New limits on compensation for fire, explosion insurance

Decree No.23/2018/ND-CP (“Decree 23”) regulating the regime on compulsory fire and explosion insurance was promulgated by the Government on 23 February 2018, replacing Decree No.130/2006/ND-CP.

Accordingly, the Decree 23 allows the insurance purchaser and the insurance enterprise to agree on the insurance contrac to expand the insurance conditions, the increased insurance premiums and the corresponding premiums, in addition to compliance with the insurance conditions, premium rates and minimum insurance sum as prescribed in this Decree.

In addition, according to the principle of insurance compensation newly added in Decree 23, the insurance enterprise will consider and settle insurance claims as follows:

a. The insured amount for the damaged property must not exceed the insured sum for the property, minus the insurance deductible as prescribed;

b. Deduction of maximum 10% of the indemnity insurance in cases where the facilities are in danger of fire and explosion due to failing to full and timely implementation of the recommendations in the minutes of inspection of fire prevention and fighting safety made by the fire prevention and fighting police agency resulting in an increase in damages upon occurrence of fire and explosion

c. The insurance enterprise does not have the responsibility to make insurance compensation for arising amounts or additional amounts due to insurance fraud.

Decree 23 will take effect on 15 April 2018.