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THE POLICY WORDINGS AND TARIFFS OF COMPULSORY FIRE AND
EXPLOSION INSURANCE
(Issued in conjunction with Decision No. 156/QĐ/PJICO/TSKT/2011 dated March 1st
2011 by PJICO General Director)
CHAPTER 1: GENERAL RULES
Article 1: Scope of application
1. Insurance companies, agencies, organizations and individuals that are possessing
fire and explosion endangered facilities specified in Annex 1 of Decree No. 35/2003/ND-
CP dated April 4, 2003 of the Government providing in detail implementation of some
articles of the Law on Fire Prevention and Fire (hereinafter called Decree No.
35/2003/ND-CP) shall be responsible for the implementation of insurance fire and
explosion in accordance with these Wordings.
2. Compulsory fire and explosion insurance regime prescribed in this regulation
covers insurance property for risks of fire and explosion of:
a) Houses, fixtures and attached equipments;
b) Equipment machines;
c) Types of goods, and other assets.
Those assets may only be insured if their value could be measured in pecuniary
term and recorded in the Insurance Contract.
Article 2. Definitions
These Wordings, the following terms are defined as follow:
1. Insurance companies mean enterprises licensed by the Ministry of Finance to
conduct non-life insurance business.
2. Insurance buyers mean agencies, organizations and individuals who own or
manage or use fire and explosion endangered facilities and registered in Insurance
Certificate.
3. Fire means a chemical reaction that produces heat and light as a result of the
explosions or any other cause.
4. Explosion means a chemical reaction causing the release of air and energy
suddenly with large quantities and generating the sound and physical effects to
surroundings but excluding:
a) The insured property are destroyed or damaged by the boiler, water heater by
propane tanks, containers, machinery or equipment that created inner pressure the steam
is entirely by the explosive water heat (and not explosion caused by ignition sources) if
the boiler and that machinery are owned or controlled by the insurance buyers.

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b) Storage Tanks, machinery or equipments or substances that are contained in
these objects are damaged or destroyed by the explosion of those materials (this exclusion
does not apply in case of petroleum fire and explosion insurance) .
5. Fire and explosion endangered facilities mean establishments that are specified
in Annex 1 of Decree No. 35/2003/ND-CP.
6. Deductibes mean the amount that the insurance buyer must bear in each
insurance event. Deductibes rate is specified in Appendix 1 attached to these Rules.
CHAPTER II: SPECIFIC PROVISIONS
Article 3. Insurance Contract
The content of the compulsory fire and explosion insurance contract is stipulated in
Paragraph 2, Article 9 of Decree No. 130/2006/ND-CP November 8, 2006 of the
Government insurance fire and explosion (hereinafter referred to as Decree No.
130/2006/ND-CP). On the basis of the insurance contract signed, the insurer may issue a
certificate of insurance for insurance buyers
Article 4. Sum insured
1. Sum insured shall be monetary value as measured by the market price at the
time of insurance participation.
2. In case where the market cost of the assets is undefinite, the sum insured
can be defined according to those basis:
2.1. In case where the property insured, sum insured is calculated in monetary
value in accordance with the residual value or new replacement value of assets at the time
insured by the agreement of the insurer and the insurance purchaser
2.2. In case where the subjects covered are goods (raw materials, semi finished
and finished products), sum insured can be determined by the average value or the
maximum value.
a) Average value represents the amount that the insurance buyers estimate and
inform the insurer about the value of the average number of goods in store during the term
of insurance. Average value is considered the sum insured. When losses occur under the
insurance liability, PJICO will pay actual damages but not exceed the declared average
value. If found that the sum insured is less than the actual value, the PJICO will
compensate according to the rate.
b) Maximum value (also known as value adjustments)
 The insurance buyers estimate and inform the insurer about the maximum value of the
goods which can reach a maximum at a certain time of insurance term. Insurance
premiums are calculated on the basis of maximum value, but only 75% collected first.
When losses occur under the insurance liability, PJICO will pay the actual damages

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but not exceeding the declared maximum value.
 Depending on mutual the agreement, at the beginning of each month or quarter, the
insured notify PJICO maximum real value of the insured property in the previous
month or quarter
 At the end of insurance term, on the basis of the values to be informed, NBH calculate
the average maximum value of the whole insurance duration and re-calculate
insurance premiums on the basis of the average maximum value to conduct the
contract account. However, the official premiums to be paid are not less than two
thirds of premiums paid at the beginning of the year
 If PJICO has been paid damages in the period of insurance, and the amount of
compensation exceeds the calculated average maximum value, the premium is
calculated on the basis of the amount of claim paid (in this case, the amount of
compensation as the amount insured).
 PJICO may request the insured person to submit books and account to check the
reported figures.
Article 5. Effect of insurance
Effect of insurance shall commence and terminate under the provisions of the
insurance contract, except to terminate the insurance contract as prescribed by law.
Article 6. Cancellation of insurance
1. An insurance contract will be terminated in part for one or several categories of
asset:
a) Scrapped or moved out of the area or location specified in the insurance
Contract.
b) No longer owned or managed or legally used by the insurance buyers
2. Insurance contract may be canceled entirely in the following events:
a) The insurance buyers require to cancel the contract if during the term of
insurance contract there is not any insurance events occurred. Insurance buyers must
notify in writing to the insurer before fifteen (15) days. Within fifteen (15) days after
receiving the cancellation notice, if the insurance company fails to respond to such a
request, the insurance contract shall deem to be automatically cancelled, the insurer shall
refund the insurance buyer 80% of the paid premium corresponding to the time of
cancellation.
b) Insurance enterprises may also unilaterally suspend the performance of an
insurance contract subject to applicable laws and regulations.

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Article 7. Rights of the insurance buyer
1. Select an insurer licensed fire and explosion insurance business to purchase fire
and explosion insurance.
2. Require the insurers to explain and provide information relevant to the
conclusion, implementation and termination of fire and explosion insurance contract.
3. Require the insurer to compensate quickly, fully and accurately in accordance
with the regulations in the insurance contract.
4. Agreements with insurance companies about the content of insurance contracts
but not contrary to the provisions of law.
5. Accounting cost of buying compulsory fire and explosion insurance to price of
products and services for production and business units, or be included in the funding
granted by the state budget for administrative and professional units.
6. Civil proceedings against the insurer if the insurer does not perform according to
the provisions of insurance Contract and relevant legislations.
Article 8. Obligations of the insurance buyer
1. Perform compulsory fire and explosion insurance as prescribed by law
2. Comply with the regulations on fire prevention and fire fighting noted in Clause
2 of Article 13 of Decree No. 130/2006/ND-CP.
3. When requiring insurance claims, insurance buyers are obliged to declare fully
and truthfully all information related to insurance Contract as required by the insurer.
4. Pay premium fully, exactly to the deadline and method as agreed in the
insurance Contract and fulfill other obligations stipulated in the compulsory fire and
explosion insurance Contract.
5. Promptly notify the insurer about the factors that change level of risks to adjust
the conditions and premium rates
6. Cooperate with the insurers during the implementation of compulsory fire and
explosion insurance Contract.
7. When the insurance event occurs, the insurance buyer is obliged to:
a) To comply with fire regulations, fire fighting and join the provisions of Article
23 of Decree No. 35/2003/ND-CP.
b) Immediately notify the insurer to coordinate for settlement and notified the
insurer in writing not later than three (03) working days from the date of occurrence of
insurance event.
c) In case of damages under the insurance liability caused by a third party, the
insurance buyer is responsible to immediately notify the insurer and conduct the

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necessary legal procedures to reserve the right of claim of the insurance business, support
business to claim the third party. In case of the damage caused by the intentional act, the
insurance buyer must immediately notify the police agency.
d) Give the insurer the necessary information, send the insurer bills and vouchers
to prove damages with damage declaration within the shortest time. Insurance companies
may request the insurance buyer produce books and accounting documents for inspection.
8. Apply measures of precaution to limit losses in accordance with the law.
In cases where the insurance buyer violates the obligations stipulated in this
Article, the insurer may refuse to compensate a part or full amount of compensation
money depending on the degree of fault of insurance buyers.
Article 9. Rights of the insurance company
1. Collect insurance premiums under the provisions of the insurance Contract and
not less than the list of premiums of compulsory fire and explosion insurance in Appendix
3 issued under this rule.
2. Refuse to sell compulsory fire and explosion insurance when the insurance
buyer does not fulfill the conditions on fire prevention and fire fighting provided in
Clause 2, Article 13 of Decree No. 130/2006/ND-CP.
3. Require the insurance buyer to produce accounting books, accounting
documents to verify the reported data.
4. Refuse to pay compensation for those cases excluded insurance liability as
prescribed in Article 10 of Decree No. 130/2006/ND-CP and Article 14 of the Rules.
Article 10. Obligations of insurance company
1. Perform the fire and explosion insurance as prescribed by law.
2. Propaganda organization of compulsory fire and explosion insurance regime ;
provide guidance and create favorable conditions for the insurance buyer to participate
insurance.
3. Sell compulsory fire and explosion insurance when the buyer has made the
conditions on fire prevention and fire fighting noted in Clause 2, Article 8 of the Rules.
4. Fully explain to the insurance buyer information related to rights and obligations
of the insured and the insurer, provide insurance buyers premium content, compulsory fire
and explosion insurance rules issued by PJICO.
5. When the insurance event occurs, insurance companies must work closely with
insurance buyers and agencies in handling the case, collect the necessary relevant
information to determine the cause and severity of losses caused by insured event.
6. When the claim dossier is full under the provisions of Article 15 of this rule, an
insurer must settle compensation within the time fixed in Article 16 of the Rules

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7. Coordinate with police agencies in fire prevention, fire fighting and rescue,
salvage and insurance buyers to make compulsory fire and explosion insurance regime
and prevent as well as limit damages to the insured unit.
8. Contribute funds to spend on the activities of fire prevention and fighting as
prescribed by law. Level of annual contributions is equal to 5% of the total premium of
fire and explosion insurance corresponding to the level of real responsibility kept by the
insurer.
9. Periodic reports to the Ministry of Finance on the results of compulsory fire and
explosion insurance business in line with the form prescribed by the Ministry of Finance.
10. Perform other obligations as may be provided by the laws.
Article 11. Insurance Liability
Responsibilities of the insurer in any case shall not exceed:
1. The sum insured corresponding to each category of assets and the total shall not
exceed the total sum insured stipulated in the Certificate of insurance at the time of the
insured events,
2. The sum insured remained after compensation of any property lost, destroyed or
damaged occurring within the term of insurance except where the insurer has agreed to
reinstate the sum insured after its settlement of each claim.
Article 12. Loss survey
1. When the insurance event comes, insurance company or its authorised entity
shall conduct damage assessment to determine the cause and the extent of the loss. Cost
for damage assessment shall be paid by the insurance company.
2. In case where the insurance buyer and the insurance company disagree on the
causes and severity of loss, an independent loss surveyor may be called upon. In case
where the relating parties fail to reach an agreement on the appointment of an independent
loss surveyor, one of the parties may request a competent court at the locality where the
loss occurred or where the insurance buyer residents to appoint such an independent loss
surveyor. Conclusion of independent loss surveyor shall be final and binding to all
parties.
Article 13. Plan of compensation in proportion
1. If at the time of loss the sum insured is greater than or equal to the actual value
of the property insured, PJICO shall pay the actual damages.
2. If at the time of loss, the sum insured is less than the actual value of the insured
property, PJICO will pay at the rate: The amount of compensation = loss value multiply
by the ratio between the insurance amount and value of insured asset at the time of loss.

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3. If at the time that the insured property was destroyed or damaged, such property
was insured by an other insurance contract, the responsibility of PJICO in any case is
limited to the loss distribution in proportion.
Article 14. Mode of claim payments
1. The insurance buyer and an insurer may agree to the compensation in the forms
below:
a) Repair of the damaged property;
b) Replace the damaged property with other assets;
c) Pay the claim.
2. In case that insurance companies and insurance buyers do not agree on the form
of compensation, the compensation will be made in cash.
3. In case of compensation in accordance with Point b and c, Clause 1 of this
Article, the insurer may recover the damaged property after the replacement or entire
compensation payment as the market value of assets.
Article 15. Exclusions
1. Insurance enterprise has no obligation to pay compensation if the damage is
caused by one of the following causes:
a) Earthquakes, volcanic eruptions or other movements of the nature.
b) The assets self-heated or self-fermented
c) Assets affected by a process of heat-used treatment.
d) Lightning affects directly to the insured property but causing no fire or
explosion.
đ) Nuclear weapon materials causing fire and explosion.
e) Damage caused to machinery, electrical equipments or parts of electrical
equipments due to overload running, short circuit, self-heating, electric arc or electric
leakage by any cause including by lightning.
g) The damages caused by intentional action causing fire and explosion of the
insurance buyers with the aim to claim damages under the insurance Contract.
h) The damages caused by the insurance buyer intentionally violate the regulations
on fire prevention and fighting causing the occurrence of fire or explosion.
i) Commission or consignment goods except that goods is confirmed in the
certificate of insurance as the insured and the insurance buyer to pay extra premiums as
prescribed.
k) Cash and precious metals, precious stones, securities, letters of guarantee,
documents, manuscripts, business books, documents stored in electronic computer,

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templates, titles, models, drawings, design documents, unless these items are certified in
the certificate of insurance.
l) Explosives, unless confirmed as insured in the certificate of insurance.
m) Properties that at the time of loss, are covered by marine insurance policy or the
insurance liability under the maritime insurance policy, unless the damage exceeding the
liability for compensation according to the maritime insurance policy.
n) The damages caused by fire or explosion to a third party.
o) The damages to data, software and computer programs.
p) The damages caused by the events in politics, security and social order and
safety.
q) Other exclusions of insurance liability as prescribed by law or agreed by the
parties.
2. For those cases excluding above insurance liability (excluding cases specified in
Points g and h, Clause 1 of this Article), if the insurance buyer needs insurance and
insurance companies accept insurance, the parties can still sign additional insurance
contract for that event.
Article 16. Claim documents
1. Insurance buyer’s claim.
2. Insurance certificate.
3. Certificate of eligibility for fire prevention and fire fighting or written
certification of eligibility for fire prevention and fighting.
4. Survey report prepared by the insurance company or its authorised persons.
5. Minutes of the assessment of loss cause by fire brigades, or other competent
authorities or other evidence of loss.
6. The declaration of loss and damage proofs.
Article 17. Time limit for claim filing and claim settlement
1. The duration of the claim of the insurance buyer is one (01) year from the date
of occurrence of insurance, unless delayed due to objective reasons or irresistible events
as stipulated by law.
2. Time for compensation payment of insurer is fifteen (15) days after receiving
complete dossiers as prescribed.
In case of refusal of compensation, the insurer shall notify in writing the insurance
buyer of the reason within fifteen (15) days after receiving complete claim documents.

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Article 18. Dispute settlement
All disputes arising from insurance Contract, if not resolved through negotiations
between the parties shall be submitted to court at locality where the defendant resides for
settlement.. The limitation period of disputes relating to this insurance contract shall be
three (03) years from the time the dispute arises. Beyond the above date, all claims shall
not be invalid.
Note: English version is only for reference. If there are any dispute regarding this policy,
Vietnamese version will be applied.