Carina Plaza fire: management board to compensate uninsured residents

Carina Plaza's management board could propose the insurance company to pay 50 per cent of compensation

Regarding insurance compensation for the Carina Plaza fire, is it true that not all insurance holders are compensated because the liability policy may only cover parts, rather than the whole, of the resident’s properties?

In this case, apart from the residents who suffered injury or damages to their personal properties, the fire also involved two other subjects: the developer and the management board. The three parties can contact relevant agencies to make claims for damages based on the principle that all parties are in strict compliance with the law.

First of all, the developer and the management board, as they are the main individuals to be held accountable for the fire, should contact the company where they have purchased their insurance packages to look for assistance and fill out a compensation claim.

The developer and the management board may review their fire insurance policy to check whether it covers part of the compensation for the properties of the residents who are under their protection (specifically, cars and motorbikes being kept in the basement parking area).

If there exists such a provision, apart from the compensation for the damages suffered by the policy holders, the insurance company shall additionally pay an amount corresponding to the level of liability stipulated in the insurance policy for the vehicles that were burnt in the parking lot. If there is no extended coverage, only those on the list of assets attached to the insurance contract shall be compensated.

In fact, every insurance contract allows a maximum prepayment value of 50 per cent of the compensation. It is advisable to make use of this clause (when the insurer determines that the cause of the losses lies within the scope of the indemnity) to request a partial and advance payment of the claim in order to expedite initial remedies.

If all residents are fully insured by the compulsory fire insurance policy, is there any possibility that the insurer will refuse to pay compensation? In which cases is this possible?

Among a number of causes that might lead to the exclusion of a compulsory fire insurance contract, there is one that is very difficult to clarify 100 per cent, as it is highly subjective. This associates to “the damages that are caused by the intention of the insurance policy holder to violate the regulations on fire prevention and firefighting, thereby purposely letting fire and explosion incidents occur.”

Thus, when working with related agencies and insurance companies, the developer and the management board should make a case to avoid such a conclusion or accusation.

Therefore, if relevant authorities come to the above conclusion, the insurer may refuse part or all of the indemnity, depending on the seriousness of the breach.

According to media reports, the investigation “does not rule out the possibility of somebody setting up an explosive device.” If this is true, two situations might have occurred. One is terrorism. If the authorities conclude that this was the cause of the fire, the claim for damages, however, would be completely rejected by most insurance policies.

The second reason might be destructive behaviour or vandalism. In this case, it is necessary to prove that the saboteurs are not the insurance buyers so that the damaged residents can still be entitled to compensation.

These would be the cases for the developer and the management board. How about the residents who are the owners of the burnt vehicles? How should they ask for compensation if the fire is found to be caused by the management board of the building?

In this case, we can set up two scenarios related to the properties of the affected residents.

Firstly, for those whose cars were burnt by the fire, if the owner of the vehicle has already bought an insurance package for material damages, he can contact his insurance company to make a claim. If the insurance company suggests him to claim compensation from the management board, it is advisable not to follow their recommendation and ask them to fulfill their contractual obligations first, then the resident can assign the Power of Attorney to them so that the insurer will have to work directly with the management board of the building later.

As for the burnt motorbikes, virtually no motorbike owners buy insurance for material damages and only have civil liability insurance (which covers compensation for the losses caused by the motorbike owner when he uses the vehicle). Therefore, the insurance company will not provide compensation for the burnt motorbikes.

The second point is about those who had purchased apartment insurance right at the time of making a loan application at the bank. Usually, when people want to buy apartments with bank loans, they will be requested to buy insurance for their apartments. This is a mandatory requirement in any bank's capital adequacy regulation. It is noticeable that at the time the resident buys this insurance package, his apartment might not be furnished.

Phan Quoc Tuan In case the resident purchased insurance for a fully-furnished apartment, they can use the “List of assets” attached to the contract to ask for compensation.

In the insurance policy, insured property is normally identified as “the value of building the frame of the house.” Hence, residents can only require the insurer to pay for the repair and cleaning fees of the apartment. They will not be compensated for the furniture or other belongings inside.

What about those suffering physical injuries?

For those who died, there will be different amounts of compensation, depending on whether they bought insurance, including life insurance or personal accident/health care insurance from the companies they work for, and the survivors’ will benefit from the social insurance the victims paid while working for their employers.

As for the injured, there may also be two such claims: life insurance—usually a premium product for medical expenses and hospitalisation—and accident/healthcare insurance paid by the companies they are working for.

A special note here is that insurance companies are obliged to pay for any human losses if the victims have already bought insurance.

After receiving the insurance compensation, residents do not need to assign the power of attorney to the insurance company to claim compensation from the management board on their behalf because in this case residents will still be compensated by the building’s management board under the Civil Code and other agreements that are not contrary to the law.

These are the benefits that residents are entitled to if they bought insurance. What is the solution for those who did not buy insurance for their properties?

Regarding residents without insurance, the management board of the building will have to compensate for the loss of their property if residents have already paid the monthly parking and management fees.

The above is only basic information for consideration. For specific queries, relevant parties can contact us or their insurance companies to ask for further assistance.