for change in the level of insurable risk under Article 23 herein;

3. The insured fails to apply safety measures to protect subject matters insured as provided in clause 3 of Article 55 herein;

4. The policyholder disagrees to transfer the portfolio of insurance contracts prescribed in clause 4 of Article 92 herein.

Article 27. Legal consequences of unilateral termination of insurance contracts

1. In case of unilateral termination of an insurance contract prescribed in clause 1 of Article 26 herein, the following actions shall be taken as follows:

a) Insurance premiums remain to be paid in full by the policyholder till the time of unilateral termination of the insurance contract. This regulation shall not apply to life insurance contracts and health insurance contracts, except group insurance contracts;

b) When unilaterally terminating a life insurance contract or health insurance contract in this case, the insurer or the foreign non-life insurer’s branch shall be responsible for paying insurance to the insured if the policy event occurs before the time of unilateral termination of the insurance contract, and may deduct insurance premiums paid till the time of unilateral termination of the insurance contract;

c) When unilaterally terminating a property insurance contract, a property damage liability insurance contract or a liability insurance contract, the insurer or the foreign non-life insurer’s branch shall be responsible for indemnifying the insured if the policy event occurs before the time of unilateral termination of the insurance contract, and may deduct insurance premiums as agreed upon in the insurance contract.

2. When unilaterally terminating an insurance contract as provided in clause 2 and 3 of Article 26 herein, the insurer or the foreign non-life insurer’s branch shall be responsible for refunding insurance premiums paid in advance for days left to the expiry date of the insurance contract as agreed upon in the insurance contract. The insurer or the foreign non-life insurer’s branch shall be responsible for paying insurance indemnity or coverage as agreed upon in the insurance contract if the policy event occurs before the time of unilateral termination of the insurance contract.

3. When unilaterally terminating a life insurance contract involving cash surrender value in the cases stipulated in clause 1 and 2 of Article 26 herein, the insurer shall be obliged to pay the policyholder the cash surrender value agreed in the insurance contract, unless otherwise agreed by contracting parties.

4. When unilaterally terminating an insurance contract as stipulated in clause 4 of Article 26 herein, the policyholder may be refunded the cash surrender value or insurance premiums that he/she already pays in advance in proportion to the days left to the expiry date of the policy term, depending on specific types of insurance products. Where the property value is less than technical provisions in the transferred portfolio of insurance contracts, the refund that the policyholder receives shall be calculated according to the proportion of property value to technical provisions in the transferred portfolio of insurance contracts.

Article 28. Transfer of insurance contracts

1. The policyholder shall have the right to transfer an insurance contract. In order to transfer a life insurance contract, the written consent must be obtained from the insured or the insured’s legal representative.

2. The transferee of the insurance contract must have insurable benefits and may inherit rights and obligations from the transferor.

3. The transfer of an insurance contract shall only come into effect when the policyholder sends the written notice of such transfer and the written consent is obtained from the insurer or the foreign non-life insurer’s branch, except when the transfer is made according to international practices or as agreed upon in the insurance contract.

Article 29. Responsibilities arising in case of reinsurance

1. The insurer or the foreign non-life insurer’s branch shall bear sole responsibility to the policyholder under the insurance contract, even in case of reinsuring insured liabilities. The insurer or the foreign non-life insurer’s branch shall not be allowed to refuse or delay their assumption of responsibility to the policyholder, even when the reinsurer defaults on their reinsurance payment obligations for liabilities reinsured.

2. The reinsurer shall not be permitted to request the policyholder to pay insurance premiums directly to them, unless otherwise agreed upon in the insurance contract.

3. The policyholder shall not be permitted to request the policyholder to pay insurance premiums directly to them, unless otherwise agreed upon in the insurance contract.

Article 30. Time limits for submission of insurance claims

1. The time limit for submission of an insurance claim under an insurance contract shall be 01 (one) year from the date of occurrence of the policy event. The period during which a force majeure event or circumstantial obstacle occurs shall not make any increase in the time limit for filing an insurance claim.

2. Where the insured or the beneficiary proves that they have no knowledge of the time of occurrence of the policy event, the time limit specified in clause 1 of this Article may start from the day on which the insured or the beneficiary has knowledge of occurrence of that policy event.

3. When the third party demands compensation from the policyholder for losses falling within the limit of insured liability as agreed upon in the insurance contract, the time limit stipulated in clause 1 of this Article shall start from the day on which the third party files their request.

Article 31. Time limits for payment of insurance indemnity and coverage

1. In case of occurrence of the policy event, the insurer or the foreign non-life insurer’s branch shall pay insurance indemnity or coverage within the time limit agreed upon in the insurance contract. In the absence of any agreement on the time limit, the insurer or the foreign non-life insurer’s branch shall pay insurance indemnity or coverage within the time limit of 15 days of receipt of all valid documents concerning request for payment of insurance claims and coverage.

2. If the insurer or the foreign non-life insurer’s branch makes late payment of insurance claims or coverage prescribed in clause 1 of this Article, the amount of interest on the overdue payment must be paid in proportion to the period of late payment. The interest rate of the late payment shall be determined according to the agreement between parties in accordance with the Civil Code.

Article 32. Dispute resolution mechanism

Any dispute about an insurance contract shall be resolved through negotiation between involved parties. In cases where such negotiation fails, the dispute shall be settled through the mediation, arbitration or court process as agreed upon in the insurance contract and according to regulatory provisions.

Section 2. LIFE INSURANCE POLICIES AND HEALTH INSURANCE POLICIES

Article 33. Subject matters

1. Human life and life expectancy is the subject matters of a life insurance policy.

2. Human health is the subject matters of a health insurance policy.

Article 34. Insurable interests of life insurance policies and health insurance policies

1. The policyholder shall have insurable interests for the following persons:

a) The policyholder himself;

b) The policyholder’s spouses, parents, offspring;

c) The policyholder’s biological siblings or other persons who are in care or support relationships with the policyholder;

d) The persons having financial interests or labor relations with the policyholder;

dd) Insured persons giving their written consent for purchase of health insurance policies to the policyholder.

2. At the time of conclusion of an insurance contract, the policyholder must have insurable interests.

Article 35. Time limits for consideration of participation in insurance

For a term insurance contract lasting for more than one year, within 21 days of receipt of the insurance contract, the policyholder may refuse to continue to participate in insurance. Where the policyholder refuses to continue to participate in insurance, the insurance contract shall be terminated and the policyholder shall be refunded insurance premiums that they have paid after deducting reasonable costs and expenses (if any) as agreed upon in the insurance contract; the insurer shall not be obliged to pay insurance indemnity or coverage in case of occurrence of a policy event.

Article 36. Temporary coverage in life insurance

The insurer shall offer temporary coverage to the policyholder upon receiving the insurance proposal and advance premiums from the policyholder. Insurance term, sum insured and terms and conditions of temporary coverage shall be negotiated between the insurer and the policyholder. Temporary coverage is terminated after the insurer accepts or refuses insurance, or unless otherwise agreed.

Article 37. Payment of life insurance premiums

1. The insurer can pay insurance premiums on a one-off basis or in installments according to the time limit and approach agreed upon in an insurance contract.

2. In the cases where insurance premiums are paid in installments and the policyholder pays one or several installments of insurance premiums, if the policyholder is unable to proceed to pay further, the extended duration of payment of premiums shall be 60 days.

3. Parties can agree to restore the effect of the insurance contract that is unilaterally terminated under clause 1 of Article 26 herein within 02 years of termination when the policyholder has paid outstanding debts on insurance premiums.

4. Where the policyholder defaults on insurance premiums or fails to pay insurance premiums in full, the insurer shall not be allowed to arbitrarily deduct premiums from the surrender value of the insurance contract without the policyholder’s consent, and take legal action to request the policyholder to pay insurance premiums. This regulation shall not apply in case of group insurance.

Article 38. Prohibition against request for third-party reimbursement

Notwithstanding that the insured is deceased, injured or sick due to direct or indirect acts of the third party, the insurer or the foreign non-life insurer’s branch shall discharge their obligation to pay insurance indemnity or coverage as agreed upon in the insurance contract without having the right to request the third party to reimburse the amount that the insurer or the foreign non-life insurer's branch has already paid to the beneficiary. The third party shall still have the burden of paying indemnity to the insured under law.

Article 39. Conclusion of life insurance contracts and health insurance contracts insuring the death of other person

1. When the policyholder enters into a life insurance contract or a health insurance contract to insure the death of the other person, the written consent, clarifying the sum insured and the beneficiary, must be obtained from that other person.

2. Conclusion of a life insurance contract and health insurance contract insuring the death of the following persons shall be prohibited:

a) Minors, except as agreed in writing by their parents or guardians;

b) People incapable of civil acts;

c) Persons who have cognitive and impulse control difficulties;

d) People with restricted capabilities of civil acts.

Article 40. Insurance exclusions

1. Insurers and foreign non-life insurers’ branches shall not be exempted from paying insurance indemnity and coverage in the following cases:

a) The insured is deceased within 02 years of the first payment of premium or restoration of the insurance contract’s effect;

b) The insured’s death is caused willfully and intentionally by the policyholder or the beneficiary, except as prescribed in clause 2 of this Article;

c) The insured’s permanent injury or impairment is caused willfully and intentionally by the insured himself, the policyholder or the beneficiary, except as prescribed in clause 2 of this Article;

d) The insured’s death is caused by serving the death sentence;

dd) Other cases are stipulated in the insurance contract.

2. In the cases where there are more than one beneficiary, despite the fact that one or more beneficiaries intentionally cause death or permanent injury or impairment for the insured, the insurer or the foreign non-life insurer’s branch shall have the burden of paying insurance indemnity or coverage to the other beneficiaries under contractual terms and conditions.

3. When any situation specified in clause 1 of this Article arises, the insurer or the foreign non-life insurer’s branch shall pay the policyholder the surrender value of the insurance contract or all of the premiums already paid after deducting any reasonable costs and expenses as agreed upon in the insurance contract, except as provided in clause 2 of this Article. In case of the death of the policyholder, all of the refunds shall be treated according to law on inheritance.

Article 41. Designation and change of beneficiaries

1. The policyholder shall have the right to designate the beneficiary, except group insurance contracts. If the policyholder is not the insured, the policyholder must obtain the written consent for designation of the beneficiary from the insured; if the insured is a minor or is incapable of civil acts or faces cognitive or impulse control problems or has restricted capabilities of civil acts, in order to designate a beneficiary, the approval from his/her legal representative must be sought.

2. If there are multiple beneficiaries, the persons entitled to designate beneficiaries as referred to in this Law may determine the beneficiary line or order of precedence or the percentage of benefit that each beneficiary can enjoy. If not doing so, all beneficiaries may be entitled to the equal percentage of benefit.

3. The policyholder can change any beneficiary provided that the written consent for such change from the insured is obtained, and the insurer or the foreign non-life insurer’s branch is informed in writing beforehand of such change. If the insured is a minor or incapable of civil acts or faces cognitive or impulse control problems or has restricted capabilities of civil acts, in order to change a beneficiary, the approval from his/her legal representative must be sought. The insurer or the foreign non-life insurer’s branch must give their certification in the insurance contract or the document attached hereto after receiving the notice of such change from the policyholder.

Article 42. Group insurance contracts

1. Group insurance contract is the arrangement between the policyholder and the insurer or the foreign non-life insurer’s branch that is made to offer insurance on the insured group members under the same insurance contract.

2. A group of members participating in the insurance contract must be the group set up not to serve the purpose of participation in insurance.

3. The policyholder and the insured may negotiate for the joint payment of premiums.

4. The insured shall have the right to designate the beneficiary in case of the death of the insured.

5. The policyholder, the insurer or the foreign non-life insurer’s branch shall have the right to amend and supplement the group insurance contract in the following cases:

a) At least one insured person is no longer the group member;

b) Insurance premiums specific to the insured persons are not paid under terms and conditions of the insurance contract;

c) Other cases are agreed upon in the insurance contract.

6. In addition to those regulations laid down in Article 17 herein, a group insurance contract must contain the followings:

a) Conditions for participation in insurance to be applied to the insured;

b) Conditions and procedures for transformation into the individual insurance contract.

Section 3. PROPERTY INSURANCE CONTRACTS, PROPERTY DAMAGE LIABILITY INSURANCE CONTRACTS

Article 43. Subject matters

1. The property or assets stipulated in the Civil Code are the subject matters of a property insurance contract.

2. Any economic benefit or contractual or lawful obligation of which any loss is incurred by the insured is the subject matter of a damage liability insurance contract.

Article 44. Insurable interests

1. Under a property insurance contract, the policyholder has insurable interests when acquiring the ownership right; other rights to property or assets; right of possession and use of the non-owner.

2. Under a damage liability insurance contract, the policyholder has insurable interests when they have financial interests; assume financial obligations and liabilities; incur economic losses towards the subject matters insured.

3. At the time of occurrence of insured losses, the policyholder or the insured must have insurable interests.

Article 45. Sums insured

The sum insured is the amount of money that a policyholder and an insurer or foreign non-life insurer’s branch are agreed upon in the insurance contract to provide insurance for property or assets and against losses upon the policyholder’s request as per this Law.

Article 46. Notification of policy events

1. The policyholder is bound to notify the insurer or the foreign non-life insurer’s branch when having the knowledge of an occurrence within the time limit agreed upon in the insurance contract. Where the policyholder fails to comply with the obligation of notification or gives late notification, the insurer or the foreign non-life insurer’s branch can deduct the amount of money that must be paid as insurance in proportion to losses that the insurer or the foreign non-life insurer’s branch incurs, except in force majeure events or objective obstacles.

2. The insurer or the foreign non-life insurer's branch is not allowed to apply the regulations laid down in clause 1 of this Article if the insurance contract does not have any terms and conditions relating to liabilities of the policyholder, sanctions against failure to comply with the obligation of notification or the deferred notification of the policy event.

Article 47. Property overinsurance contracts

1. An overinsurance contract is the contract where the sum insured is greater than the market value of the insured property at the time of conclusion of the contract. The insurer, the foreign non-life insurer’s branch and the policyholder shall not be allowed to deliberately enter into an overinsurance contract.

2. Where an overinsurance contract is concluded through the policyholder’s intentional fault, the following actions shall be taken:

a) If there is no policy event that occurs, the insurer or the foreign non-life insurer’s branch shall repay the policyholder the amount of premiums paid in advance in proportion to the sum insured in excess of the market value of the insured property at the time of conclusion of the insurance contract after deducting reasonable costs and expenses (if any) as agreed upon in the insurance contract;

b) If any policy event occurs, the insurer or the foreign non-life insurer’s branch shall indemnify the policyholder for losses in proportion to the market value of the insured property at the time of occurrence, and repay the policyholder the amount of premiums already paid in advance in proportion to the amount of insurance in excess of the market value of the insured property at the time of conclusion of the insurance contract after deducting reasonable costs and expenses (if any) as agreed upon in the insurance contract.

Article 48. Property underinsurance contracts

1. An underinsurance contract is the contract where the sum insured is less than the market value of the insured property at the time of conclusion of the contract.

2. When entering into a property underinsurance contract, the insurer or the foreign non-life insurer’s branch shall pay losses in proportion to the sum insured and the market value of the insured property at the time of conclusion or as agreed upon in the insurance contract.

Article 49. Double insurance contracts

1. A double insurance contract is the situation where there are at least two insurance contracts that provide insurance in the same scope of insurance, for the same subject matter, during the same policy term and against the same insured event, and total sum insured of these insurance contracts exceeds the market value of the insured property at the time of conclusion of the insurance contracts.

2. After entering into a double insurance contract, in case of occurrence of a policy event, the amount of the indemnity in each insurance contract is calculated according to the relevant proportion of the agreed sum insured to total of the sums insured in all insurance contracts that the policyholder enters into. Total of the indemnities of all insurance contracts shall not be greater than the actual loss of the insured property.

Article 50. Loss or damage caused by normal wear and tear or inherent vice or nature of insured property

The insurer or foreign non-life insurer’s branch can disclaim indemnification responsibility for the insured property damaged due to normal wear and tear or inherent vice or nature of that property, unless otherwise agreed upon in the insurance contract.

Article 51. Indemnification basis

1. The amount of indemnity that the insurer or the foreign non-life insurer’s branch must pay the insured is calculated on the basis of the market value of the insured property at the time and place of occurrence of loss or damage and actual loss percentage, unless otherwise agreed upon in the insurance contract. Costs and expenses incurred from determination of the market value and loss percentage shall be covered by the insurer or the foreign non-life insurer’s branch.

2. The amount of indemnity that the insurer or the foreign non-life insurer’s branch pays the insured shall not be greater than the sum insured, unless otherwise agreed upon in the insurance contract.

3. In addition to paying indemnity, the insurer or the foreign non-life insurer’s branch shall pay the insured necessary or reasonable expenses agreed upon in the insurance contract to provide and hedge against losses, and claims-arising expenses that the policyholder or the insured must incur to follow the instructions of the insurer or foreign non-life insurer's branch.

Article 52. Methods of providing indemnity

1. The policyholder and the insurer or the foreign non-life insurer’s branch can agree on one of the following methods:

a) Repairing the damaged property;

b) Replacing the damaged property with another equivalent one;

c) Paying indemnity.

2. If the insurer, the foreign non-life insurer’s branch and the policyholder are unable to agree on the method of providing indemnity, cash indemnity can be paid.

3. Where either or both of the indemnification methods specified in point b and c of clause 1 of this Article is used, the insurer or the foreign non-life insurer's branch shall be entitled to keep the damaged property after replacing it with another equivalent one or paying the indemnity in full according to the market value of the insured property.

Article 53. Loss and damage assessment

1. In case of the policy event that occurs, the insurer or the foreign non-life insurer’s branch or the person authorized by the insurer or the foreign non-life insurer’s branch shall conduct the assessment of loss and damage in order to determine the causes and levels of loss or damage. Costs and expenses incurred from the loss assessment process shall be covered by the insurer or the foreign non-life insurer’s branch.

2. Where contracting parties fail to reach any agreement on the causes and levels of loss or damage, independent assessors may be hired by mutual consent, unless otherwise agreed upon in the insurance contract. Where the contracting parties disagree on hiring of the independent assessor, one of the parties may request the Court having relevant jurisdiction or the Arbitrator to solicit the independent assessor for their assessment feedback. The independent assessor’s conclusions or consultative opinions shall be binding upon concerned parties.

Article 54. Transfer of the right to claim for reimbursement

1. In a policy event that occurs, if the third party carried the burden of paying compensation for any loss or damage to the insured, the following actions shall be taken:

a) After the insurer or foreign non-life insurer’s branch completes their payment of the insured’s insurance claim, the insured shall assign the right to claim reimbursement from the third party for that insurance claim to them;

b) The insurer or the foreign non-life insurer’s branch may deduct the amount of insurance claim, depending on how serious the insured's fault is, if the insured refuses to the right to claim for reimbursement from the third party.

2. When the insurer or the foreign non-life insurer’s branch enforces the right to claim for reimbursement from the third party, the insured shall have the mandate to provide them with required documents and associated information under terms and conditions of the insurance contract.

3. The insurer or the foreign non-life insurer’s branch is not allowed to request the insured’s parent, spouse or offspring to reimburse the insurance claim that they pay the insured, except as these requested kin cause any loss or damage through their intentional fault.

Article 55. Safety regulations

1. The insured shall be bound to comply with fire prevention and control; occupational safety and hygiene; and other regulations of relevant law in order to ensure their safety.

2. Insurers and foreign non-life insurer's branches shall have the right to inspect safety conditions for the insured or advise and request the insured to apply measures to provide and hedge against risks.

3. Where the insured fails to apply safety measures to provide sufficient protection for the subject matter insured, insurers and foreign non-life insurer's branches shall have the right to set the deadline for the insured’s execution of these measures. After such deadline, if the insured fails to comply, insurers and foreign non-life insurer's branches shall reserve the right to increase insurance premiums or unilaterally terminate the insurance contract.

Article 56. Prohibition against abandonment of insured property

In case of any loss or damage that occurs, the insured shall not be allowed to abandon the insured property and shall apply necessary measures within their competence to prevent or minimize loss or damage, unless otherwise prescribed in law or agreed upon by parties.

Section 4. LIABILITY INSURANCE CONTRACTS

Article 57. Subject matters insured

The subject matter of a liability insurance contract is the civil liability of the insured towards the third party under the regulatory provisions of law.

Article 58. Responsibilities of insurers and foreign non-life insurers’ branches

1. Responsibilities of the insurer or the foreign non-life insurer arise only when the third party requests the insured to pay them compensation for any loss or damage occurring within the policy term.

2. The third party shall not be entitled to directly demand compensation from the insurer or the foreign non-life insurer’s branch, unless otherwise provided by law.

Article 59. Limit of liability

1. The limit of liability is the amount of money that an insurer or a foreign non-life insurer’s branch is bound to pay to the insured under terms and conditions of the insurance contract.

2. Within their limit of liability, the insurer or foreign non-life insurer’s branch is bound to pay the insured amounts of money that the insured is obliged to pay as insurance indemnity or coverage to the third party under law.

3. In addition to paying the insurance claim as per clause 2 of this Article, the insurer or the foreign non-life insurer’s branch is bound to pay expenses related to the resolution of disputes over liability towards the third party, together with any interest payable to the third party that is charged on the insured’s late payment of the compensation claim according to the instructions of the insurer or the foreign non-life insurer’s branch.

4. Total amount of insurance claim paid by the insurer or the foreign non-life insurer’s branch as per clause 2 and 3 of this Article must fall within the limit of liability, unless otherwise agreed in the insurance contract.

5. Where the insured is required to provide a pledge or security deposit to ensure that the insured property is not forfeited; or taking legal action in court is not required, upon the request of the insured and under the insurance contract, the insurer or the foreign non-life insurer’s branch shall be obliged to provide a pledge or security deposit within the limit of liability that they insure against.

Article 60. Rights of representation for insured persons

Insurers and foreign non-life insurers’ branches shall have the right to act on behalf of the insured persons to negotiate with the third party about the amount of compensation for loss or damage, unless otherwise agreed upon in insurance contracts.

Article 61. Indemnification approaches

As requested by the insured, insurers or foreign non-life insurers' branches can directly pay insurance claims to the insured or pay compensation to the third parties suffering insured loss or damage.