Laws of Vietnam

CIRCULAR No. 137/1999/TT-BTC OF NOVEMBER 19, 1999 GUIDING THE INSURANCE OF CONSTRUCTION WORKS

I. GENERAL PROVISIONS

1. When carrying out the investment and construction, the investment projects that use the State budget’s capital, credit capital guaranteed by the State, the State’s investment and development credit capital and/or investment capital of the State enterprises, shall have to purchase insurance for construction works against damage caused by sudden and unexpected risks. Particularly for the people’s investment and construction projects, the State encourages the purchase of construction work insurance.

Construction work insurance for foreign direct investment projects shall comply with the provisions of the legislation on foreign investment in Vietnam.

2. Work insurance premium shall constitute part of a project’s investment capital and be incorporated in the total cost estimates (cost estimates) of such project.

The insurance premium determined according the Ministry of Finance’s current regulations shall be the maximum level for purchasing insurance for works at insurance companies lawfully operating in Vietnam.

3. Construction consultancy organizations and construction and installation contractors shall have to purchase the professional liability insurance for their consultations, supplies and equipment, workshops and plants in service of the construction process; the accident insurance for laborers and insurance of civil liability to the third party in the course of project execution. The insurance premium shall be accounted into the production costs.

II. SPECIFIC PROVISIONS

1. Compulsory insurance subjects

- Projects that use the State budget’s capital, credit capital guaranteed by the State, the State’s investment and development credit capital and/or investment capital of the State enterprises.

- Consultations, supplies and equipment, workshops and plants in service of the construction process and laborers of consultancy organizations and construction and installation contractors in the course of project execution.

2. Insurance types:

- Insurance of construction works in the course of investment execution. Work insurance premium shall be accounted into the work’s value in item of other expenses.

- Insurance of construction supplies and equipment in the course of transportation from the places of purchasing (receiving) them to the construction sites and warehousing time. The insurance premium shall be accounted into the value of such supplies and equipment.

- Insurance of supplies, equipment, workshops and plants in service of the project construction, which shall be managed by organizations involved in the investment project.

- Insurance of civil liability to the third party in the course of construction; accident insurance for laborers.

- Professional liability insurance for investment and construction consultations, which shall rest with consultancy organizations.

3. Insurance purchasing modes:

3.1. Insurance rules, clauses and premium bracket: shall comply with the Ministry of Finance’s current regulations.

3.2. Insurance purchasers:

- Construction work insurance: Investors or contractors authorized by investors to purchase insurance of construction works chosen by investors. In cases where the insurance premium has already been included in the bid-winning price, the contractor shall purchase the construction work insurance.

- For civil liability insurance, insurance of assets under the management of organizations involved in the investment projects: Such organizations shall purchase the insurance.

3.3. The insurance purchasing procedures:

- For construction work insurance: A dossier for insurance purchase shall comprise:

+ The work site plan

+ The summary of work structure and construction method(s)

+ The bid-winning price or approved cost estimates

+ The contract for purchase of supplies and equipment

+ Other necessary documents as required by the insurance rules.

- For insurance of assets and insurance of civil liability of organizations related to the investment projects: Such organizations shall purchase the insurance. A dossier for insurance purchase shall comprise:

+ The list of quantity and value of construction supplies, machinery and equipment at the construction site.

+ The list of laborers participating in the insurance purchase.

+ The list of assets surrounding the construction site that may be damaged in the course of construction.

+ Other necessary documents as required by the insurance rules.

- For professional liability insurance: A dossier for insurance purchase shall comprise:

+ The principal contents on the investment project.

+ Information on capability of the consultancy organization.

+ The consultancy organization’s work contents when the project is executed.

+ The technical parameters of the project (pedology, underground water level, foundation, structure, materials, construction method(s)...).

Basing themselves on the insurance premium estimates, the insurance premium bracket and the above-said dossiers, the insurance companies shall offer insurance premium rates and grant insurance policies when being chosen.

3.4. Payment of insurance premiums:

- For construction work insurance, the insurance premium shall be paid in lump-sum or in installments according to provisions in insurance policies and the approved annual capital plans.

- For insurance of supplies, equipment and other insurance types, the insurance premiums shall be paid according to provisions in insurance policies.

4. Indemnity:

- Upon occurrence of an incident within the insurance liability, the insurance purchaser shall have to promptly report it to the insurance company and within seven days send a written detailed report thereon to the latter.

- Upon receiving the insurance purchaser’s report, within three days, the insurance company shall have to send its officials or invite branch experts (if necessary) to the scene to evaluate the cause(s) and damage extent.

- The insurance company shall have to pay indemnity to the insurance purchaser strictly according to the conditions and terms of the insurance policy.

III. IMPLEMENTATION PROVISIONS

This Circular takes effect 15 days after its signing and replaces the Ministry of Finance’s Circular No.65-TC/DTPT of November 2, 1996.

Any problems arising in the course of implementation must be promptly reported to the Ministry of Finance for study and settlement.

For the Minister of Finance
Vice Minister
LE THI BANG TAM