Insurance Law · 15.09.2026

Marine Insurance in Vietnam: Trading Limits, Class and Total Loss

Marine insurance in Vietnam: a VND 110 billion total loss claim dismissed because the vessel sailed outside her classed area. Trading limits, premium, subrogation and time limits.

Lawyer UnilawReading time: 8 min

By Lawyer Nguyen Nhu Hai – UniLaw LLC

A policy covering hull and P&I can look complete and still pay nothing. Marine insurance in Vietnam sits on two layers of law at once, and a breach of the class certificate can wipe out the cover before anyone reaches the question of what sank the ship. One decided case makes the point better than any summary: a vessel became a total loss, the owner claimed over VND 110 billion, and the courts awarded nothing.

Marine insurance in Vietnam: a total loss that went unpaid

Judgment No. 45/2023/KDTM-PT of 24 May 2023 — Superior People’s Court in Ho Chi Minh City, upholding the first-instance judgment and dismissing the owner’s claim in full.

On 17 October 2008 a Vietnamese shipowner took out Hull and P&I policy No. AD0005/08PA56000 on the vessel Binh Dinh River. The hull sum insured was VND 8,000,000,000. The P&I certificate carried a limit of USD 500,000,000. The trading range was the Far East, from 60°E to 180°E.

On 26 December 2008 the vessel loaded 245.1 tonnes of oilfield equipment at Vung Tau for Muara in Brunei. She sailed on 6 January 2009. Bad weather set in the next day, with a north-easterly force 7 to 8 and heavy swell. At 04:30 on 8 January the cargo shifted, holed the side shell and flooded hold 2. The vessel took a 15-degree list. By 10:30 the bow was down and the rudder had stopped answering, so the master abandoned ship at 05°13′N 108°02′E. A Korean vessel picked up the crew and landed them in Singapore. Binh Dinh River drifted on, grounded off Palau Sagudarmar in Indonesia, and surveyors wrote her off as unsalvageable.

Why the insurer paid nothing

The class certificate was the problem. Vietnam Register had classed the vessel for Restricted Area II, which allowed her no more than 50 nautical miles from shore or from a safe refuge. The Braemar Falconer survey placed the abandonment position 418 nautical miles from Muara and 250 from Kuching, the nearest port of refuge. The nearest land, Cape Sekatung on Laut island, lay 25 miles away and was solid coral, so it was no refuge at all.

Criminal Judgment No. 56/2013/HSST of 30 December 2013, upheld on appeal on 14 July 2014, had already found that the master took the ship outside Restricted Area II, and that the company fixed a voyage outside that area knowing the restriction.

The policy required the vessel to comply with maritime safety under the Maritime Code and international rules. The courts therefore treated the voyage as unlawful and within the policy exclusion. The owner recovered nothing of the VND 110,655,535,352 claimed — VND 8 billion of hull plus VND 9.55 billion of interest, and VND 45.71 billion of P&I plus VND 47.40 billion of interest.

Two further points are worth keeping. The casualty happened in January 2009 and the appeal judgment came in May 2023, so the dispute ran fourteen years. And the finance company that had been assigned the policy benefit did no better than the owner, because an assignee takes the policy as it stands.

Marine insurance in Vietnam runs on two layers of law

The policy in Judgment No. 45/2023 named Vietnamese law first: the Insurance Business Law, the Maritime Code and the Civil Code. Then it added a second layer. Where Vietnamese law is silent, English law and English marine insurance practice apply.

That clause is common in the Vietnamese market, and it has teeth. In this case the courts went to Clause 4 of the English Institute Time Clauses — Hulls, which discharges the insurer from liability from the date the class or trading warranty is broken. If the ship is at sea on that date, the discharge is deferred until she reaches the next port.

So read both layers before you advise on cover. A Vietnamese policy can import an English warranty regime that is far harsher than anything in the Maritime Code.

What the Maritime Code covers

Article 303 defines the contract: the insured pays the premium, and the insurer indemnifies maritime losses on the agreed terms. Maritime risks include perils of the sea, fire, explosion and war.

Article 304 sets the subject matter broadly. It covers the ship, a ship under construction, cargo and other property exposed to maritime risk. It also covers freight, hire, expected profit on cargo, commissions, loans and advances, and liabilities to third parties.

Article 305 requires an insurable interest in the adventure. Without that interest there is nothing to insure, whatever the paperwork says.

Premium, disclosure and increased risk

Article 319 makes the premium payable immediately after the contract is signed or the policy issued, unless the parties agree otherwise. In practice they usually do agree otherwise, as the parties did in Judgment No. 45/2023, where the insurer granted several deferrals.

Article 310 deals with misdescription. If the insured deliberately breaches the disclosure duty, the insurer may terminate. If the insured is not at fault, the insurer cannot terminate but may charge a reasonable additional premium.

Article 320 then covers what happens after inception. If anything changes that increases the insured risk, the insured must tell the insurer. A voyage outside the classed area is exactly that kind of change.

Sum insured, insured value and under-insurance

Article 311 fixes the insured value of a ship as her whole value at inception, including machinery, equipment and spares plus the premium, and sometimes advance crew wages and voyage preparation costs.

Article 312 then handles the gap. Where the sum insured is lower than the insured value, the insurer pays in the proportion the sum insured bears to the insured value, and that proportion applies to costs as well.

Article 313 addresses double insurance. Where several policies on the same subject and the same risk exceed the insured value, the insurers together are liable only up to that value, each in its share.

Abandonment and total loss

A shipowner who abandons the subject matter must say so properly. Article 330 requires a written declaration stating the grounds. It must reach the insurer within a reasonable time, and in any event within 180 days of the day the insured learned of the facts relied on, or within 60 days of the end of the policy period in the cases the article sets out.

Article 324 handles successive losses. The insurer answers for losses that follow one another even if the total exceeds the sum insured. However, where a partial loss is neither repaired nor paid and a total loss then follows, the insured recovers for the total loss only.

Subrogation after payment

Article 326 gives the insurer the right to pursue the party at fault once it has paid, up to the amount paid. Article 327 puts a matching duty on the insured to hand over the information, documents and evidence needed to bring that recovery.

Consequently the insured should not settle with, or release, a third party before the insurer has paid. Doing so can destroy the subrogated claim and, with it, the insured’s own recovery.

Time limits in marine insurance in Vietnam

Article 336 gives two years from the day the dispute arises for claims on a marine insurance contract. That is measured from the dispute, not from the casualty, which matters when an insurer takes months to decline.

Even so, do not treat the two years as breathing room. Fix the date the insurer first refused, in writing, and work back from it.

What the Binh Dinh River case should change in practice

Check the class certificate and its restricted area before you fix the voyage, not after the casualty.
Match the trading warranty in the policy to the class restriction. A 60°E to 180°E trading range means nothing if class limits the ship to 50 miles from shore.
Read the choice-of-law clause and find out which English clauses it imports.
Tell the insurer before any change that increases the risk, and keep the proof.
If you are a bank or lessor taking an assignment of policy benefit, check the class position yourself. You inherit the owner’s defences.

Legal basis

Maritime Code 2015 (Law No. 95/2015/QH13), consolidated as Document No. 52/VBHN-VPQH of 18 March 2026 — Article 303 (marine insurance contract); Article 304 (subject matter); Article 305 (insurable interest); Article 309 (automatic termination); Article 310 (right to terminate; disclosure); Article 311 (insured value); Article 312 (sum insured and under-insurance); Article 313 (double insurance); Articles 314–315 (assignment of the policy); Article 316 (open cover); Article 319 (payment of premium); Article 320 (notice of increased risk); Article 324 (successive losses); Article 326 (subrogation); Article 327 (insured’s duty to assist recovery); Article 330 (declaration of abandonment, 180 days); Article 336 (two-year time bar).
Insurance Business Law and the Civil Code 2015, as named in the policy in Judgment No. 45/2023.
Institute Time Clauses — Hulls, Clause 4 (Classification), applied through the policy’s choice-of-law clause.

How we handle marine insurance in Vietnam

Unilaw acts for owners, charterers, cargo interests, underwriters and finance parties on hull, cargo and P&I disputes. The first thing we check is rarely the casualty. It is the class certificate, the trading warranty and the choice-of-law clause, because that is where these cases are won and lost.

For the wider practice see our Vietnam maritime lawyer page. On cargo damage and the choice of defendant, see cargo claim in Vietnam. On securing a claim against the ship, see ship arrest in Vietnam. If your claim ended in a London or Singapore award, see foreign arbitral award in Vietnam. If the port authority is holding the ship rather than a court, see vessel detention in Vietnam. On crew wages and repatriation, see seafarer wages in Vietnam. For flagging, mortgages and priority, see ship registration in Vietnam. Further judgments sit in our maritime law library.

Related reading: our overview from an insurance law lawyer in Vietnam, and what the courts require before an insurance claim denial in Vietnam can stand.