What should be noted in the process of requesting compensation from the insurer when an insurance event occurs?

The Appellate Judgment No. 68/2019/KDTM-PT of the People's Court of Hanoi (the [1] Ngoc Son ship case) shows a very valuable lesson for businesses buying property insurance and marine insurance: there are contracts, there are insurance events, even if the insurer does not deny the risks covered by insurance, but the enterprise may still not receive the full amount of money it expects if the claim dossier, the interpretation of the contract terms and the chain of evidence on the value of assets are not strictly prepared.

The Court determined that this is property insurance and the principle of compensation must be based on the actual value of the asset, not exceeding this value, even if the contract states a higher amount

The incident of the Ngoc Son ship

On June 29, 2016, the shipping enterprise signed a hull insurance contract with an insurance amount of 2.8 million USD. On August 13, 2016, the Ngoc Son ship ran aground in Maldives waters, then was rescued but finally sank, determined to be a total loss.

The insurer acknowledged that the event was covered by insurance, but did not accept compensation in the amount of 2.8 million USD, but only agreed to compensate according to the actual value of the vessel at the time of the loss (about 1.75–1.779 million USD) after appraisal. Meanwhile, the insured believes that this is a "valuation insurance policy", so it must compensate the agreed amount.

The Court determined that this is property insurance and the principle of compensation must be based on the actual value of the asset, not exceeding this value, even if the contract states a higher amount. As a result, the Court only accepted compensation according to the appraisal value, and at the same time forced the insurer to pay interest due to late payment.

Legal issues of the case

The case shows that insurance disputes do not necessarily occur in the usual question: "whether to be insured or not". Here, the two parties finally agree that the loss of the ship is a case of compensation; the breaking point lies in the amount of compensation, the time when the payment obligation arises, and the subject is entitled to receive compensation. From the contract signed on June 29, 2016 with the sum insured of USD 2,800,000, the enterprise requests to be insured according to that amount. The insurer only accepts compensation according to the actual value appraised. As a result, the Court accepted the value of the ship of 1,779,000 USD, plus the value of supplies and spare parts of 156,531.41 USD and 1,582,900,621 VND, instead of paying 2.8 million USD for the hull.

The Court also determined that the insurance buyer had submitted a complete and valid dossier on 29/11/2016; According to Clause 6.4.2 of the contract, the insurer must settle the compensation within 30 days from the receipt of the complete dossier. Therefore, the latest payment milestone is 28/12/2016, and from 29/12/2016, late payment interest is incurred at the basic interest rate of 9%/year. In addition, the Court accepted the refund of the premium corresponding to the excess insurance portion, the amount of 119,206,855 VND, and forced the insurer to bear 60,000,000 VND of appraisal costs.

A very practical detail is that the compensation in the event of a total loss does not automatically flow directly to the insured enterprise. The public judgment shows that the contract has been amended on beneficiary rights, and when a total loss occurs, the compensation amount will be paid to the beneficiaries according to the issued Letter of Endorsement. For enterprises that are using insured assets to secure credit obligations, this is a clear warning: the compensation dossier must be processed at the same time as the dossier of the secured party, otherwise it is very easy to cause congestion at the stage of disbursement of compensation.

Legal risks that businesses often encounter in the claim process

The first risk is over-insurance[2]

The Law on Insurance Business 2000 considers a property-to-value insurance contract to be a contract with a sum insured higher than the market price of the insured property; when an insurance event occurs, the insurer is only responsible for compensation not exceeding the market price of the insured property. This logic has appeared very clearly in the Ngoc Son case: instead of paying the full amount of USD 2,800,000 as requested by the insurance buyer, the Court accepted compensation at the actual value and also recorded the refund of the insurance premium corresponding to the excess value of the insured property. In terms of currentness, the Law on Insurance Business 2022, amended in 2025, still retains the same philosophy in the articles on property insurance contracts on value and compensation basis.

The second risk is confusion between the value under the insurance policy and the actual value

The Maritime Code 2005 recognizes the "valuation insurance application", that is, the application in which the insurer agrees in advance to the value of the insured object stated in the application and used when settling compensation for loss. However, this same Code stipulates that the insured value of a ship is the actual value of the ship at the time of commencement of insurance, and the amount of insurance in excess of the insured value is not recognized. The case of the Ngoc Son ship shows that the Court will not stop at reading a line "ship value" on the certificate, but will compare the entire system of regulations on insurance value, insurance amount and insurance on value. Therefore, if the enterprise wants to rely on the argument that there has been an agreement on the indemnity value, the trade union must have a clear appraisal and negotiation record; only having an insurance certificate is not enough.

The third risk is providing untrue information

According to the provisions of law and trial practice, the provision of adequate and truthful information is considered a fundamental obligation; The Law on Insurance Business 2000 allows insurers to unilaterally suspend the performance of the contract if the insurance buyer deliberately provides false information in order to conclude the contract. On the other hand, the case law No. 22/2018/AL of the Supreme People's Court shows that not all controversies over declaration automatically lead to the loss of insurance benefits. The court will carefully consider the clarity of the question, the scope of the declaration obligation and the possibility that the insurance buyer really violates or not. The lesson for businesses is that as soon as a loss occurs, absolutely do not edit the dossier, do not supplement information in a vague way, and do not write an explanation letter according to emotions.

The fourth risk is that the claim file is inadequate, inconsistent, or fails to demonstrate a completion date

In insurance, "notified" is completely different from "sent enough valid documents". The Ngoc Son judgment is particularly noteworthy in that the Court clearly determined that 29/11/2016 is the date of sending all valid documents and then counts 30 days to determine late payment. This means that enterprises must create for themselves a set of evidence on the date of submission of complete documents: list of documents, receipts, emails, deliveries, acknowledgments of receipt, working minutes, and a table that compares each document with the terms of the contract. Otherwise, it will be very difficult for enterprises to claim late payment interest, even though in fact they have submitted the dossier early.

The fifth risk is not fulfilling the obligation to mitigate damage to the case

The Maritime Code 2005 sets a very clear obligation: when a loss occurs, the insured must take all necessary measures to prevent and limit the loss; if the insurer is too negligent or deliberately fails to do so, the insurer is not responsible for the loss arising from such negligence. At the same time, the reasonable expenses to limit the loss, determine the cause and extent of the loss are the amounts that the insurer must reimburse according to the law. That means "saving property" and "making expense records" must run in parallel, it is impossible to choose one or the other.

Another note is about the statute of limitations: The Law on Insurance Business 2000 stipulates that the statute of limitations for initiating a lawsuit on an insurance contract is three years from the time the dispute arises, while the Maritime Code 2005 stipulates that the statute of limitations for initiating a lawsuit related to a marine insurance contract is two years from the date the dispute arises. For enterprises with maritime disputes, the safe approach is to choose a shorter statute of limitations to avoid debating the statute of limitations when resolving disputes.

For enterprises with maritime disputes, the safe approach is to choose a shorter statute of limitations to avoid debating the statute of limitations when resolving disputes.

Notes for businesses

In our opinion, when an insurance event occurs, businesses should consider full and step-by-step compliance as summarized below to facilitate the insurance claim process:

Enterprises should note that insurance indemnity is not a simple administrative procedure, but a process of proving benefits according to contracts and laws. When an insurance event occurs, an enterprise that acts faster, locks up better evidence, better understands the relationship between the sum insured and the actual value, and handles the insured party and the third party issue early, that enterprise has a significantly higher chance of recovering the insurance money. The Ngoc Son incident shows that even if it wins the question of "whether it is compensated or not", it can still lose on the question "how much is compensated, at what time, and who does the compensation belong to?".

The practice of recent disputes shows that businesses should not wait for disputes to prepare documents. Right from the moment of purchasing insurance, businesses should review the insurance value, valuation terms, beneficiary terms, notification procedures, claim documents, exclusion clauses, and dispute resolution mechanisms. When an insurance event occurs, the claim must be considered as a "legal risk management project". Therefore, businesses need to assign a person in charge, make a plan and plan, as well as an appropriate negotiation strategy. This preparation not only helps businesses increase their chances of receiving correct and adequate compensation, but also drastically reduces the risk of falling into a lengthy and costly litigation.