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Principal Law – PD 612 , promulgated on December 18, 1974; -amended by PD 1460 which consolidated PD 612 and the Insurance Code. -amended by BP 874 on June 12, 1985; -followed by Act no. 2427, which was later amended by PD 63; *ACT 2427 – was taken verbatim from the Insurance Law of Califoria; -hence decisions of Californian Courts persuasive effect on courts in the Philippines.
and determine whether to rehabilitate or liquidate the company within 30 days; 5. Ensure that the insurance laws are faithfully executed. ADJUDICATIVE FUNCTIONS a. Jurisdiction – claims and complaints involving: 1.loss, damage, or liability of an insurer under any policy or insurance contract; 2. liability of a reinsurer; 3.liability under the contract of suretyship; 4. liability of mutual benefit association to its members 5. counterclaims against the insured; 6. cross-claim against a co-party 7. third-party claims by the insurer against another party. NOTES: Sec. 416 – adjudicative functions of the IC is concurrent with Civil Courts; the filing of the complaint with the Commissioner shall PRECLUDE the civil courts from taking cognizance of the case. Appeals of decisions rendered by the IC in the exercise of its adjudicative authority shall be APPEALABLE and is under the exclusive appellate jurisdiction of the Court of Appeals. RTC have jurisdiction if the insurance claims is over php 100,000.00; An insured may invoke the Regulatory Authority of the IC and determine whether or not the insurer violated the Insurance Code, AND at the same time, litigate the substantive aspects of its insurance claims against the insurer before the RTC where the claim is in excess of Php 100,000.00. *When insurance claim commences? -from the time of the denial of the insured’s claim either expressly or impliedly.
*SUPPLEMENTARY LAWS: 1. Civil Code a. Art. 1962 – acceptance by letter SHALL NOT BIND the person making the offer, except from the time it came to his knowledge; b. Art. 2012 – persons barred by the civil code from receiving donations are also disqualified as beneficiaries in a life insurance policy, by the person who cannot make a donation to him. c. Art. 739- declares as void those donations made between persons who are guilty of adultery or concubinage at the time of donation. d. Art. 2011 – The contract of insurance is governed by special laws. Matters not expressly provided for in such special laws shall be regulated by this Code. 2. Mutual Insurance On work 3. RA 8291 – GSIS Act of 1997 4. RA 656 – Property Insurance Law; 5. RA 8282 – SSS Act of 1997 6. RA 3124 – Industrial Life Insurance; 7. PD 317 – Insurance Cooperatives; 8. PD 1467, as amended RA 8175 – on Crop Insurance *Implementing Office – Insurance Commissioner -is an administrative agency vested with regulatory power as well as with adjudicatory authority. *TWO FOLD POWER OF THE Insurance Commission -. Under its Adjudicatory Authority -has original jurisdiction to adjudicate and settle insurance claims, and complaints where the amount being claimed does NOT EXCEED in any single claim of Php 100,000.00, (sec. 416), in concurrence with MTC and MCTC. -Commissioner has regulatory authority to revoke or to suspend the CA of an insurance company upon findings of legal grounds, as provided under Section 241 and 247 of the Insurance Code. *Functions of the INSURANCE COMMISSIONER:v(I-RISE) (ADMINISTRATIVE FUNCTIONS) 1. Issue the following: a. Certificate of Authority to qualified insurers; b. Rulings, instructions, circulars, orders, and decisions for the enforcement of the provisions of the Code. (subject to the approval of the SF) 2. Regulate the sale and issuance of variable contracts to license persons selling insurance; 3. Impose fines and penalties for violations of the Code and rules. 4. Stop operations of an insolvent Insurance company
B. BINDING EFFECT OF DECISION , ORDER OR RULING: -shall have the force and effect of a judgment -appealable to the Court of Appeals within 15 days from notice of the award, judgment, final order or resolution or from date of its last publication, or from the denial of the MR, or new trial; -a decision which has become final may be the subject of a writ of execution which may be served and enforced by a Sheriff.
NATURE OF INSURANCE:
*WHAT IS A CONTRACT OF INSURANCE? -an agreement whereby one undertakes for a consideration to INDEMNIFY another against a loss, damage or liability arising from an unknown or contingent event. -also called a contract of adhesion. Philamcare vs. CA – a contract of suretyship is an insurance contract if the surety is doing an insurance business; *WHAT ARE THE ELEMENTS OF AN Insurance Contract? (ITARP) 1. Insurable interest on the part of the insured; 2. The insured is subject to a risk of loss by the happening of the designated peril;
or his adhesion thereto. as a vocation. CHARACTERISTICS of an INSURANCE CONTRACT: (CAVPECS) 1. -reasonably and properly guarding and maintaining the stability and solvency of their company. b. -from the moment the insured became liable to third person. -premiums on the policy must be paid before the contract can be valid and binding. as a benefit to which the member-policy holder is entitled. Making or proposing as: -an insurer. Assumption of such risk by the insurer. -a surety. -if there is no ambiguity. Executory -the insurer merely promises to pay when the risks attaches. Doing or proposing to do any business equivalent to the above. -creates a contractual relation which inures to the benefit of any and every person who may be negligently injured by the named insured. *WHEN CONTRACT OF INSURANCE ARE PERFECTED? – when assented by both parties. Contract of perfect good faith for both parties.3. either in person or by their agents. the insurance company is liable for compensation payments. limiting its coverage. 3. Act required to be performed. Voluntary -depends on the willingness of the parties to enter into it. -economic benefits filter to the cooperative members either equally or proportionally. the contract is construed in their plain. 7. but for the mutual benefit of its members-policy holders. which may be GARNISHED like any other credit. 3. ordinary and popular sense. contingency or circumstances under which the performance becomes a requisite. *PROVISION ON THIRD PARTY LIABILITY: -third party injured may sue the insurer directly. merely SUSPENDS the contract of a Life Insurance. necessarily defeats the RIGHT to renew the contract. -called a contract of adhesion because the participation of the other part is to affix his signature. *WHAT includes Doing or Transacting Business: 1. *TEST TO DETERMINE Whether a contract is an IC or not? (ENA) 1. engaged as PRINCIPALS in the insurance business. 2. it may be total or partial. 4. Connecticut Rule – holds that payment of premium is a condition precedent. for life cannot be a subject of valuation nor the loss is adjustable on any principle of indemnity. Personal -binds only the parties to its and its assignee. -the happening of the event is the only contingent element. New York Rule – holds that war between States in which the parties reside. regardless of the conditions in the contract. -receive their insurance at cost. Compensatory . partnerships. and liberally in favor of the insured. Synallagmatic -both parties have reciprocal obligations of equal value to each other. 2. except Mutual Benefit Associations. *In Property Insurance – the loss may or may not occur. -any ambiguity in contracts of adhesion. *WHAT ARE CONTRACTS OF ADHESION? -contracts where almost all provisions are drafted by one party only. payment of premium in consideration of the insurer’s promise by the insured.only actual loss or damage is compensated. the insured ACQUIRED interest in the insurance contract. the contract is REVIVED. since the time of payment is peculiarly the essence of the contract. when it occurs . American Principles: a. 4. the non-performance of which even when performance would be illegal. usually a corporation. and that upon tender of all premiums due by the insured or his representative after war has been terminated.Exact nature of the agreement in the light of the occurrence. by reason of non-payment of premiums. and not as a mere incident to any other legitimate business of the surety. *Manila vs. and becomes fully OPERATIVE. Workmen – in compulsory insurance. 3. SURETYSHIP – a contract whereby a person binds himself SOLIDARILY with the principal debtor for the fulfillment of an obligation. Nature of the promise. in the event of death. *What constitutes an Insurance Company? -shall include individuals. Risk assumed is part of the general scheme to distribute actual losses among a large group of persons bearing a similar risk. US Rule – declares that the contract is NOT merely SUSPENDED. Doing any other insurance business like reinsurance and similar acts. . *Life insurance is not a contract of indemnity but a contract to pay a sum certain in money. like an insurance contract is resolved against the insurer. 6. 2. as if such injured person was named in the policy. -members become debtors for whatever premium they have promised the company in the event that the company fails before the policies expire. in view of the fact that we follow the FULL COVERAGE rule in compulsory insurance. 5. c. *WHAT IS A MUTUAL INSURANCE COMPANY OR ASSOCIATION? (Bar) is a cooperative that promotes the welfare of its own members -does not operate for profit. 5. associations or corporations. Aleatory -chance is a predominant factor. but remains an overpayment . distributed among members in correlation with the resources of the association utilized. The Quasi-appearance profit will not change its character. but is abrogated.
2. 5M. not the insured. as the same cannot be made a limitation to any other insurance which may be procured by the insured. no cause of action against the original parties. and can exercise the rights and privileges of an owner under the policy. or association who holds a certificate of authority from the insurance commissioner. the third person is still NOT a party to the contract. corporation. whether or not the beneficiary has an insurable interest in the life of the insured. GSIS – the beneficiary of a life insurance does not automatically become the beneficiary in the retirement insurance UNLESS said person is so DESIGNATED in the application for retirement insurance. -Suretyship. The Insured –any person with capacity to contract and having insurable interest in the life or property of the insured.00. The Beneficiary – designated to receive the proceeds of the policy when the risks attaches.: a beneficiary who insures his own life. -the insured SHALL have the right to change the designation of the beneficiary. The Insurer – undertakes to indemnify another by a contract of insurance. Minors-may be insured under certain circumstances. or descendants by reason of his office. may designate any person including his estate as his beneficiary. Life Insurance – war terminates policy. even without the consent of her husband. cannot be insured. An insured may designate more than one beneficiaries. -citizen and alien a. EXCEPTION: when there is STIPULATION POUR AUTRUI – which provides that third person is allowed to avail himself of a benefit granted to him by the terms of the contract. *A father or mother of a minor. *WHAT MAY BE INSURED AGAINST: 1. -Marine Insurance. Public Enemy – meaning those to which the Philippines may be at war. b. 2. Insurable interest is necessary at the time the policy becomes effective. 2. *BAR QUESTION: 1. Married Woman –may take an insurance on her life and that of her children. with a contributed surplus of 1M . because beneficiaries designated by the insured ARE NOT required to have any insurable interest on his life. all rights under the policy up to 20. or Fire Insurance) 2. ascendants. *BAYVIEW VS. KER – an insurance contract provision for Prior arbitration before resort to court action applies only where the insurer disputes his liability not where it totally disclaims liability. the proceeds will accrues to his estate and will be given to his legal heirs in accordance with law. made to a public officer. *CLASSES OF INSURANCE 1. a. No domestic insurance company shall be given a certificate of authority UNLESS: -if a corporation – with 5M paid up capital -life insurance comp. Contingent Liability – reinsurance. provided that the contracting parties have clearly and deliberately conferred a favor upon such person. without need of a court authority or bond. Non-life Insurance (contract of indemnity). Life Insurance –dependent upon human life. . -non-life insurance. when commercial relations are assumed. is not BARRED from recovering insurance from any other insurance company. who is an insured or beneficiary in a life policy. -Fire Insurance. *PERSONS who are DISQUALIFIED as beneficiaries (Sec. company. (Life Insurance. 4. 3. -may be a natural person. persons guilty of adultery or concubinage. -G. *Uberrima Fides( Perfect Good Faith) Contract *Personal – takes effect only between the parties. 2. half million. Future Contingent Event Resulting to Loss or Damage(FCERLD). *Vda de Consuegra vs.000. -reinsurance companies. Past Unknown event resulting to Loss or Damage 3. 739NCC) 1. persons who have been found guilty of adultery or a concubinage. property insurance –war abrogates the contract (KENTUCKY RULE) b. when the insurance is taken on the life of a third person. and cannot generally demand the enforcement of the same. *NOTES: Banks cannot be insurers. for the said minor. being a compulsory insurance. *EFFECT OF WAR on Insurance Contracts: -prevents insurance from being entered into between the citizens and juridical entities of the warring estates.R. but the insured is still entitled to the EQUITABLE value of the policy arising from the premiums actually paid. his wife. may exercise. -but. -Casualty Insurance. and designates himself as the beneficiary . *In the employee failed or overlooked to state his beneficiary in a retirement insurance. c. UNLESS he has expressly designated an IRREVOCABLE BENECIARY. 3.*An insured who had recovered insurance under the Workmen’s Compensation Law. FOLLOWING US RULE. Fortuitous Event *PARTIES to an INSURANCE CONTRACT 1. -should perform the function for a compensation.
and any act of his which would avoid the policy will thus. avoid the same. termination or injury. when such other person whose life. when such other person is whom he depends for education and support. In life insurance. may be performed by the mortgagee with the same effect as if it had been performed by the mortgagee. the insurable interest must exist at the time the insurance was taken. the beneficiary must have an insurable interest in the property insured. EXCEPTION: Life policy under GSIS. and when the loss occurs. or the interest in which he may have in the lives of the other persons who: a. PNB vs. at the time the policy was taken. when such other person has legal obligation to him for payment of money. depends on him for education and support. b. within a considerable period of time. Assign the policy. *BENEFICIARY OF PROPERTY INSURANCE: -must have an insurable interest over the subject matter on the insurance existing at the time the policy was taken. e. In life insurance taken on the insured’s life. while in property insurance. Section 11 of the Insurance Code – for the designation to be irrevocable. whereby the law makes the proceeds liable to Attachment. 2. and from other conjugal funds. c. CA – failure on the part of an irrevocable beneficiary to collect from the insurer. and when the loss occurs. c. Given to the specified person as beneficiary. -PROPERTY INSURANCE. -essential to the validity and enforceability of the contract of insurance. b. Attach or execute on the policy. Add a new beneficiary. b. and beneficiaries MAY CONTINUE paying the same. (legatee of a usufruct insuring the life of the usufructuary on whose death the usufruct will be extinguished. by the happening of the event insured against. or will suffer pecuniary loss or damage. 8) -mortgagor has an insurable interest on his property as owner up to the FULL VALUE of his property. where he derives pecuniary benefit or advantage from its preservation. while in Property Insurance. and at the time the loss took place. In life insurance. it is BARRED from enforcing the obligation of the insured. there is no limit to the amount of the insurable interest. c. as specified by law. 3. *DIFFERENCES between the Insurable Interest in Life and Property Insurance? a. the beneficiary need not have an insurable interest on the life of the insured.*VESTED RIGHT OF A BENEFICIARY: -the designation of beneficiary in a life policy is REVOCABLE unless the insured EXPRESSLY provides that it is irrevocable. *WHAT IS INSURABLE INTEREST? -interest found in the subject matter insured. Garnishment. Take the cash surrender value. 2. . where the estate of the Insured is the Beneficiary: -proceeds are still conjugal if the premiums are paid from the salaries of the insured. the mortgagor continues to be a party to the contract. where a person has a relation. upon whose life any estate or interest vested in him depends. the INSURED should expressly state the irrevocable designation in the policy itself. Change the beneficiary. -beneficiaries are entitled to AUTOMATIC extended term on paid up insurance options. d. -any act which under the contract is required for a mortgagor to perform.is the interest in which the person has in his life. but need not exist in the meantime. property or service. and to prevent the contract from becoming wagering contract) 1. -mortgagor who takes insurance on the property in his own right. -should be measured on its full face value.) *When insurable interest should exist? -in LIFE INSURANCE. any estate or interest vested in him depends. insurable interest is limited to the actual value of the interest in the property. -CANNOT be divisible at any given time. *WHEN MAY A PERSON HAVE AN INSURABLE INTEREST in the Life of another? (in order to prevent the insurer from destroying the life of the insured. the insurable interest must exist at the time the insurance was taken. the premium is immaterial. (except when the irrevocable beneficiary consented to the same) -because the irrevocably designated beneficiary acquired from date of the policy vested rights. *EFFECT OF IRREVOCABLE DESIGNATION: -the insured cannot: a. the insurable interest over the life of another must exist at the time the insurance is taken. *BENEFICIARY OF LIFE INSURANCE on the LIFE of ANOTHER PERSON: -the person who wanted to insure another MUST HAVE INSURABLE INTEREST in the life of that person. under a legal obligation to pay him in money. and other legal processes. when obligations or indebtedness to the GSIS and the employer is concerned. *WHAT IS INSURABLE INTEREST in LIFE? .. from its destruction. or properties. and NOT on its cash surrender value. *INSURABLE INTEREST IN MORTGAGED PROPERTIES: (sec. (except in marine insurance) -mortgagee’s insurable interest is only up to the extent of the credit. insurable interest must exist at the time the insurance is taken. *DISTRIBUTION OF Policy Proceeds if Premiums are paid through Salaries: 1. while in property insurance. otherwise the policy is VOID. connection or concern.
SECTION 12 – policy shall be forfeited is the beneficiary is the principal. extinguished. *WHEN BENEFICIARY PREDECEASES the INSURED? a. 5. or divested. in any relation or liability in respect thereof. from which mere expectancy arises. an expectancy. definition. Automatic subrogation by the insurer to the rights of the mortgagee against the mortgagor. but which may ripen into a vested estate. *TEST OF INSURABLE INTEREST IN PROPERTY? -W/N the insured has the right . if not barred. c. *WHAT CONSISTS INSURABLE INTEREST In PROPERTY? -every interest in property. -w/n the insured will derive benefit from the preservation and continued existence of the property or will suffer a direct pecuniary loss from its destruction or injury from the peril insured against. coupled with an existing interest. -nearest relative of the insured shall receive the proceeds of the policy. only up to the extent of his credit. arising from an existing interest. -EFFECTS: mortgagee shall not be affected or prejudiced by any ACT or NEGLECT by the mortgagor. change in one or more of several distinct things. to one NOT previously interested or insured. *WHEN POLICY NOT SUSPENDED? a. accessory or accomplice in the willful bringing about the death of the insured. 2. 16) -when it is not founded on an actual right to the thing nor upon any valid contract for it. of such nature that a contemplated peril might directly damnify the insured. -must be made EXPRESSLY by the insured and with the insurer’s consent. meaning. change of interest by will or succession on the death of the insured. *WHAT is the MEASURE of INSURABLE INTEREST in property? -the extent to which the injured might be damnified by the loss or injury thereof. -its an interest in real estate which is not a present interest. -an ABSOLUTE TRANSFER of the insured’s entire interest in the property insured. separately insured by one policy. but is merely affording the mortgagee a greater security for the settlement of the mortgagor’s obligation. change of interest by will or succession on the death of the insured. *EFFECT of INSURANCE Procured by the Mortgagee? (MAB) 1. separately insured by one policy. If Irrevocable – has vested interest in the policy. *WHAT IS THE UNION MORTGAGE CLAUSE? -creates the relation of the insured and the insurer between the mortgagee and the insurance company INDEPENDENT of the contract with the mortgagor. -interest of the beneficiary is a CONTINGENT ONE. change in one or more of several distinct things. *SECTION 9 –if the insurer ASSENTS to the transfer of the insurance policy from a mortgagor to a mortgagee. 3. *WHY CONSENT IS NECESSARY? –absence of consent in the contract renders it VOID. the making of new contract with him. d. imposes further obligation to the assignee. prohibited b. change after the occurrence of the injury or loss. or of he dies before that time. unless subsequently ratified by the insured. up to the extent of the former’s indebtedness. the act of the mortagaor cannot be the rights said assignee. c. unless the latter is unable to collect the full amount thereof. and upon the time of his assent. If revocable – the proceeds are passed to the Estate of the insured. Balance of the proceeds of the policy after payment of the interest to the mortgagee cannot be collected by the mortgagor unless stated in the policy. c. change after the occurrence of the injury or loss. Mortgagor is not released from his debt since the insurer I SUBROGATED to the mortgagee’s right over his credit. *NOTE: Assignment of the policy to a mortgagee DOES NOT constitute payment. interest or title in relation thereto. *WHAT CHANGES in INTEREST does not avoid the IPC? a. Collecting full amount of credit relieves the mortgagor from his liability to the mortgagee. -applicable only in life insurance. b. *CHANGE of INTEREST. Mortgagee may collect from the insurer upon the occurrence of the loss.*WHEN NO ASSIGNMENT was made to the Mortgagee? -the mortgagor will RECOVER from the insurer and the policy taken by the mortgagor shall be applied exclusively to his interest. -proceeds will be given to the representatives of the IB b. -that insurance is a contract of indemnity applies only to property insurance. an existing interest. an inchoate interest. to some other person indicated beneficiary. the benefits of the policy will ACCRUE only to the beneficiary in case the insured DIES before the end of the period designated in the policy. *WHAT IS ENDOWMENT INSURANCE/ -is a contract to pay a sum certain to the insured if he LIVES a certain length of time. *WHAT IS MORTGAGE REDEMPTION? -is the kind of life insurance procured by the mortgagor with the mortgagee as the beneficiary. NOTE: When an expectancy NOT INSURABLE? (sec. 4. b. -which may consists in: a. . real or personal. if not otherwise disqualified.
when the policy provides that if the application is approved and issued. -maybe verbal or on writing. and are not susceptible to present knowledge. but not afterwards. 36) -may be oral or written -may be made anytime. partly verbal or partly writing. 2. REPRESENTATION (sec. -must be submitted to the Insurance Commission for approval or disapproval. *Contents of an Insurance Policy: (PARPRIP) 1. or before the issuance of the policy. All general usages of Trade. amount of insurance. *STATEMENT OF BELIEF or EXPECTATION vs. -must be substantially and materially true. 7. Impliedly –there was neglect to make inquiries as to such facts distinctly implied in other facts of which information was communicated. -FRAUDULENT INTENT is necessary when the fact concealed proves or tend to prove the falsity of a warranty to entitle the other party to RESCIND. *TIME OF COMMUNICATION -at the time of the effectivity of the policy or after acquiring knowledge of such concealment . Public Knowledge. *Representation may be altered or withdrawn before the insurance is effected. it shall be in force from the date of application. *WHAT IS THE TEST OF MATERIALITY? -Whether knowledge of the true facts would have influenced the prudent insurer in determining whether to accept the risk in fixing the amount of the premiums.Collateral Matter which induces the execution of a contract of insurance. -it is an oral or written statement of fact or condition affecting the risk made by the insured to the insurance company. . ascertaining such fact is beyond the means of the other party. except in open or running policies. 2. 5. Promissory Representation: a. 26) -the neglect to communicate that which a party knows and ought to communicate. property or life insured. *WHAT IS A MATERIAL FACT? -is a fact where the knowledge or ignorance of it will influence the judgment of the insurer in deciding whether he will enter into the contract. 3. SECTION 29 – matters covered with warranty need not be revealed. Expressly – under the terms of the insurance policy 2. 4. or in estimating the degree and character of the risk in fixing the premium. tending to induce the insurer to assume the risk. CONCEALMENT: (sec. *WHEN COMMUNICATIONS may be waived? 1. and the absence of concealment or deceit however slight. General causes which are open to inquiry. Notorious facts which creates reasonable presumption that the insurer has knowledge thereof. *CONSTRUCTION OF REPRESENTATION -need not be literally true and accurate. POLICY (sec.*WHAT IS GAMING or WAGER POLICY? -one in which the person who benefit the contract was issued has no pecuniary interest in the subject matter insured. absolute and perfect candor. rescission of the policy contract on the ground of concealment. while PR will entitle the injured party to rescind the contract. 2. Affirmative – affirmation of facts when the contract begins 2. when changes occurs after the consummation of the insurance ORALLY although the formal policy has not been issued yet. *EFFECT of CONCEALMENT a. warranty to such facts was not made by the other party. RE/SBE will not avoid the policy unless made Fraudulently. 3. interest of the insured in the property if he is not the absolute owner. 4. information is material to the contract. EXCEPTIONS: 1. from the time the representation becomes false. SBE is of contingent nature. *KINDS OF REPRESENTATION: 1. -not necessary for the perfection of an insurance contract. *REQUISITES of the FACTS to be COMMUNICATED: (sec. 28) (KAWI) 1. or material perils contemplated. 4. -insurer has the duty to establish concealment with satisfactory and convincing evidence. openness or honesty. 3. 2. -material fact operates as an inducement to the insurer to enter into the contract. known to each or either of the parties. parties. Promissory – statement by the insured concerning what is to happen during the terms of the insurance. period during the insurance is to continue. Uberrimae Fidei –contract of utmost Good Faith -means most abundant good faith. rate of premium. *NATURE OF REPRESENTATION . while PR is a promise to be performed after the contract has come to its existence. -it suffices that they are substantially or materially true and that they are substantially complied with. which may either affect the political. 44) -is an instrument which the contract of insurance is set forth. risk insured against 6. b. but before the effectivity of the policy. vitiates the policy b. *WHAT ARE THE FACTS WHICH THE OTHER PARTY OUGHT TO KNOW? (GANP) 1.
and stating the same in the notice. or due to the existence of fact s which the insured is ignorant without fault. a Life insurance policy. insurable interest is lacking. non-exposure to the risks insured against. e. Life Insurance – if a third person takes the policy. 3. -this is made in order to prevent over-insurance and thus avert the possibililty of perpetration of fraud. Casualty 3. f. b. from the date of issue. PREMIUM -is the consideration paid to an insurer for undertaking to indemnify the insured against a specified peril. mailed or delivered to the insured at the address shown in the policy.*What is a RIDER? – attached to the insurance policy which modifies the conditions therein either expanding . -physical changes in the property insured making it uninsurable. -willful or reckless acts or omissions increasing the risk insured against. *INCONTESTABILITY CLAUSE – provides that a life insurance policy made payable on the death of the insured. b. 3. *KINDS OF POLICY: 1.contract is voidable due to fraud or misrepresentation by the insurer. through a clearly indicative intent to waive such a right. b. cause of death was an excepted risk. . c. -Defenses that are NOT BARRED by IClause: a. Assignee of the Policy a. as he is responsible to the things deposited to him hence has an insurable interest over them. -the mortgagee is only a beneficiary under the contract and recognized as such by the insurer but not made a party to the contract itself. b. Industrial 2. Life Insurance a. Valued Policy – definite valuation is agreed by the parties and is written on the face of the policy. rescission is granted due to the insurer’s breach of contract. -may be waived expressly or impliedly. restricting or excluding certain conditions from the coverage. 65) -notice of cancellation based on the occurrence of one or more of the grounds mentioned. Individual b. Open Policy – value of the thing insured is not agreed upon but is only determined at the time of loss. *WHEN THE INSURED is ENTITLED to Return of PREMIUMS: a. *OPEN or LOSS OF PAYABLE MORTGAGE CLAUSE: -the mortgagor does not cease to be a party to the contract. in force during the lifetime of the insured for 2 years from its issue or of its last reinstatement. Whenever grace period applies (industrial or life insurance) 2. -must be in writing. -fraud or material representation. 1.over-insurance. *Is payment of the premium by a post-date check allowed? -NO. the BENEFICIARY must have insurable interest. -conviction of a crime out of acts increasing the hazard insured against.. Non-payment of premiums. surrender of the policy before the termination of the period agreed upon. In case of ASSIGNMENT< the assignee NEED NOT HAVE insurable interest. Property Insurance – the beneficiary and the assignee must have INSURABLE INTEREST.insurer never incurred liability d. No insurance policy issued or renewed is valid and binding UNTIL ACTUAL PAYMENT of the premium. -REQUISITES: a. Fire c. -determination by the Commissioner that the policy would violate the Insurance Code. G. Any agreement to the contrary is VOID> Ex. c. Consent of the insurer must be secured before the assignment. or of its last reinstatement. parties have agreed to pay the premium by installments. Non-life insurance a. Marine b. which shall have been in force during the lifetime of the insured for a period of 2 years. the INSURER can no longer prove that the policy is void ab initio or is rescinddible by reason of the fraudulent concealment or misrepresentation of the insured or his agent. *Cancellation of Non-life Policy GROUNDS: -non-payment of premium. 4. *OTHER INSURANCE CLAUSE – provides that the policy shall be void if the insured should procure other insurances without the consent of the insurer. REQUISITES OF CANCELLATION (Sec. Group c. Running Policy/Floating Policy – contemplates successive insurances and provides that the subject of the insurance be defined from time to time. TYPES OF INSURANCE CONTRACTS: 1. 2.R. credit term has been granted. acknowledgement that premium has been paid. *INSURABLE INTEREST of Beneficiary vs. Contract of Suretyship – *Can a depositary insure the things deposited to him? -yes.
c. Concealment b. while in RI. the insured has to give his consent. the insured in the first contract of insurance is the nd party in interest in the 2 contract of insurance. Constructive Total loss – when the insured exercise the right of abandonment. e. the insurer remains in such capacity. the subject is the original insurer’s risk. whenever there will be many deaths or claims. 3. Representation d. *DIFFERENCE between Policy of Insurance and Reinsurance: a. while RI is the insurance of different interest. e. failure of the beneficiary to furnish proof of death or to comply with any condition imposed by the policy after the loss has happened. the insurer becomes an insured . -purposely to enable the insurer to be able to pay all claims. Loss due to the rescuing of the thing from the peril insured. Exception –specifies the risks excluded which would have been included under the general language describing the risks assumed. b. KINDS of LOSSES: (PAC) 1. -insured can also from the insurers the excess of the premium he paid. in DI. e. against possibility of big losses. b. LOSS and CLAIMS SETTLEMENT PROXIMATE CAUSE – any cause that produces the injury in a natural and continuous sequence. Delimitation of the risk. a. *DOUBLE INSURANCE vs. except when negligence is so gross amounting to willful act. c/ Control of the risk to guard against the increase of risk. c. except when the proximate cause is an excepted peril. *Devices used by the INSURER for ascertaining or controlling the risk? a. some or all of the insurers. action was not brought within the time specified. before or after the loss. d. the amount thereof. unbroken by any efficient intervening cause. Actual Total Loss – entitles the insured to full recovery. CASH SURRENDER VALUE – part of the premium that is set aside which is mandatory upon insurance company. Determine if loss occurs. in DI. b. a. DI involves the same interest. Interest insured is the same. *REQUISITES of double insurance: (TOSIR) a. while in RI. -is an insurance against possible liability and serves to keep the insurer solvent. Condition c. Facultative – the reinsurer may refuse to accept the ceded policy. Proximate and Immediate Cause. but may be prohibited by other insurance clause. and deprives the insured from possession thereof. OVER-INSURANCE – insuring the property more than the value of the insurable interest . Warranty DOUBLE INSURANCE /REINSURANCE *WHAT IS DOUBLE INSURANCE – exists where one person is insured by several insurers. Policy is a written and formal evidence of a contract of insurance. Two or more insurers insuring separately. the insured shall bear part of the loss. in whole or in part. vicious type of fraud. d. while in RI. g. while in RI. in DI. whereby the latter will accept the insurance ceded by the person originally insured. RULE: Insurer is bound only to pay the amount of the value of the property lost. Policy embodies the terms and stipulations in the contract of insurance. by Treaty – by prior agreement between the insured and insurer. The insured can recover the excess of the premium paid. violations of the condition in the policy relating to naval or military service. Risk or peril insured against is the same *EFFECTS OF DOUBLE INSURANCE/OVERINSURANCE: -insured can claim only up to the agreed valuation or up to the full insurable value from any. but the thing was exposed to a peril not insured against. *HOW REINSURANCE IS DONE? . e. the consent of the original insured is NOT necessary. and if so. b. while in every Reinsurance. such that the result would not have occurred otherwise. 2. -insurer is Liable when: Proximate cause of the loss is the peril insured against. is a contract of procuring a third person by the insurer to insure him against a loss or liability by reason of the original insurance. *WHAT IS REINSURANCE/REINSURANCE CESSION –a rd contract whereby the insurer procures a 3 person to insure him against loss or liability by reason of such original insurance. *WHEN INSURER NOT LIABLE for A LOSS? DEVICES USED to ascertain and control the risk or loss: a. b. while a Reinsurance. REINSURANCE.d. -not prohibited by law. separately in respect to the same subject and interest. with the same insurance company. in DI. Correct estimation of risk. the subject of insurance is property. a. the original insured has no interest in the reinsurance contract. d. Partial Loss – carries with it co-insurance. the original contract of insurance and the contract of reinsurance are covered by separate policies. Subject matter is the same. Only one insured. f. with notice to the insurer. Loss due to the negligence of the insured.
2/ payment of the insurer to the insured for a risk not covered by the policy. c. actions. Unreasonable delay in acknowledging communication 3. *WHAT ARE IMPLIED WARRANTIES IN MARINE INSURANCE? (SNNPP) 1. Profits. effects. . 106). assemble. marine builder’s risks and all personal property floaters risks. or while awaiting shipment. storage. or the Commissioner: -beneficiary is entitled to : a. -it inures to the insurer without any formal assignment or any express stipulation. freightage. crafts or instrumentalities. 3. with reference to a lawful claim or right which could be legal or conventional. Seaworthiness at the time of the inception of the insurance. Presence of Insurable Interest ALL RISK MARINE INSURANCE – covers all risks other than those due to the willful and fraudulent act of the insured. appertaining to or in connection with any perils or risks of navigation. including war risks. releasing of the wrong doer by the insured. 4. Bad faith in settling clear and reasonable claims 5. *EXAMPLES OF UNFAIR CLAIMS SETTLEMENT By the INSURER: . precious stone. damages under the NCC. -actions must be brought in proper cases. c. The burden of proof is on the INSURER. c. b. 3. Non-engagement in any illegal ventures. -if the ship is hypothecated by a bottomry loan. it is subrogated pro tanto to any right of action which the insured may have against the person or circumstances/peril insured against. *LIABILITY OF THE INSURER if the INSURED COMMITTED FELONY – insurable and the insurer is liable on the ground that such acts are accidental. . money. that is twice the value of the legal interest. OR while being packed.results to revocation or certification of CA. provided it is not less than one year from the time the cause of action accrues. 5. *INSURABLE INTEREST in MARINE INSURANCE: (SECFP) 1. Recovery of loss in excess of insurance coverage. Misrepresentation as to the coverage. securities. the insurable interest is only up to the extent of the value of the vessel over the loan. merchandise. Excess of the value of the vessel over the bottomry loan 3. with the Commission or the Courts. -upon payment of the insurer to the insured. the claim shall be deemed waived. which caused the loss. No deviation unless proper. bridge.. otherwise. -but liability as a consequence of a deliberate criminal act is NOT INSURABLE> *NOTICE of SETTLEMENT – stipulation in the policy requiring that the consent of the insurer must first be obtained before any payment by the person responsible for the loss is settled is valid. transshipment. PRESCRIPTION: -10 years in the absence of express stipulation in the policy. incident to ownership and operation of marine vessels. repair and maintenance. or by arbitration. compressed or baled. CA – notice of claim must be filed within 6 months from the date of accident otherwise.a. *MARINE INSURANCE: INCLUDES: a. transit or transportation. Possession of documents of neutrality or nationality. b. jewelry and metals. or unless expressly excepted. when the amount recoverable is less than the value of the expenses for the suit. claim shall be made within 60 days after presentation of the claim and the filing of the proof of the death of the insured. *CASES where there is no right of subrogation: 1. 1. cargoes. 5. and not from the time of the loss. or reshipment. 2. persons connected with marine insurance. No promptness in investigation 4. and the liability of the insured for such losses. -parties may agree on a shorter period. the claimant’s right of action shall prescribe. Property Insurance – claims shall be made within 30 days after presentation of proof. bottomry. Life Insurance –immediate payment of policy upon maturity. -payment to the insured makes the insurer an assignee inequity. b. interest respondentia. contructions. 100). the payment of interest for the duration of the delay. and furnishing as an aid to navigation. aircrafts. attorney’s fees and litigation expenses. and piers. b. crafts. Loss where the excepted peril is the proximate cause. Life Insurance. used in the ocean or inland waterways. 2. 4. MARINE PROTECTION AND INDEMNITY INSURANCE -insurance against loss . SUBROGATION – is the substitution of one person in the place of another.if maturity is on death of the insured. or expenses. crated. or during delays. vessels. Charterer(sec. evidence of debts. Shipowner on the vessesl (sec. Loss due to connivance of the agent and the insured. d. meaning it simply accrues upon payment of the insurance company of an insurance claim. 4. vehicles. *CLAIMS SETTLEMENT – a. Jimenez vs. RIGHT OF SUBROGATION – -a normal incident of indemnity property insurance as a legal effect of payment. freightage. and ascertainment of the loss either by agreement of the parties. damage. Compelling the insured to sue. -the cause of action accrues from the final rejection of the claim of the insured. *EFFECTS OF DELAY OF THE INSURER: -upon finding of the Court. tunnel. 2. within one year from the denial of the claim.Willful act or gross negligence on the part of the insured.
PERILS OF THE SEA. an unreasonable delay in repairing the defect exonerates the insurer on ship. or shipowner’s interest from liability arising therefrom. at the same time. d. When different portion of the voyage are contemplated – at the commencement of each portion. PERILS OF THE SEA -includes only those casualties due to the unusual violence or extraordinary causes. (except when it caused the Loss): (WULLN) a. the cargo or both. *APPLICABILITY OF IMPLIED WARRANTY OF SEAWORTHINESS TO CARGO OWNERS: -fact of unseaworthiness unknown to the Insured is IMMATERIAL in ordinary Marine Insurance. *REQUISITES: Common danger to the vessel and cargo. Sacrifice is Necessary. Time Policy . and to encounter ordinary perils of the voyage. unless occasioned or acquiesced by the insured. in order to save the vessel . *MATTERS concealed but did not vitiate the MARINE INSURANCE. for the benefit or safety of all. vs PERILS OF THE SHIP a.implied warranty is nOT COMPLIED unless the vessel is seaworthy at the commencement of every voyage it undertakes during that time. PARTICULAR AVERAGE LOSS (PAL) -includes all expenses and damages caused to the vessel and her cargo. Does not extend to the aggravation or increase of a maritime risks of war operations. which DOES NOT INURE to the common benefit and profit of all persons interested in the vessel and the cargo. BUILDER’s RISKS – covers damage to ways from launching as well as damage to the ship. -when so covered. and goes to pieces after the cargo is saved. -Amount of insurance is less than the value of the property insured. in pursuance of some unlawful or fraudulent purpose.Liability of the insured thing to capture or detention. Marine Insurance – co-insurance exist when: -Partial Loss. when the ship was seaworthy at the commencement of the voyage. Liability to seizure for breach of foreign laws. Made by the master or upon his authority. without the consent of the owners. -negligence and failure of the ship owner to provide the vessel with necessary equipment to convey the cargo under ordinary condition. PARTICULAR AVERAGE LOSS: a. -ordinary wear and tear of the ship. in consequence of improper towage. the insured is considered a Coinsurer for the difference between the amount of the insurance and the value of the property. but becomes unseaworthy during the voyage. GENERAL AVERAGE LOSS(GAL) -damages or expenses deliberately caused by the master of the vessel or upon his authority. -may be covered by the policy. *WHAT IS CO-INSURANCE CLAUSE? a. b. d. Result is successful. PERILS OF THE SHIP – losses or damages resulting from: -natural and inevitable action of the sea. except in the following: a. and may not be used as a defense by the insured in order to recover from the policy. . c. -one that could not be foreseen and not attributable to the fault of anybody. NOTE: In the absence of stipulation. Use of False or Simulated Papers. c. Property Insurance -a stipulation which provides that where the property is insured LESS THAN its value. but also to the master and the crew and other implements for the voyage. and to the prejudice of the owner’s interest. *WHEN SHIP SHOULD BE SEAWORTHY? -at the time of the commencement of the risk. b. -arise from overwhelming power which cannot be guarded against by the ordinary exertion of human skill or prudence. e. b. c. The INSURED is bound to prove that the cause of the loss is a peril of the sea. from a real or known risk. Fire Insurance – must be expressly stipulated. -losses which do not entitle the unfortunate owners to receive contribution from other owners concerned with the venture as where a vessel accidentally runs aground. -WARRANTY of SEAWORTHINESS: -extends not only to the condition of the structure of the ship. b. the risks insured against are only Perils of the Sea. when insurance is upon the cargo – at the commencement of each particular voyage. Want of necessary documents. National character of the insured. Part of the vessel or cargo was deliberately sacrificed. contemplated by the parties to the policy. GENERAL AVERAGE LOSS vs. connected with navigation. WAR RISKS – extends to perils due to directly hostile actions. *WHAT IS BARRATRY? –willful misconduct on the part of the master or crew. SEAWORTHINESS – -reasonably fit to perform service. NOT WAR RISKS – collision of a wreck of a ship sunk by an enemy. PERILS OF NAVIGATION – includes all perils in making landing. proof is necessary to prove that the act is willful and intentional.
*LOAN ON BOTTOMRY or RESPONDENTIA -loan in which the repayment of the sum loaned and the premium stipulated. made to save human life or another distressed vessel. -if made by the tenant with knowledge of the insured – the policy shall be forfeited. -results in the extinguishment of the loan. -Insurer can still claim payment from the common carrier for breach of contract based on the insurer’s right of subrogation. but shall not exceed the total value of the policy. ABANDONMENT – act of the insured after a constructive total loss. and accordingly. ALTERATION – when the thing insured is used other than what it is limited in the policy. shall be DIVIDED between the lender and the insurer in proportion to the legitimate interest of each one of them. pursuant to the following requisites: (SAMAMM) Special limitation is imposed as to the use of the thing insured. -insurable if expected. binds himself to transport the merchandise or person for a fixed price. orally or in writing. *What is the EXTENT of the INSURER’S LIABILITY in an Open Policy? -the actual total loss represents the total indemnity due and payable by the insurer. Abandonment is neither partial nor conditional. e. or an unreasonable delay in pursuing voyage. d. without abandoning the goods. -if made by the agent without the consent of the insured – the policy is AVOIDED. Explicit notice of abandonment. windstorm. the owner or the agent of the vessel. tornado and earthquake and other allied risks. Friendly Fire – fire burns in the place where it is supposed to be. *WHEN DEVIATION IS PROPER? 1. -expenses of shipment exceed ¾ of value of cargo. or the vessel. the shipowner has no insurable interest on the freightage. for a consideration agrees to indemnify the insured against a loss or damage to property by fire. or he may. done to comply with a warranty. ENTITLES the insurer to RESCIND in a contract of fire insurance. FREIGHTAGE – benefits derived by the ship owner from chartering of the ship or carriage of goods or of others. explosions. 2. Notice is given to the insurer. made in good faith to avoid peril. and claim for the whole insured value . when it is due to circumstances outside the control of the ship captain or owner.*EFFECT OF PAYMENT: -operates as a WAIVER on the Insurer’s right to enforce the implied warranty of seaworthiness. Made a violation of a material provision in the policy. etc. -actual loss of more than ¾ of the value of the object. without the consent of the insurer. 3. *INSURABLE INTEREST OF LENDER IN BOTTOMRY/ -only to the extent of the amount of the loan granted. -total deprivation of owner of possession of thing insured. breakage of shafts. g. -damage rendering the thing valueless. b. -may also include damage by lightning. by the means within the control of the insured. FRIENDLY FIRE vs. Made without the consent of the insurer’ Alteration increases the risks. HOSTILE FIRE: a. specifying the particular cause of abandonment. Actual relinquishment by the person insured of his interest to the thing insured. Alteration of the use of the thing insured. taking into consideration the principal amount of the loan. c. Loan on Bottomery – security is the vessel’ Loan on Respondentia – security is the cargo *What is the Insurable Interest of the vessel hypothecated by Bottomry? -excess of the value of the vessel over the amount of the secured bottomry. Constructive Total Loss – the insured may ABANDON the goods or vessel to the insurer. FIRE INSURANCE: -contract of indemnity by which the insurer. Factual. or the commencement of an entirely different voyage. LOSS and ABANDONMENT: a. Made within the control of the insured. but if payable at any event. b. Actual Total Loss -total destruction -loss by sinking. DEPENDS upon the safe arrival of the goods to the port. and the latent defect of the machinery and the hull. -damage reducing value by more than ¾ of the value of the vessel and of cargo. the lender stands to suffer damage by the loss of the vessel or the cargo. (loss resulting is not insurable) . *RIGHTS OF THE INSURER and the LENDER: -the value of what may be saved or salvaged after a loss. thereby increasing the risks. declares the relinquishment to the insurer of his interest to the thing insured. whether the ship is lost or not. Constructive Total Loss exist. INCHMAREE CLAUSE – cover loss or damage to the hull or machinery through negligence of the captain. *DEVIATION –departure of the vessel from the course of voyage. claim for partial loss. C. 4. CHARTER PARTY – a contract by virtue of which. f. -waiver extends only in favor of the insured. Made within a reasonable time after receipt of reliable information of the loss. *REQUISITES for a Valid ABANDONMENT: (CAMFANE) a. when the same are covered by the extension of the fire insurance policy.
Overinsurance –building was insured more than the value of property insured. 2. payment shall be made within five working days after reaching an agreement. or dismounting from. *May a third person sue the Insurer directly? -IT DEPENDS. Hostile Fire – fire that escapes and burns in a place where it is not supposed to be. total indemnity does not exceed Php 15. 7.000. 5. -if the insurer pays the third person. *WHAT ARE PRIMA FACIE EVIDENCE OF ARSON? (SISDOTS) 1. but in case shall exceed the amount of recovery stipulated in the contract. if the victim is not an OCCUPANT. a. d. and the insured can recover even if the thief has no driver’s license. Yes. c. otherwise it will be VOID. NO. otherwise. b. then recovery is to the extent of the value of the thing insured. *how protection is complied? 1. In all cases. *THEFT CLAUSE – provides that the insurer. If there is NO AGREEMENT . b. *NOTE: Increase of risk alone WILL NOT ENTITLE the insurer to rescind the contract. Prescriptive Period -must be filed with the Insurance Commission within one year from the denial of the claim. instead of the payment of the value thereof. Simultaneous – fire broke out at the same time in two or more places. if the policy provides reimbursement after actual payment by the insured. insurance policy 2. c. insurable. to drive the vehicle. MUST BE DULY LICENSED. claim may be made against one motor vehicle only *From whom should the injured recover? a. other than the insured owner. . mounting. TIME TO FILE and PROCESS CLAIM a. Demand for money for desistance of the suit filed to recover. the insurer is excused from liability. is liable when the vehicle is unlawfully taken.*What is a Motor Vehicle? – b. Public Liability Insurance Motor vehicle Liability Insurance. cash bond. 6. *OPTION TO REBUILD CLAUSE – made when the parties agreed to repair. *Can Fire Insurance be Transferred? – NO. the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained. Suspicious – finding of electrical. surety cash bond. or for indemnity against loss.00 b. IF there be an Agreement. Submission of Proof of Loss -police report -death cert -medical report c. 3. Against the INSURER of the directly offending vehicle. -may provide liability for third person by way of stipulation rd Pour Autrui –whereby 3 persons may directly sue the insurer upon the occurrence of the loss. -if there is value. -examples: Employer’s Liability Insurance. SURETYSHIP: . the insurance policy will pay only the No-Fault indemnity. there must be a showing of violating the contract. Inflammable – keeping of inflammable materials in excess of need. Two or more fire claims covered in the same period. mechanical or chemical fire causing devices. CASUALTY INSURANCE – covers the loss or liability arising from accident or mishap. *AUTHORIZED DRIVER CLAUSE – stipulations that the driver. b. under the following conditions: a. rd a. COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE -primarily intended to provide compensation for the death or bodily injuries suffered by innocent third parties. rebuild or replace the damaged buildings and structures wholly or partially. Period of Notice to File -6 months from the date of the accident. 3. the right of subrogation operates. or passengers as a result of the negligent operation and use of motor vehicles. otherwise waived. *WHAT IS THE NO FAULT CLAUSE? -provides that the injured third party or passenger has the option to file a claim for the death or injury without the necessity of proving fault or negligence of any kind. Measure of Indemnity in a Fire insurance: -extent to which it would take the insured to replace the thing lost or destroyed in its original condition. Against the INSURER of the vehicle to which the occupant is riding . excluding those falling under other types of insurance such as fire or marine. without prejudice to the claimant in pursuing his claim further. 4. if the policy provides for indemnity against 3 party liability. Substantial withdrawal of stocks which are insured. and has no effect. as it may affect other conditions of the insured. *Passenger – any fare paying person transported and conveyed by a motor vehicle for transportation. *What is the Purpose of Compulsory Third Party Liability Insurance? -to give immediate financial assistance to the victims. Workmens Compensation Insurance.
4. Margin of solvency in the company is deficient. Fidelity Guaranty Insurance – one agrees to indemnify the insured against loss arising from want of integrity. 2. REVOCATION OF CERTIFICATE OF AUTHORITY: *Grounds (Sec.Kinds of Bonds 1. 247) (FUPIM) 1. minus the paid up capital over liabilities and reserve. 2. Proceedings are hazardous to the public or policyholders. 3. -provides for benefits or values thereunder to vary so as to reflect investment results of any segregated portfolio of investment. 5. fidelity. *WHAT is MARGIN OF SOLVENCY? -excess of admitted assest. *What is a Boldereaux? -books where the re-insured enters the risks that the reinsurer is supposed to assume. Unsound condition of the company. Failure to comply with the provisions of the law. Impairment or deficiency in the assets. or other persons holding positions in trust. VARIABLE CONTRACT – -policy or contract on either group or individual basis. . issued by an insurance company providing for the benefits r other contractual payment. Fidelity Bond –bond against loss from misconduct.
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