Circular No. 65/TC-ĐTPT guiding construction project insurance

CIRCULAR

Guidelines for Construction Project Insurance

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- Pursuant to the State Budget Law promulgated on March 20, 1996;

- Pursuant to Decree No. 100/CP dated December 18, 1993 of the Government on insurance business and guiding circulars issued by the Ministry of Finance;

- Pursuant to Decree No. 42/CP dated July 16, 1996 of the Government on the issuance of the Regulation on Investment Management and Construction;

- Pursuant to Circular No. 04/TTLB dated September 10, 1996 of the Joint Ministries of Construction, Planning and Investment, and Finance guiding the implementation of the Regulation on Investment Management and Construction issued together with Decree No. 42/CP dated July 16, 1996 of the Government;

The Ministry of Finance hereby provides guidelines for implementing construction project insurance as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. When conducting investment and construction, the project investors must purchase construction project insurance from an insurance company permitted to operate in Vietnam. For private housing projects, the State encourages the purchase of construction project insurance.

Direct foreign investment projects shall be governed by the laws on foreign investment in Vietnam.

Projects using state capital will not be provided state budget funds or preferential state credit for losses within the scope required to purchase construction project insurance.

2. The construction project insurance premium is part of the project's investment capital, included in the approved total budget estimate (project estimate). In cases where the investor authorizes the contractor to purchase insurance, the insurance premium is included in the bid price.

The insurance premium is determined according to the current regulations of the Ministry of Finance and represents the highest rate at which the investor can purchase insurance.

Organizations and individuals undertaking construction, consulting, and supply of materials and equipment must purchase insurance for materials and equipment, factory buildings serving construction, work injury insurance, civil liability insurance for third parties, and insurance for survey and design products during the project implementation period. The insurance premium is included in production costs.

II. SPECIFIC PROVISIONS

1. Insurance Purchasers

1.1. Investors:

- Projects using state capital.

- Projects of Limited Liability Companies, Joint Stock Companies, and Cooperatives.

- Private investment projects.

1.2. Organizations and individuals related to investment projects:

- Construction consultants.

- Suppliers of materials and equipment.

- Contractors.

2. Types of Insurance:

2.1. Investors must purchase the following types of insurance:

- Construction project insurance during the implementation phase (including civil liability towards third parties caused by the construction project) to address unexpected and unforeseeable risks such as fire, earthquake, flood, etc. The insurance premium is included in the construction value and settled under other cost items.

- Insurance for materials and equipment under the management of the investor during transportation from the place of purchase (receiving goods) to the construction site and while being stored in warehouses. The insurance premium is included in the cost of materials and equipment.

2.2. Organizations and individuals related to investment projects must purchase the following types of insurance:

- Insurance for assets under their management, such as materials, equipment, and factory buildings serving construction.

- Liability insurance including: civil liability insurance towards third parties during construction; work injury insurance for employees of the aforementioned organizations during the insured period; professional liability insurance for investment and construction consulting organizations.

The insurance premium is included in the production and business costs of the aforementioned organizations and individuals.

3. Methods of Purchasing Insurance and Paying Premiums:

3.1. Rules, terms, and premiums: Implemented according to the current regulations of the Ministry of Finance.

3.2. Procedures for purchasing insurance: In the absence of any agreement between the insured party and the insurance company, the insurance procedures shall be applied as follows:

a) For investors: The investor directly purchases or authorizes the contractor to purchase construction project insurance from an insurance company chosen by the investor. The person purchasing insurance submits the following documents to the insurance company:

- Site plan of the construction project.

- Summary document on the structure and construction methods of the project.

- Approved total project budget estimate or winning bid price.

- Contract for purchasing materials and equipment.

- Extract of the insurance clause from the construction contract.

- Other necessary documents as required by the insurance rules. Based on the estimated insurance premium, the insurance tariff, and the above documents, the insurance company calculates the insurance premium and issues an insurance policy to the person purchasing insurance.

b) For organizations and individuals related to investment projects: The person purchasing insurance submits the following documents to the insurance company:

- List of quantities and values of materials, machinery, and equipment on the construction site.

- List of workers participating in the insurance.

- Estimated value of surrounding assets that may be damaged during construction.

- List of projects completed in the last five years.

- Other necessary documents as required by the insurance rules. The insurance company reviews, evaluates, and determines the insurance premium, issuing an insurance policy to the person purchasing insurance.

3.3. Payment of Insurance Premiums:

- For material and equipment insurance premiums, payment is made fully and on time as stipulated in the insurance policy.

- For construction project insurance, the premium is paid once or in installments as stipulated in the insurance policy and the approved annual plan.

- For other types of insurance, the premium is paid as stipulated in the insurance policy.

4. Compensation:

- Upon occurrence of an incident within the scope of insurance responsibility, the insured must immediately notify the insurance company and provide detailed written notification within seven days.

- After receiving the notification from the insured, the insurance company must send staff or invite specialized experts (if necessary) to the scene within three days to assess the cause and extent of the loss.

- The insurance company must compensate the insured according to the conditions and terms of the insurance policy.

III. IMPLEMENTATION PROVISIONS

This circular takes effect from the date of signature and replaces Circular No. 105 TC/ĐT dated December 8, 1994 of the Ministry of Finance.

During implementation, if any difficulties arise, please promptly reflect them to the Ministry of Finance for study and resolution.