In an insurance relationship, the insurance contract is one of the most important documents, stipulating the agreement between the parties such as insurance premium, amount of compensation, dispute settlement… The more detailed the contract is, the more transparent and tighter the insurance relationship will be, thus helps protecting the interests of the parties and minimizing potential disputes.
In order to ensure consistency and synchronization with the relevant legal system, especially the Civil Code, Law on Insurance Business No. 08/2022/QH15 passed by the National Assembly on 16 June 2022 (“Law on Insurance Business 2022”) has brought about a series of changes related to insurance contracts. Some notable points in the Law on Insurance Business can be mentioned as follows:
Types of insurance contracts under the new law
The current Law on Insurance Business stipulates three types of contracts, including: (i) personal insurance, (ii) property insurance and (iii) civil liability insurance. The Law on Insurance Business 2022 stipulates five types of insurance contracts, which apply from 01 January 2023, including: (i) life insurance, (ii) health insurance, (iii) property insurance; (iv) property damage liability insurance and (v) liability insurance.
Additionally, the parties can also agree to sign a combination contract from many of the above-mentioned types of contracts. It should be noted that this combination must also ensure compliance with regulations on insurance business sectors restrictions of foreign insurance enterprises and branches of non-life insurance enterprises.
Time to consider participating in insurance
The Law on Insurance Business 2022 has released a new “fresh from the oven” regulation on the time to consider participating in insurance. From 01 January 2023, for insurance contracts having a period of more than one year, the policyholder will have up to 21 days to consider after receiving the insurance contract. During this period, if the policyholder refuses to continue participating, the contract will be cancelled, and the premium will be refunded.
Policyholders shall acknowledge this regulation so as not to miss their legitimate rights and interests. However, it should be noted that when the insurance premium is refunded, it will also be deducted from the reasonable costs to return it to the insurance company, and if damages unfortunately occur, it will certainly not be covered.
Additional provisions to unify the Law on Insurance Business and the current Civil Code
The new law adds provisions on cancellation of insurance contracts, the purpose of contract performance, conditions for the contract to take effect, unilateral termination of the contracts… to ensure consistency with the Civil Code 2015, and at the same time for ease of application in practice.
According to current regulations, the time limit for initiating a lawsuit on an insurance contract is set to be 03 years from the time since the dispute has arisen. However, this provision sometimes faces many obstacles in practice, when the parties have difficulty in determining the exact time the disputes arose during the performance of insurance contracts. The Law on Insurance Business 2022 has abolished the time limit for lawsuits in insurance contracts, so the application of the time limit for lawsuits will be unified in accordance with the rules of civil law. Specifically, the time limit for initiating a lawsuit shall be 03 years from the date the requester knows (or should have known) about the violating of his/her rights and interests. Thus, the unification of the Law on Insurance Business 2022 with the civil law will help the parties to determine the time limit for lawsuits more easily in practice.