A power project is a hundred-million-dollar asset sitting in nature — storms, lightning, floods and fires can erase years of profit in one night. Insurance doesn’t make projects safer, but decides whether they survive incidents. Vietnamese law mandates certain insurances; the rest is the sponsor’s risk management and lenders’ requirements.
Mandatory insurance by law
Vietnamese law requires compulsory fire and explosion insurance for fire-and-explosion-hazard facilities — power plants, substations and battery stores fall in this category under the Fire Law 55/2024/QH15. Owners must also carry liability insurance and worker insurance under labour law. Skipping mandatory insurance draws administrative penalties, and all incident losses are self-borne.
Note: compulsory fire insurance has regulated liability limits and terms — owners should add all-risk property insurance to fully protect project asset value.
Lender-required and risk-management insurance
Project-finance lenders almost always require a full insurance package as a disbursement condition: construction all-risk (CAR) during building; all-risk property and business-interruption insurance during operation; third-party liability. Offshore wind adds marine insurance for transport and offshore installation.
Business-interruption insurance is especially vital for power projects: when turbines stop due to an insured event, it replaces lost power-sales revenue — keeping debt service alive during repairs.
Four insurance-buying mistakes
One, cheap policies with high deductibles and broad exclusions — discovering non-coverage only at claim time. Two, not updating insured values with actual asset values (equipment price rises) — underinsurance means pro-rata payouts insufficient for repairs. Three, skipping business-interruption cover to save premiums — small saving, big risk. Four, not reading exclusion clauses (natural disasters, wear and tear, design defects) — claim disputes usually start at exclusions.
This article has been quality-reviewed by the FLAW AI Legal Council.
Frequently Asked Questions
Which insurances are mandatory for wind and solar projects?
Under Vietnamese law: compulsory fire and explosion insurance for hazard facilities (power plants, substations, battery stores under Fire Law 55/2024/QH15); liability and worker insurance under labour regulations. Skipping mandatory cover draws penalties and self-borne losses.
What insurance do project lenders require?
A full package is a common disbursement condition: construction all-risk (CAR) during building; all-risk property and business-interruption insurance during operation; third-party liability. Offshore wind adds marine insurance for transport and offshore installation.
How important is business-interruption insurance for power projects?
Very: when turbines stop due to an insured event, it replaces lost power-sales revenue, keeping debt service alive during repairs. Skipping it to save premiums is a common mistake — small saving, big risk.