What is the object of a property insurance contract and damage insurance contract? What are the insurable benefits of the above two types of contracts? This article shares in detail the legal regulations surrounding property insurance contracts and damage insurance contracts according to current law. 

CSPL:   Articles 43, 44, 45, 47, 48, 49 Insurance Business Law 2022

              Article 105 of the Civil Code 2015

1. The insured object of a property insurance contract and damage insurance contract

– The insured object of a property insurance contract is property according to the provisions of the Civil Code. Comparing with Article 105 of the 2015 Civil Code, Assets are determined to include:

+ Assets are objects, money, valuable papers and property rights.

+ Assets include real estate and movable property. Real estate and movable property can be existing assets and assets formed in the future.

– The insured object of a damage insurance contract is any economic benefit or obligation to perform a contract or legal obligation that the insured person must bear when a loss occurs.

2. Insurable interests of property insurance contracts and damage insurance contracts

– For property insurance contracts, the insurance buyer has insurable interests when it has ownership rights; other rights to property; the right to possess and use of a person other than the owner.

– For damage insurance contracts, the policyholder has insurable interests when they have financial interests; financial obligations and responsibilities; economic loss to the subject of insurance.

– At the time of loss, the insurance buyer or insured must have insurable interests.

3. Insurance amount

– Insurance amount is the amount that the insurance buyer and the insurance enterprise or branch of a foreign non-life insurance enterprise agree in the insurance contract to insure property and damage based on the insurance buyer’s request according to the provisions of this Law.

4. Notification when an insurance event occurs

– The insurance buyer must notify the insurance enterprise or branch of a foreign non-life insurance enterprise when it learns that the insurance event occurs within the time limit agreed in the insurance contract. In case the insurance buyer fails to perform or is late in performing this obligation, the insurance enterprise or branch of a foreign non-life insurance enterprise has the right to reduce the amount of insurance compensation corresponding to the damage suffered by the insurance enterprise or branch of a foreign non-life insurance enterprise, unless there is a force majeure event or objective obstacle.

– Insurance enterprises and branches of foreign non-life insurance enterprises are not applicable. The above provisions if the insurance contract does not have an agreement on the insurance buyer’s responsibilities and sanctions for failure to perform or delay in performing the obligation to notify an insured event.

5. Value-based property insurance contract

– Above-value property insurance contract is a contract in which the insured amount is higher than the market price of the insured property at the time of entering into the contract. Insurance enterprises, branches of foreign non-life insurance enterprises and insurance buyers are not allowed to intentionally enter into over-value property insurance contracts.

– In cases where above-value property insurance contracts are concluded due to the unintentional fault of the insurance purchaser, proceed as follows:

+ If an insurance event has not yet occurred, the insurance enterprise or branch of a foreign non-life insurance enterprise shall must refund to the insurance buyer the amount of premium paid corresponding to the insurance amount exceeding the market price of the insured property at the time of entering into the contract after deducting reasonable expenses (if any) as agreed in the insurance contract;

+ If an insurance event occurs, the insurance enterprise or branch of a foreign non-life insurance enterprise is only responsible for compensating for damage corresponding to the market price of the insured property at the time of the damage and must refund to the insurance buyer the amount of premium paid corresponding to the insurance amount exceeding the market price of the insured property at the time of entering into the contract after deducting reasonable expenses (if any) according to agreement in the insurance contract.

6. Undervalued property insurance contract

– An undervalued property insurance contract is a contract in which the insured amount is lower than the market price of the insured property at the time of entering into the contract.

– In case an undervalued property insurance contract is concluded, the insurance enterprise or branch of a foreign non-life insurance enterprise is only responsible for compensating for damages in proportion to the insurance amount and market price of the insured property at the time of conclusion or agreement in the insurance contract.

7. Duplicate insurance contract

– A duplicate insurance contract is a case where there are two or more insurance contracts to cover the same scope, object, term and insurance event where the total insurance amount exceeds the market price of the insured property at the time of entering into the insurance contract.

– In case the parties enter into a duplicate insurance contract, when the insurance event occurs, the compensation amount of each insurance contract is calculated according to the ratio between the agreed insurance amount and the total insurance amount of all contracts that the insurance buyer has entered into. The total compensation amount of insurance contracts does not exceed the actual value of damage to the property.