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Insurance; Double Insurance (2005) When does double insurance exist?

(2%) SUGGESTED ANSWER: Under Section 93 of the Insurance Code, there is double insurance when there is over-insurance with two or more companies, covering the same property, the same insurable interest and the same risk. Double insurance exists where the same person is insured by several insurers separately in respect of the same subject matter and interests. (Geagonia v. Court of Appeals, G.R. No. 114427, February 6, 1995) Insurance; Double Insurance; effect (1993) Julie and Alma formed a business partnership. Under the business name Pino Shop, the partnership engaged in a sale of construction materials. Julie insured the stocks in trade of Pino Shop with WGC Insurance Co for P350th. Subsequently, she again got an insurance contract with RSI for P1m and then from EIC for P200th. A fire of unknown origin gutted the store of the partnership. Julie filed her claims with the three insurance companies. However, her claims were denied separately for breach of policy condition which required the insured to give notice of any insurance effected covering the stocks in trade. Julie went to court and contended that she should not be blamed for the omission, alleging that the insurance agents for WGC, RSI and EIC knew of the existence of the additional insurance coverages and that she was not informed about the requirement that such other or additional insurance should be stated in the policy. Is the contention of Julie tenable? Explain. May she recover on her fire insurance policies? Explain. SUGGESTED ANSWER: 1) No. An insured is required to disclose the other insurances covering the subject matter of the insurance being applied for. (New Life Ent v CA 207 s 669) 2) No, because she is guilty of violation of a warranty/ condition. Insurance; Effects; Payment of Premiums by Installment (2006) The Peninsula Insurance Company offered to insure Francis' brand new car against all risks in the sum of PI Million for 1 year. The policy was issued with the premium fixed at 160,000.00 payable in 6 months. Francis only paid the first two months installments. Despite demands, he failed to pay the subsequent installments. Five months after the issuance of the policy, the vehicle was carnapped. Francis filed with the insurance company a claim for its value. However, the company denied his claim on the ground that he failed to pay the premium resulting in the cancellation of the policy. Can Francis recover from the Peninsula Insurance Company? (5%) SUGGESTED ANSWER: Yes, when insured and insurer have agreed to the payment of premium by installments and partial payment has been made at the time of loss, then

the insurer becomes liable. When the car loss happened on the 5th month, the six months agreed period of payment had not yet elapsed (UCPB General Insurance v. Masagana Telamart, G.R. No. 137172, April 4, 2001) . Francis can recover from Peninsula Insurance Company, but the latter has the right to deduct the amount of unpaid premium from the insurance proceeds. Insurer: Effects: Several Insurers (2005) What is the nature of the liability of the several insurers in double insurance? Explain. (2%) SUGGESTED ANSWER: The nature of the liability of the several insurers in double insurance is that each insurer is bound to the contribute ratably to the loss in proportion to the amount for which he is liable under his contract as provided for by Sec 94 of ICP par. The ratable contribution of each of each insurer will be determined based on the following formula: AMOUNT OF POLICY divided by TOTAL INSURANCE TAKEN multiplied by LOSS = LIABILITY OF THE INSURER. ALTERNATIVE ANSWER: Each insurer is bound, as between himself and other insurers, to contribute ratably to the loss in proportion to the amount for which he is liable under his contract. (Sec. 94, Insurance Code)

Insurer; 3rd Party Liability (1996) While driving his car along EDSA, Cesar sideswiped Roberto, causing injuries to the latter, Roberto sued Cesar and the third party liability insurer for damages and/or insurance proceeds. The insurance company moved to dismiss the complaint, contending that the liability of Cesar has not yet been determined with finality. a) Is the contention of the insurer correct? Explain. b) May the insurer be held liable with Cesar? SUGGESTED ANSWER: No, the contention of the insurer is not correct. There is no need to wait for the decision of the court determining Cesars liability with finality before the third party liability insurer could be sued. The occurrence of the injury to Roberto immediately gave rise to the liability of the insurer under its policy. In other words, where an insurance policy insures directly against liability, the insurers liability accrues immediately upon the occurrence of the injury or event upon which the liability depends (Sherman Shafer v Judge RTC Olongapo City Branch 75 GR l-78848, Nov 14 88 167s386) The insurer cannot be held solidarily liable with Cesar. The liability of the insurer is based on contract while that of Cesar is based on tort. If the insurer were solidarily liable with Cesar, it could be made to pay more than the amount stated in the policy. This would, however, be contrary to the principles underlying insurance contracts. On the other hand, if the insurer were solidarily liable with Cesar and it is made to pay only up to the amount stated in the insurance policy, the principles underlying solidary obligations would be violated . (Malayan Ins Co v CA GR L-36413 Sep 26, 88

165s536; Figuracion vda de Maglana v Consolacion GR 60506 Aug 6, 92 212s268) Marine Insurance; Implied Warranties (2000) What warranties are implied in marine insurance? SUGGESTED ANSWER: The following warranties are implied in marine insurance: 1) That the ship is seaworthy to make the voyage and/or to take in certain cargoes 2) That the ship shall not deviate from the voyage insured; 3) That the ship shall carry the necessary documents to show nationality or neutrality and that it will not carry any document which will cast reasonable suspicion thereon; 4) That the ship shall not carry contraband, especially if it is making a voyage through belligerent waters. Marine Insurance; Peril of the Ship vs. Peril of the Sea (1998) A marine insurance policy on a cargo states that the insurer shall be liable for losses incident to perils of the sea. During the voyage, seawater entered the compartment where the cargo was stored due to the defective drainpipe of the ship. The insured filed an action on the policy for recovery of the damages caused to the cargo. May the insured recover damages? (5%) SUGGESTED ANSWER: No. The proximate cause of the damage to the cargo insured was the defective drainpipe of the ship. This is peril of the ship, and not peril of the sea. The defect in the drainpipe was the result of the ordinary use of the ship. To recover under a marine insurance policy, the proximate cause of the loss or damage must be peril of the sea. Mutual Insurance Company; Nature & Definition (2006) What is a mutual insurance company or association? SUGGESTED ANSWER: A mutual life insurance corporation is a cooperative that promotes the welfare of its own members, with the money collected from among themselves and solely for their own protection and not for profit. Members are both the insurer and insured. A mutual life insurance company has no capital stock and relies solely upon its contributions or premiums to meet unexpected losses, contingencies and expenses (Republic v. Sunlife, G.R. No 158085, October 14, 2005).