Cargo liability insurance is the first clause an FDI client asks about when signing a logistics contract, yet in Vietnamese law it is not a universal compulsory insurance for road transport. The most common confusion lumps three different covers into one: the vehicle owner’s compulsory civil liability insurance toward third parties, the cargo owner’s cargo insurance, and the carrier’s liability insurance toward the cargo carried. This article separates the three layers, identifies the niches where liability insurance is genuinely a mandatory condition, the default liability limit under Article 237 of the Commercial Law, and the legal consequences of not buying cover.
Legal Basis and Three Covers to Distinguish
The vehicle owner’s compulsory civil liability insurance under Decree 67/2023/ND-CP is a duty of every vehicle owner: it pays third parties suffering personal and property damage in a road accident caused by the vehicle, and in no way protects the cargo on the vehicle or substitutes the carrier’s liability toward the cargo owner. Cargo transport insurance is a product bought by the cargo owner or the carrier to protect the shipment’s value against physical loss or damage. A logistics operator’s liability insurance protects the carrier itself: it pays the compensation the carrier must bear when a client’s cargo is lost through the carrier’s fault, up to the insured liability limit. The baseline liability limit of this relationship sits in Article 237 of the Commercial Law 2005 on logistics services, the anchor for both parties when negotiating how much cover to buy.
When Liability Insurance Is Genuinely Mandatory
For ordinary road cargo transport, the law does not compel the carrier to buy cargo liability insurance; buying is a risk-management decision and a commercial condition in contracts with large clients. A liability insurance duty appears clearly in three niches. First, international multimodal transport: the enterprise must hold multimodal transport operator liability insurance or an equivalent guarantee under Decree 87/2009/ND-CP as amended by Decree 144/2018/ND-CP — a condition for licensing and license maintenance. Second, establishments and cargo in the fire and explosion hazard class: the establishment owner must buy compulsory fire and explosion insurance under the Law on Fire Prevention, Fighting and Rescue 55/2024/QH15 and Decree 105/2025/ND-CP. Third are requirements inside international contracts: sea transport documents, port conditions and multinational cargo owners typically make liability insurance and P&I cover a precondition of tender, mandatory by contract even where domestic law does not compel it.
Minimum Cover and the VND 500,000 per Kilogram Liability Limit
The law fixes no minimum sum insured for road cargo liability insurance, so the cover amount is chosen by the enterprise according to the average cargo value per trip and client requirements. The legal anchor for the calculation is Article 237 of the Commercial Law 2005: the logistics operator’s liability limit is as agreed by the parties in the contract; absent agreement, where the customer declared the cargo value and paid a surcharge the limit is the declared value, and where the customer did not declare value the default limit is only VND 500,000 for each kilogram of cargo lost or damaged. That default figure is far below the real value of electronics, pharmaceuticals or machinery, so both sides benefit from agreeing the limit clearly in the contract and buying insurance matching it: the carrier avoids compensation claims beyond capacity where it bought low cover, and the cargo owner knows in advance what value slice it must insure additionally itself.
Which Risks the Insurance Pays For
Under customary cargo and transport liability conditions, the insured event is physical loss of or damage to cargo during carriage from external causes such as accidents of the carrying vehicle, fire and explosion, overturning, natural disasters and the perils listed according to how wide or narrow the chosen conditions are. International-standard conditions divide into clause A for all risks and clauses B and C for progressively narrower named perils; domestic products have an equivalent structure. Typical exclusions to read carefully include: damage from the shipper’s faulty packing or lashing; loss from the cargo’s inherent nature such as oxidation or natural wastage; loss from delivery delay unless separately extended; and indirect losses such as lost profit or the cargo owner’s contract penalties with third parties. The claims process requires a damage record at delivery, notice of loss within the policy period and documents proving cargo value; the absence of a delivery receipt noting damage is the most common ground of refusal in practice.
What Happens Without Insurance
If the enterprise is not in a mandatory class, not buying cargo liability insurance draws no administrative sanction; the consequence is that the enterprise bears the entire compensation risk when a client’s cargo is lost, capped by the contract or by Article 237 of the Commercial Law where the contract agrees nothing else. The commercial consequence usually arrives before the legal one: FDI cargo owners and international logistics platforms make a liability insurance certificate a tender condition, so an uninsured enterprise is screened out of the high-value client group even with competitive rates. If the enterprise is in a mandatory class and uninsured, consequences escalate by niche: an international multimodal operator fails the conditions to obtain or maintain its license; an establishment subject to compulsory fire and explosion insurance is sanctioned under the fire-safety sanction framework and ordered to buy cover. Assessing correctly which class one belongs to is the first step to building an insurance programme that is neither excessive nor deficient.
Frequently Asked Questions
Must an FDI logistics company buy cargo liability insurance?
Not for ordinary road cargo transport: the law does not compel the carrier to buy cargo liability insurance. Only three areas are mandatory or near-mandatory: an international multimodal transport operator must carry liability insurance or an equivalent guarantee under Decree 87/2009/ND-CP as amended by Decree 144/2018/ND-CP; establishments and cargo with fire and explosion hazards must buy compulsory fire and explosion insurance under Law 55/2024/QH15 and Decree 105/2025/ND-CP; and insurance requirements inside contracts with cargo owners and international ports. The vehicle owner’s compulsory insurance under Decree 67/2023/ND-CP covers liability to third parties, not cargo.
What is the minimum cover amount?
No statutory minimum sum insured exists for road transport. The negotiating anchor is the liability limit in Article 237 of the Commercial Law 2005: the parties agree it themselves; if the customer declares the cargo value and pays a surcharge, the limit is the declared value; if not, the default limit is only VND 500,000 per kilogram of cargo lost or damaged. The enterprise should choose cover matching the liability limit committed in its contracts and the average cargo value per trip.
Which risks does the insurance pay for?
Insurance pays for physical loss of or damage to cargo during carriage caused by external events such as vehicle accidents, fire and explosion, overturning and natural disasters, within the scope of the conditions chosen — all-risks or named-perils conditions. Typical exclusions: damage from the shipper’s faulty packing or lashing; loss from the cargo’s inherent nature; delay losses and indirect losses such as lost profit, unless separately extended. A claim requires a damage record at delivery and notice within the policy period.
What happens if the company does not buy insurance?
If not in a mandatory class, not buying insurance draws no administrative fine; the enterprise simply bears the whole compensation risk under the contract or the Article 237 Commercial Law limit, and is usually screened out of tenders by FDI cargo owners requiring insurance certificates. If in a mandatory class and uninsured: an international multimodal operator fails the conditions to obtain or maintain its license; an establishment subject to compulsory fire and explosion insurance is fined under the fire-safety sanction framework and ordered to buy cover.
This article has been quality-reviewed by the FLAW AI Legal Council