Overview of Marine Cargo Insurance

- Any person on board who is killed, injured or otherwise harmed in any way, or suffers any loss or damage to property on board.

- Any person outside the ship who is killed, injured or otherwise harmed in terms of human health, any property or other rights outside the ship are lost, damaged or violated by the act, negligence or mistake of anyone on board or outside the ship for whom the shipowner is responsible for their negligence or mistake. In case of loss caused by persons outside the ship, the shipowner is only limited to compensation liability for losses arising in the control and management of the ship, loading, transporting and unloading of goods, receiving and returning passengers.

- All obligations and responsibilities as prescribed by law regarding the clearance of shipwrecks and objects related to ships when salvaging, moving, destroying sunken, stranded, or abandoned ships, obligations or responsibilities to compensate for damage to port equipment, wharves, channels, berthing areas, docks, obligations or responsibilities to compensate for pollution losses.

environmental pollution caused by ships other than environmental pollution damage due to atomic radiation.

The shipowner shall not be limited in liability for damages in respect of:

- Salvage or expenses to contribute to general average;

- Environmental pollution caused by atomic radiation;

- Claims of the master, other crew members, employees of the shipowner or other employees outside the ship who have duties related to the ship, including claims of heirs, representatives and persons for whom they are responsible for maintenance, if the provisions of the law on the employment contract between the shipowner and these persons do not allow the shipowner to limit liability for their claims or only allow the shipowner to limit liability to a higher level than the prescribed limit;

The limited and unlimited damages of the shipowner's civil liability as prescribed in the Vietnam Maritime Code are completely consistent with the International Convention on the Limitation of Civil Liability of Shipowners in 1957. The damages not subject to limitation of liability as compared with the Convention on the Limitation of Liability for Maritime Claims in 1976 are not really complete.

2) Decision 254/TCQD-BH dated May 25, 1990 issued by the Ministry of Finance on shipowner civil liability insurance

This decision applies to vessels including self-propelled or non-self-propelled vehicles used to transport goods, passengers, raw materials or specialized for towing activities on rivers, lakes, inland waters and territorial waters of Vietnam. The rules issued with this decision detail the following issues: Scope of civil liability insurance for ship owners, signing of insurance contracts, insurance terms, insurance value, obligations and rights of the insured, assessment and compensation for losses, etc.

3) Decision of the Minister of Finance No. 179-TC/QD/BH dated July 8, 1986 on allowing Insurance Companies to conduct insurance on a voluntary basis

This Decision is issued together with the Rules for physical insurance and civil liability for fishing vessels. Fishing vessels mentioned in this Rule include types of vessels for exploitation, research, processing, transporting aquatic products and vessels serving in the fishing industry such as for refueling, food and provisions.

b. Scope of shipowner civil liability insurance

The scope of shipowners' civil liability insurance in Vietnam is clearly regulated by the Rules issued together with Decision 254/TCQD-BH dated May 25, 1990 of the Ministry of Finance. According to these Rules, the losses to be compensated include:

- Actual costs arising from accidents of insured vessels for which the vessel owner must bear civil liability according to the law as well as according to court decisions include:

+ Costs of cleaning up oil pollution, fines from local authorities and claims for consequences caused by oil pollution;

+ Costs of lighting, marking, destroying, salvaging, and moving the wreck of an insured ship or boat that has sunk as required by local authorities;

+ Necessary and reasonable costs in preventing and limiting losses, and providing rescue assistance;

+ Costs related to litigation, disputes and complaints regarding civil liability.

- Expenses for which the ship owner is legally liable to compensate for the life, health, injury or material loss of sailors and crew members on the insured vessel;

- The liability that the ship owner must bear due to the insured ship causing:

+ Damage to wharves, dams, culverts, rafts, bottom braces, onshore or underwater structures, fixed or mobile;

+ Injury or damage to life or property of a third party (not a crew member on the insured vessel);

+ Loss or damage to goods and property transported on insured vessels (excluding damage or loss due to theft or natural shortage).

- Collision liability: includes costs arising from collision accidents between the insured vessel and another vessel, for which the shipowner is legally responsible to compensate others for:

+ Damage to other ships or property on other ships;

+ Delay in using other ships or assets on other ships;

+ General average, salvage or contractual salvage of another vessel or property on another vessel;

+ Salvage, move or destroy other wrecks;

+ Crew members on that ship were killed or injured;

+ Clean up the pollution that ship caused.

According to the Hull Insurance Rules, shipowners' civil liability for vessels operating on rivers, lakes, inland waters and territorial waters of Vietnam issued together with Decision 254/TCQD-BH dated May 25, 1990 of the Ministry of Finance, the insurance exclusions for shipowners' civil liability insurance are exactly the same as the insurance exclusions in ship hull insurance.

c. Signing insurance contract

When participating in insurance, the insured must send the insurer the insurance request form 05 days before the date the ship owner wants the insurance contract to take effect. For ships participating in insurance for the first time, the following documents must be attached to the insurance request:

- Certificate of nationality;

- Certificate of seaworthiness and ship classification certificate of the registry;

- Minutes of ship inspection upon delivery or receipt of ship or minutes of partial inspection of the register;

- Report on the loss of the vessel occurring before the insurance claim and the old insurance policy (if any).

The insurance contract is considered to be concluded when the insurer issues the insurance certificate. If after the signing of the insurance contract there is a change in the vessel, it must be

notify the insurer immediately. If the insurer considers that the change increases the insurer's risk and liability, the insurer may charge an additional premium. If the insured fails to declare the changes to the vessel in full, the insurer will not be liable for any loss resulting from such errors or changes.

d. Other regulations in P and I insurance in Vietnam.

The rules issued together with Decision 254/TCQD-BH dated May 25, 1990 of the Ministry of Finance on shipowners' civil liability insurance have mentioned in relatively detail the issues related to this insurance business, aiming to set standards for insurers and insureds to follow in the process of insuring a certain object (ship). However, these regulations only apply to ships operating in Vietnam's territorial waters and inland waters... According to this Rule, other regulations in P and I insurance are similar to those in ship hull insurance, including the following main contents:

- Insurance exclusions;

- Insurance term;

- Insurance value and liability limits;

- Obligations and rights of the insured;

- Loss assessment and compensation;

- Compensation and transfer of compensation rights to third parties;

- Time limit for complaints and dispute settlement.

e. P and I insurance incident resolution and compensation in Vietnam.

1) Troubleshooting

After receiving information about the loss from the ship owner and checking a number of factors such as checking whether the ship owner has insurance for that risk, insurance period, payment of insurance premium, etc., the insurer will proceed with the following steps:

- Conduct loss assessment: If the loss occurs domestically, the insurer shall send an assessor to determine the cause and extent of the loss. If the loss occurs abroad, the insurance association shall be notified to arrange for timely assessment.

- Troubleshooting:

+ Coordinate with the ship owner to request the captain to carry out the following tasks: Establish initial legal documents related to the incident such as maritime protests, captain's incident reports, full detailed copies of deck and engine logs, etc.

+ Regularly monitor the incident situation, as well as the opinions of relevant parties. Collect evidence and documents related to the incident to prove that the ship has applied appropriate measures for the journey and handled the incident;

+ The insured must send the insurer the above documents and legal evidence;

+ The insurer collects legal documents related to the technical condition of the ship such as certificates and technical inspection reports of the registry.

2) Settlement of loss compensation

When considering compensation, the insurer shall only base its settlement on the shipowner's liability arising from the shipowner's fault.

Liability is a statutory or contractual liability between the shipowner and a third party.

Depending on the type of loss, the basis for determining the ship owner's responsibility is different:

- Loss to goods: The basis for determining responsibility is based on written documents such as transportation contracts, reports, maritime protests, original bills of lading, damage assessment records, delivery records made and signed between the ship and relevant agencies (port, importer), cargo loading diagram, related documents as evidence that the ship has been diligent, and appeal documents of the ship against third party liability related to the loss;

- Oil pollution damage: Minutes of assessment determining the cause and extent of damage due to pollution consequences, decisions of competent authorities (port and local authorities) on fines for pollution and requests for effective handling measures, incident reports of the captain, chief engineer, relevant documents and certificates;

- Losses due to collisions with wharves, floating structures, floating objects, etc.: To determine the ship's liability, the insurer shall rely on maritime protest documents, captain's reports, incident assessment records, copies of the engine deck log, protests from the party with losses to the ship, documents from competent authorities regulating the liability of the ship or the laws of the country where the ship caused the incident, regulations on the liability of relevant sectors for the ship's operations;

- Risk of moving the wreck: Evidence proving the shipowner's abandonment of the ship (salvage costs exceed the value of the salvaged ship, shipowner's declaration of abandonment), decision to move the wreck by competent authorities, reports of the captain and chief engineer;

- For injuries, illnesses…: Maritime protest or captain's report, examination and inspection report of port authorities, labor safety agency where the accident occurred, crew hiring contract.

3) Determine the insurer's responsibility

Due to the weak financial capacity of Vietnamese insurance companies, ships insured in foreign currencies (running overseas routes) are all reinsured by P and I insurance associations abroad, especially in the UK, with a deductible greater than the deductible stated in the insurance policy. Therefore, whenever a claim is received with a claim amount higher than the deductible in reinsurance, the claim will be filed at the association.

After receiving the claim file, the insurer will proceed to dispute and negotiate with the claimant to reduce or release the liability. For losses occurring abroad that the foreign P and I insurance association directly resolves with the claimant, the insurance company will coordinate with the ship owner to have a valid opinion on accepting, rejecting or reducing the liability of the ship owner. The ship owner must provide relevant evidence to help the association dispute with the claimant.

Determination of insurance liability is based on the following documents:

- Domestic ship insurance rules issued by the Ministry of Finance (for domestic ships, insurance in Vietnamese currency);

- Rules of foreign insurance associations applicable to foreign-going ships insured in foreign currency;

- Additional amendments to insurance conditions;

- Shipowner's civil liability insurance contract signed between the insurer and the shipowner;

- The insurance policy issued for the ship, defining the insurance period, applicable exclusion conditions (if any), insurance conditions and insurance rules;

- Vietnam Maritime Code.

3.4.1. Insurance claim procedures and issuance of insurance certificates

Due to the actual conditions of Vietnamese ship owners being small and scattered. On the other hand, the majority of ship owners have very limited knowledge of P&I insurance. Therefore, they do not directly participate as members of P&I insurance associations but all purchase P&I insurance from insurance companies, then companies such as Bao Viet, Bao Minh represent all ship owners in Vietnam to participate as members of the association for sponsorship and compensation, mutual support for ship owners in the West of England.

Due to the above practical conditions, P&I insurance in Vietnam has similarities and differences in insurance procedures compared to hull insurance: Basically, it is the same as hull insurance, in that before purchasing insurance, the ship owner must sign a contract in principle with the insurance company, then when wanting to purchase insurance for each specific ship, the ship owner must also complete similar forms such as submitting an insurance request, registration papers, certificates, etc.

3.4.2. Conditions, duration and validity of P&I insurance

According to the conditions of WOE insurance, there are the following groups of conditions: Class I (P&I risks); Class II (freight, penalties, defense); Class III (officer and crew strikes); Class IV (port worker strikes). Currently, Vietnamese ship owners often buy P&I insurance according to group I.

Regarding the insurance period: The time frame is calculated from 12:00 on February 20 to 12:00 on February 20 of the following year (GMT). If insurance is purchased during the year, it will only be calculated until 12:00 on February 20 of the following year.

If, after the notice of termination of the insurance contract has been issued, the association and the member agree on new conditions before 12 noon on 20 February, the notice of termination of insurance will be revoked and the vessel will continue to be insured for the new financial year under the new terms. Unless approved by the association or the contract is terminated by law, the member may not withdraw the insurance contract at any time.

3.4.3. Changes in insurance conditions and scope of travel

Unless otherwise notified, the insurance conditions for the following fiscal year shall remain the same as the current fiscal year. However, the insurance conditions may be amended at any time and shall take effect at the beginning of the following fiscal year.

If the Association wishes to change the terms for the following financial year, it must notify the member before 12 noon (GMT) on 20 February, the contract will continue on the re-negotiated terms, otherwise the insurance will end at the end of the current financial year.

4.1.1. Insurance objects and insurance benefits

a. Insurance objects

When goods transported in an insured maritime voyage encounter risks of natural disasters or unexpected accidents that lead to damage, that damage in insurance law is called the loss of the insured object. Thus, the object of insurance for goods transported by sea is the goods. Here, it is necessary to clearly distinguish between the concept of goods in general and the goods subject to insurance for goods transported by sea in particular. Because, not all goods are within the scope of the insurance subject being studied.

According to Marxist-Leninist political economy, a commodity is an object that satisfies a certain human need and can be exchanged. In other words, a commodity must have both use value and exchange value, also known as value.

The type of goods that are subject to the insurance business under study also has the two basic attributes mentioned above, but it does not include all types of goods in general. To distinguish the difference between goods that are subject to marine cargo insurance and other types of goods, people rely on foreign trade contracts of import and export business organizations. Goods in foreign trade contracts are subject to marine cargo insurance. Meanwhile, goods that are personal property, carried with individuals, to serve the necessary living needs of individuals but not for commercial purposes are called luggage because they are not within the scope of marine cargo insurance. Thus, only goods in foreign trade contracts, which are subject to marine transportation contracts or commonly known as import and export goods, are the main subjects of marine cargo insurance.

When studying goods that are the subject of marine cargo insurance, people pay special attention to the nature and characteristics of each type of goods such as: ordinary goods, dangerous goods, perishable goods, fragile goods, etc.

These characteristics have a direct impact on the selection of insurance conditions, as well as in determining the cause of loss and damage. Goods with high loss rates must pay higher insurance premiums than other types of goods, although they have the same insurance conditions and the same maritime journey. In the practice of international maritime trade, insurers have listed a series of goods with high loss rates such as: Cement packed in paper bags that are easily torn and broken, coal that is easily self-ignited, glass, porcelain that are easily broken, etc. Because the nature and characteristics of each type of goods have a great impact on the safety of the journey, when signing an insurance contract, the insurer often requires the owner of the goods to fully declare the details of the subject.