Navigating the global liability defence agenda
New regulations prescribe which buildings must apply for legal liability insurance
The Thai Government has updated laws on compulsory liability insurance. This will have significant consequences for many private sector property owners or occupiers.
The Ministerial Regulations are issued in accordance with the Building Control Act B.E. 2522 (1979) and came into effect on 6 November 2021. The Regulations are broadly split into those relating to buildings under construction or refurbishment and those already in use.
Buildings under construction or modification
Clause 3 of the Regulations relates to coverage against liability for life, body, and property of a third party as a result of construction, modification, relocation, or demolition of private buildings. The building owner, occupier or operator shall obtain an insurance policy for the following buildings:
- High buildings (over 23m)
- Large buildings (the legislation is silent on the precise definition)
- Extra large buildings (over 10,000sqm).
Before carrying out any works under a permit for construction, modification, relocation, or demolition, the building owner, occupier, or operator is required to obtain third party liability coverage (in accordance with limits below) and maintain the relevant documents for the local official to inspect at any time.
If the construction, modification, relocation, or demolition of a building is unfinished prior to the date the Regulations come into force, the owner, occupier or operator must obtain such insurance within 30 days from the date the Regulations come into force. The period of insurance shall not be less than the period under the construction permit.
Buildings in use
Subject to clause 4, during the use of a building by the private sector, the building owner or the building occupier must obtain an insurance policy which provides coverage against liability for life, body, and property of a third party, for the following buildings:
- Public assembly buildings (all or part of a building where people may enter for assembly, having an area over 10,000sqm, or capacity for 500+ people).
- Hotels under the Hotel Act, with 80 rooms or more.
- Service facilities with space exceeding 200sqm.
- Signboards installed more than 50m from the ground or from rooftop of building height greater than 25m; or occupying space of 50sqm or more.
The building owner or occupier must maintain the insurance policy at all times the building is being used, and retain the relevant documents for local officials to inspect at any time.
The obligations under this clause must be completed within 30 days from the date of any completion of construction, modification or change of use of the building.
Third party liability policy requirements
The building owner, occupier, or operator under clause 3 or clause 4 has to obtain a third party liability policy, which provides coverage amounts of not less than:
- THB 100,000 per person for death or infirmity
- THB 100,000 per person for medical expenses
Combined coverage for (1) and (2) must be at least THB 5,000,000 per occurrence.
- THB 500,000 per occurrence for damage to property.
Building owners or occupiers under clause 4 shall obtain the insurance under these Regulations within 30 days from the date the Regulations come into force, and shall maintain such insurance policy documents for the local official to inspect at any time.
Note: The insurance documents required under the Regulations may be kept electronically.
Building owners/occupiers should note that the legislation specifically provides that the payment of insurance compensation under these regulations shall not prejudice the rights of the injured persons to demand compensation under other laws. Consequently, these Regulations should be seen as a minimum level of cover, not necessarily the limit of cover.
Failure to maintain appropriate insurance may result in imprisonment for up to three months, a fine of up to THB 60,000, or both. In addition, there may be a penalty of up to THB 10,000 per day until compliance is achieved.
Individuals responsible for violation by a juristic person may also be liable to these punishments.
Consequently all building owners, occupiers and operators would be prudent to review their insurance cover with their broker or insurer to ensure they are compliant with the new laws and avoid potential penalty.