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June 25, 2010 Let’s start with the brief history of insurance. Authors of different books vary on their accounts on how insurance started. But they are common in saying that insurance is based on the principle of giving aid to another who suffers loss by reason of unfortunate event. In the ancient times,(Hindus, Chinese, Egyptians), there were already societies which were organized for the purpose of extending aid to any of its members. And aid comes from the fund attributed by all of its members. But with respect to the modern day insurance that we have, its origin started from the maritime law or maritime transaction. Where merchants engaged in shipping ventures particularly Italian cities. They mutually agree among themselves to distribute the loss caused by the perils of navigation. And from that concept if insurance spread rapidly the states of Europe. In England in particular, you must have heard of the famous Lloyds of London. It’s a big insurance company. Actually, that started in an inn where merchants would gather. And gathering would be an occasion for them to discuss mutual agreements on how they could possibly protect themselves from the loss arising from the perils of navigation. From there, insurance evolved and developed to what we have now. And the rest is history. But for the Philippines, how did insurance develop? In the Philippines, it was rather late in development. We have low per capita income so we’re more concerned on the basic needs than our insurance. And also because of the attitude ‘bahala na’, so we leave everything to fate. But even the, the principles on which insurance is based is still the same. It started with the basic political units in the family and in the barangay wherein if a member of the family dies, we extend assistance, “limos”. And from there, there were organizations that were formed. But for modern day insurance in the Philippines, this was introduces by the representatives of Lloyds of London. They started with nonlife insurance. The life insurance was introduced by another company. Laws governing insurance of the Philippines: What are these laws? Primarily, the contract of insurance will be governed by the insurance code of 1978. Subsidiarily, it shall be governed by the provisions of NCC. What is the basis of the saying that it shall be governed by NCC? There is a specific provision of NCC that says NCC will apply – art 2011. It provides that the contract of insurance will be governed by special laws. ‘special laws’ refers to insurance code of the phil and other special laws. And for matters not specifically provided in the special law, then the provision oc NCC shall apply/govern. So that’s your legal basis in saying that NCC will apply subsidiarily. With respect to development of insurance laws in the Philippines, during Spanish times, what governed insurance transactions? Provisions of the code of commerce. After that, during American regime, we have the insurance act or act no. 247. After that, we still have the civil code. So even before, there were already provisions od civil code governing insurance. But I think as insurance progressed and evolved, the provisions of the civil code were not sufficient. So they enacted a specific law regulating insurance transaction. That is why PD 612 during the martial law came about. But there were several amendments made. And finally we have PD 1460 or the insurance code of 1978 which consolidated all the insurance law and that is the governing law of insurance transactions. Take now: our insurance code of 1997 was patterned after the civil code of California. And you have the rule in statutory construction that if the law is adopted from another country, interpretations and constructions made on that law shall be given weight.
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Because you have a rule in statutory construction – if there’s a conflict between general laws and special laws, apply the special laws. Ex. A, a married man obtained a life insurance policy with himself as the insured. He designates B, his common law wife as his beneficiary. In civil code, common law relationship is that of living together without benefit of marriage but without legal impediment to be married. A died. Can B recover from the insurance policy? No. Art 738 in relation to Art 2012; both of them are guilty of adultery and concubinage. Designating B as a beneficiary is equivalent to giving a donation to B Since A is prohibited from giving a donation to B, he cannot make B beneficiary. So in this case, B cannot recover the insurance. What happened to the policy? Is the policy void? Only the designation of the policy is void. So the proceeds of the insurance policy will go the estate of the insured. But it would be a different story if A insured B and designated B as the beneficiary. Remember that for purposes of insurance law and donation, the law does not require conviction but mere preponderance of evidence.
Another provision of NCC that relates to insurance contract is the perfection of the contract. Ex. If Mr A files an application for insurance coverage w/ B company and its officers in manila. If A mailed to B in June 1 its application; B sent the letter of acceptance for insurance coverage in June 3. But on June 2, A died. The heirs of A sought to recover from B company. Can the heirs recover? NO. the contract of insurance was not perfected. Art 7319 of NCC – obligcon – perfection of the contract entered into through correspondence – acceptance made through letter or correspondence shall bind the offerer from the time the acceptance came to his knowledge. Here, the contract was not perfected. Because the acceptance by B of A’s application never came to the knowledge of A. A died. Therefore the heirs of A cannot recover from B. You cannot find this in the insurance code bt you can find this in NCC.
Another provision of NCC relating to insurance is art 739 and art 2010. Art 739 talks about void donations. Example of void donations: Those donations made by persons guilty of adultery or concubinage, Those persons guilty of criminal offense in consideration thereof, Those given to public officer, ascendant or descendant by reason of public office. These are examples of void donations under art 739. The basis is art 2012 – a person prohibited from receiving donation under art 739 cannot be named beneficiary from a life insurance policy of a person who cannot make a donation to him. Why? Is there a similarity on making a donation and designating someone as beneficiary? Yes. It is of similar nature because botha acts are acts of liberality.
Another provision is in art 2207. In essence, this talks about right of subrogation. The right of subrogation is the right to step into the shoes. In relation to insurance law, the insurer steps into the shoes of the insured, after paying the insured and acquires all the rights of the insured against the wrongdoer who has caused the damage. What is the reason for subrogation? To promote justice and equity in the sense that… Without the right of subrogation, the wrongdoer would be free from liability. So to make the person who has caused the loss liable. Because without the right of subrogation, what would happen is that, if I’m the insured, I would already receive compensation from the insurer. So the tendency is, I won’t already go after the wrongdoer. But with the right of subrogation, the insurer can go after the third party and make him liable. So to prevent double recovery from the insurance company and from the wrongdoer.
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When does the right of subrogation accrue? Must it be provided in the contract? Must the insured make the assignment of his claim to the insurer to go after the wrongdoer? No. It accrues the moment the insurer pays the insured. The law does not provide that it be stipulated in the contract or there be assignment of his claim. The moment he pays, it operates as an EQUITTABLE ASSIGNMENT. How much can XYZ exercising the right of compensation recover from B? XYZ can only recover 1.5m because as we said, the extent of the insurer’s right of subrogation is only to the extent of A’s right also. A’s right against B is only 1.5m. So XYZ can still go after B for 1.5m
Is the right applicable to both life and property insurance? As expressly provided in 2207, it states there that it’s the plaintiff’s property. What’s the reason why it’s applicable only to property insurance and not to life insurance? Because you cannot say that you have been compensated enough. Property insurance is a contract of indemnity. A CONTRACT OF INDEMNITY means that you can only recover to the extent of the damage that you have suffered or to the extent of your insurable interest. But in life insurance as a general rule, it’s not a contract of indemnity. Because the value of life is unlimited. No amount of recovery can compensate you for loss of life. So you cannot say to the insurer not to recover from the wrongdoer because we have recovered enough. SUBROGATION DOES NOT EXIST IN LIFE INSURANCE.
Assuming the court adjudged B to be liable for 2.5m, how much can XYZ recover from B? XYZ, the extent of his right to subrogation is to the extent of A’s right against B, but in no case shall it exceed the amount that XYZ paid to A. So what about the .5m? who can recover? Only A.
2207 – if the amount paid by the insured is not sufficient to recover the loss or injury, the insured has the right to claim the deficiencwy against or from the wrongdoer. So the right to recover the deficiency is on the insured. Not the insurer.
What about if between A and B, B already paid 2m, the value of the damage. Can XYZ still go after B? No. The right of subrogation is still applicable, but A no longer has rights against B, because he already received compensation. What’s the remedy of XYZ? Go after A. Ka diba, right of subrogation prevents double recovery. Since XYZ can no longer be subrogated of the rights of A against B. it has the right to recover whatever he has paid to A. So the rightof insurance company is only to the extent of the right of A. But in no case more than the amount he has paid. And if there is deficiency, the one who is entitiled to recover the deficiency is the insured.
To what extent can the insurer recover from the wrongdoer? Ex. Insurer insured the property of A. The value of the property is 2m. The value of the policy is also 2m. rd B, 3 party, burned the house of A. He is responsible for the loss. Under the policy XYZ has to pay A 2m, the value of the policy. In the case between A and B, B was adjudged to be liable for 1.5m. XYZ company, after paying A, he go after B? Yes. He stepped into the shoes of A, acquired all the rights of A.
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What’s the effect if A, thru his own act or negligence releases B from liability? He signs a waiver or quitclaim. The insurance co paid A 2m. Can XYZ still go after B? Is the right of subrogation still available? No. A no longer has the right to which XYZ would be subrogated to. So what is the remedy of XYZ? So after A. Because if the insured through his own fault or act caused the loss of right of subrogation on the insurance company, he has the obligation to reimburse whatever amount he has received from the insurer. Take note that when the insurance company is subrogated to the right of the insured, it is as if siya ang insured. He takes the personality of the insured, not that of the insurance company. Ex. A co, insurer, insured the cargoes of B, shipper. B entered into a contract of carriage with C, the carrier. Between A co and B, we have a contract of insurance. Between B and C, we have a contract of carriage. A insured the goods of B. The goods were damaged thru the fault of C. A co after paying B is subrogated to the rights of B. As a subrogee, A co has the right to go after C. This time he acts as the insured. Therefore, A co as the insured now can raise defenses available against the carrier, as the shipper, not as the insurer. At the same time, the carrier cannot raise the defense na defective ang insurance contract, because he is not a party to the insurance contract. Ang ilang relationship is not between a carrier and insurer. Because in the first place, C is not a part of the insurance contract. And when A co stepped into the shoes of B, he stepped into the shoes of the insured, not as the insurer. SEC 2.
A "contract of insurance" --is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. A contract of suretyship --shall be deemed to be an insurance contract, within the meaning of this Code, only if made by a surety who or which, as such, is doing an insurance business as hereinafter provided.
But if the carrier has already piad the insured, the insurance co can refuse payment. He can say that since he has already received payment from the carrier, that is tantamount to losing my right to subrogation. But you cannot compel the insured to go after the carrier first. If C knew that insurer already paid, B should return back to A. If the designation of the beneficiary is invalid, that alone is void. But the policy remains valid. But it will be void if you took the insurance policy of the life of the common law wife and at the same time designated himself as the beneficiary.
Donations made between husband and wife during marriage is void. If I insured my own life and I designate my husband as beneficiary, is the designation valid? Does it come in the prohibition on void donation? No. Both have insurable interest. But because what is prohibited in the family code on donations between husband and wife are donation inter vivos, and designation as beneficiary is donation mortis causa.
The insurer cannot tell the insured to go after the wrongdoer. It is the right of the insured to go after the insurance company or the third person. So insurance company cannot wait for 3rd p to pay. The insured can immediately go after the insurer. In fact, that’s the reason why he obtained the insurance.
What is contract of insurance? It is a contract whereby one party (insurer) undertakes for a consideration (premium) to indemnify the insured against loss, damage and indemnity arising from unknown contingency. This talks about indemnification which limits the definition to non life insurance or property insurance. Life insurance as we discussed earlier is not a contract of indemnity. Kwin Transcripts Page 4
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subsidiarily liable. The liability of the insurer arises only upon the happening of the contingent event. 5. In guaranty. In this case. As a rule. EXECUTORY AS TO INSURER. So to determine whether it’s an insurance contract or not. It becomes an insurance contract if they are doing an insurance business. Because the contract of insurance is a RISK DISTRIBUTING DEVICE (all 5 are present). Naghuat ra siya sa insurer to indemnify him which may or may not happen. only 3 elements are present. In effect. the guarantor pays if the debtor cannot pay. the perfection os upon the delivery of the thing. the insured must possess an INSURABLE INTEREST on the subject matter of the insurance. Object is to provide protection.com . B has insurable interest:the loan / 2. cause. You merely transfer the risk. When does it become one? When it forms part of the general scheme. Risk distributing device. damage. in risk shifting device. It’s because it is perfected the moment there is meeting of the minds. the surety pays if the debtor does not pay.Insurance Kwin But anyway. A borrowed money from B. there is ASSUMPTION OF RISK by the insurer 4. or impairment arising from an UNKNOWN OR CONTINGENT EVENT. then that’s only a RISK SHIFTING DIVICE. So again. that becomes a UNILATERAL CONTRACT Kw Kwin Transcripts Page 5 PDF Created with deskPDF TS PDF Writer . part of GENERAL SCHEME who are exposed to somewhat similar risk. Is the contract between B and C a contract of insurance? NO. In suretyship. Consent of the contracting parties. Risk: insolvency or death / 3. B entered into a contract with C whereby C guarantees payment of C’s obligation to B. all 5 elements are present. 3. / 1. object. can B insure the life of A? Yes. Rateble contribution: payment made only to C This is only a risk shifting device. the insurable interest must be SUBJECT TO RISK of loss. The basic elements of an insurance contract as in any other contract – consent. That’s why it is subject to regulation because it is an aleatory contract. property if property insurance and risk of loss if casualty insurance. Exception: if you insure the life of the debtor. In guaranty. Ex. this is an exception to the rule that a contract of life insurance is not a contract of indemnity. there is benefit of exhaustion of assets. General Scheme: the contract was only bet B and C X 5. In suretyship. they are not a contract of insurance but merely a risk shifting device. Subject matter is the life in life insurance. EXPT: compulsory motor vehicle insurance 3.docudesk. For now. So again the contract of suretyship can become a contract of insurance if the surety is doing an insurance business. So A is the debtor. insured must make some RATABLE CONTRIBUTION to the general fund called PREMIUM. It is considered an insurance business if it is occasioned and not just incidental to the legitimate business. it is VOLUNTARY. 2. As opposed to real contracts. But a contract of suretyship can become a contract of insurance. If only the first three are present. look at the designation of the contract. To protect B from the death or insolvency of A. not a risk distributing device. EXECUTED AS TO INSURED. primarily liable. there is none. This is a contract of guaranty. Based on the definition. -it becomes a contract of indemnity because you can only recover to the extent of you loan or insurable interest CHARACTERISTICS OF INSURANCE CONTACTS: 1. The last 2 requirements are present. The premium is already paid. Is a contract of insurance a consensual contract or a real contract? CONSENSUAL contract. we have the elements of an insurance contract. Assumption of risk: insurance X 4. What are the distinguishing elements of an insurance contract? 1. All must be present. But as a rule.DEMO :: http://www. 2. that’s the definition.
That’s a wagering contract. popular meaning. “who cares about the government. this was changed. (rider) But they failed to modify the table. In this case. he renewed the policy twice. ordinary. Sonco will qualify to recover the policy. So the insurance company is estopped from saying that they are not covered. If you chose to adhere.docudesk. they should be given its plain. The policy did mot include death arising from drowning. So in their policy. That’s why it is called contract of adhesion. the policy remains.com . So there was authority to the collecting officer to make salary deductions. Just to begin. The participation of the insured is either to adhere to or reject the stipulations. That’s why if the property is insured and subsequently you sell it. Then it will be interpreted liberally in favor of the insured. Applying the doctrine of estoppel. you can no longer change. there’s no insurable interest. Sonco can recover. In effect the policy is suspended. Because in the contract. What is a CONTRACT OF ADHESION? Most if not all of the terms of the (insurance) contract are not a result of mutual negotiations of the parties. Instead the premiums will be considered Kwin Transcripts Page 6 Kw PDF Created with deskPDF TS PDF Writer .DEMO :: http://www. The language was chosen carefully with deliberate care and with aid of legal experts acting for the sole interest of the insurer. But it is not a contract of chance compared to a wagering contract. Only when there is doubt that you apply the rule on statutory construction: CONSTRUE STRICTLY AGAINST INSURER AND LIBERALLY IN FAVOR OF INSURED Basis? Because the contract of insurance is a contract of adhesion. In doctrine of estoppel. if the provisions of the contract are clear. they stated that they authorize their collecting officer of the bureau to deduct the premiums from the policy. there is an ambiguity. It did not state how much he will receive. In fact. There was an agreement bet BPWH and GSIS because government employees are covered by GSIS. Case: Landichu v GSIS Landichu was an employee of the bureau of public works and highways. It is not clear how much he can recover. PERSONAL It is based on the character. It is ALEARTORY because it id dependent upon the happening of a contingent event. Is that insurable? No. How much will he recover? 3k. Insurer denied payment alleging that the coverage was for a common carrier insurance and the vehicle was a private jeepney. They met an accident and somebody died. There was a summary for specific amounts depending on the extent of the injury. Later he died because of drowning The issue is in the amount. And if there are failure to deduct the premium. it’s not automatic that the insurance is likewise transferred. Now let’s go to INTERPRETATION OF INSURANCE CONTRACTS How is insurance contract interpreted? As in the rule of statutory contruction. representation or omission. So the issue was WON the private jeepney of Sonco will be covered by the insurance policy. Case: Del Rosario v Equitable Insurance He obtained a personal accident insurance from equitable The coverage was for 1k to 3k. a man of scant education insured his private jeepney.Insurance Kwin 4. Case: Feildman’s Insurance v Vda de Sonco Insured. In fact there was a statement by the agent. you have led someone to believe that a particular act exists and then later on denied or changed your stand. sue the government”. Like when you ensure the loss if you did not win the lotto. but later on. 5. through your acts. conductor credit of the person insured He may not be willing to insure the same property owned by another person. But if it is prescribed to the insured in its final printed form.
it is with risk. It involves loss of legs. unusual. Therefore. the death arising from the boxing was an accident. means unforeseen. unexpected. landichu was entitles to insurance In fact. fell and died. he was hit at the back of the head. Loss of hand here was defined by the policy to mean amputation from the wrist.Insurance Kwin indebtedness to GSIS. During a boxing contest. there was no loss of hand. So that when you enter into a boxing contest. that is an accident. There’s another case that I didn’t assign. Therefore. Applying the rules on statutory contract. Because total permanent paralysis of legs is equivalent to amputation of legs. But instead. Loss of legs was defined as amputation of legs. unpaid premiums would be considered as debts. So all the more reason why Landichu would not doubt his policy was effected. Second. Case: De la Cruz v Capitol Insurance The insurance policy was on accident insurance. but there was no amputation. So the policy according to them did not take effect. This will warn him that the policy did not take effect. It was a coverage for an accidental insurance the coverage was for loss of legs. the policy would not lapse. the premiums were not paid because GSIS failed to advice the collecting officer of the bureau to deduct premiums. SC said there was no ambiguity. This was not correct. the provision on the contract was clear as to what accident means. Unfortunately for Landichu. Insurance company said that the death was not an accident because he entered purposely into the boxing contest. without sign. What happened here was that he fractured only some fingers.com . The court said. without intention or design. fortuitous. Accident happens by chance. But there is no reason to think that way. it was the contention of GSIS that Landichu should have known that the premiums were not deducted because he received salary in full. you would force a desperate man to have his legs amputated to be covered by the policy. Because it is stipulated that even if the premiums were not deducted . So it shall be given its plain and ordinary meaning. The insurance company refused to pay saying that there was no amputation of legs. In fact SC said the there were lapses on the part of GSIS on their failure top advice the collecting officer. And also. But the insured is still entitled to recover. Kw Kwin Transcripts Page 7 PDF Created with deskPDF TS PDF Writer . Case: Ty v First National Security The coverage was for a partial disability resulting to loss of hand. There are risks but as for death.DEMO :: http://www. but it’s not your intention to die. GSIS said that the premiums were not paid. “accident” did not acquire technical meaning. GSIS gave out premiums. The insured met an accident which resulted to a total permanent paralysis of both of his legs. So when the heirs sought recovery from GSIS. There was a provision in the policy that it shall take effect on the first day of the month following the first payment of premium. there was only temporary disability.docudesk. If you would rule otherwise.
Kw Kwin Transcripts Page 8 PDF Created with deskPDF TS PDF Writer . --may. it’s not necessarily an insurance against liability. Give an example of insurance against damage. subject to the provisions of this chapter. or makabayad ka because you injured someone. like foe example. 2010 SEC 3 Any contingent or unknown event. wife. mother. And aside form being unknown. But it becomes as insurance against liability if the insurer will pay the third person. the benefits or proceeds of the policy is payable to the 3rd p. Normally. Any minor of the age of eighteen years or more. In short. notwithstanding such minority. if the insurer will indemnify you for the actual loss that you will suffer. it would create a liability to other person. the 3rd party can directly go after the insurance company. All rights. insurable risks are: 1. there’s a second requirement. title and interest in the policy of insurance taken out by an original owner on the life or health of a minor --shall automatically vest in the minor upon the death of the original owner. or create a liability against him. it is expressed in the policy by words ‘lost or not lost’. brother or sister. having insurable interest or 2. provided the insurance is taken on his own life and the beneficiary appointed is the minor's estate or the minor's father. contract for life. Otherwise. So past events can also be insured. So those two risks: 1. Insuring car against damage. Because under the policy. unless otherwise provided for in the policy. normally the insurance company will not cover prior loss. Unknown events are events that could either be past or present. if it is not provided in the policy. Contingent events are events that may or may not happen. insurance against damage 2. either past or future.DEMO :: http://www. exercising its right to subrogation does not go after the insured. insurance against damage -anything that would create damage or cause damage to you. in insurance against liability.com . If not causing damage to you. The married woman or the minor herein allowed to take out an insurance policy --may exercise all the rights and privileges of an owner under a policy. Normally. What risk will there be? It will result to loss or damage. --may be insured against. How will this create liability? What would you insure? This will become insurance against liability that may be created when you make adamage on another car or if you hit someone. But in order for past events to be insured. husband. insurance against liability And then you insure these risks from what kind of events? Any contingent events and unknown events. The policy must expressly provide or expressly stipulate that it will cover a prior loss or it will cover the past event. The consent of the husband --is not necessary for the validity of an insurance policy taken out by a married woman on her life or that of her children. insurance against liability *remember that insurance company. It goes after the wrongdoer What may be insured? Why do we obtain insurance policy? What for? Arising from contingent or unknown event. child. health and accident insurance. the law requires that the past event must be unknown to the parties. makabayad kay nakabangga kag sakyanan. whether past or future. with any insurance company duly authorized to do business in the Philippines. Insurable risk are those risk s that would cause damage or loss to the person having insurable interest.Insurance Kwin July 2.docudesk. If the policy states that the insurer will INDEMNIFY YOU for any loss you may suffer. You have to take note of the policy. Give an example of insurance against liability. Insurance against fire. which may damnify a person having an insurable interest.
it is not on his own life or the designated beneficiary are not those enumerated in law. father. But even in marine insurance right now.Insurance Kwin It has to be specified. in the modern means of communication. raise the defense that the contract is voidable because the insured is minor. Contingency. mother. And there’s another requirement. You are the owner of a vessel that is currently going to China. that of her children. A married woman can obtain a policy insuring her own life. mother. But unknown to you. brother or sister This talks about a minor. the nature of the obligation requires assumption of risk. not only will the insurance policy be on the life of the minor. spouse. health and accident insurance. PAR 3 Any minor of the age of eighteen years or more. notwithstanding such minority. But this is no longer a threat because the age of majority has already been reduced from 21 to 18. it must be unknown to the parties 2. So for a past event to be insured: 1. children or siblings. it’s very easy to confirm whether the vessel still exists or not. normally they would take a look at the property whther it is insurable or it exists. those who are capable cannot raise the incapacity of those whom they contracted with. it provides an instance wherein an insurance policy was taken out by the minor is valid. And in this case. Kwin Transcripts Page 9 Kw PDF Created with deskPDF TS PDF Writer . Valid until annulled. it already sunk in the pacific ocean. Otherwise. In that paragraph. And also in the property insurance. with any insurance company duly authorized to do business in the Philippines. but the designated beneficiary must be his estate. there is still an exception. Can the insurer raise the defense that he will not be liable because the loss was due to a fortuitous event? Although we have the principle in obligations and contracts that no person should be liable for fortuitous events. But who can raise the defense of minority or incapacity? Only the minor himself. Remember that the contract is voidable. her husband or even her separate paraphernal property without the consent of her husband. husband. When will it be valid? If the insurance is taken out on accident or health. it must be stipulated by the parties took out the insurance policy: to secure yourself against fortuitous event PAR 2 SEC 3 The consent of the husband --is not necessary for the validity of an insurance policy taken out by a married woman on her life or that of her children.DEMO :: http://www. it if not on life. Maybe years ago where it’s difficult to determine where you vessel is. you cannot apply the ‘past. accident or health. provided the insurance is taken on his own life and the beneficiary appointed is the minor's estate or the minor's father. the insurer cannot. then the policy will be voidable. The policy took effect today. Can you go after the insurer? Yes. So minor here should refer to someone who is below 18 years old. the event must relate something in the future. child. It’s the reason. If the event was unknown and If the policy covers prior loss But past. contract for life. wife.com . in the first place why you So basically. if it is other type of insurance.docudesk. Now we said that you insure your interest against a contingency. So it’s not possible that there’s a ‘past unknown event’. in denying the claim. --may. you can relate this to a fortuitous event. you relate that in your family code. Or the policy will include it as an excepted peril or not part of the coverage. One exception is when the nature of the obligation requires assumption of risk. Such that if the minor obtained an insurance policy and they suffered a loss. In fire insurance. Give an example of past. But right now. Something which may or may not happen and is unforeseen. do you think this is still applicable? Well it depends if the insurer is willing to insure prior loss. unknown event’. unknown events are peculiar only to marine insurance. unknown event. Because before the policy will take effect. In NCC it says that only the minor can raise the defense of incapacity.
Insurance Kwin The last paragraph The married woman or the minor herein allowed to take out an insurance policy --may exercise all the rights and privileges of an owner under a policy. partnership. because that is not insurable. the designated beneficiary. So under sec 4. Assuming A predeceased B. In insurance. To whom will the proceeds of the policy go? B. insuring a wagering contract is prohibited. A. can you obtain an insurance policy for the risk of loss? No. But actually the law allows individuals and natural persons to engage into insurance business as long as they have CERTIFICATE OF AUTHORITY FROM THE INSURANCE COMMISSIONER. So when can you say that it’s a wagering contract or it’s a contract of chance or gambling? Let’s say you are an operator of bingo. The law states that it will automatically vest to the minor. But assuming A. B. He insures the life of the minor and designates himself as the beneficiary. it’s a wagering contract. and you are composed of funding members. life. premium. Who can be an insurer? They are those who are authorized to engage in insurance business. Is that an insurance contract? Yes. we will discuss that as we go along. Our thinking before was that only corporations can engage into insurance business. --may be an insurer. you have no insurable interest which is exposed to a risk of loss. Ex. But if the contribution will be used to someone who is used in the race. you have an insurable interest and that insurable interest is exposed to risk. insured and beneficiary. Whereas a gambling is based on chance.docudesk. ‘unless the policy otherwise provides. fire. title and interest in the policy of insurance taken out by an original owner on the life or health of a minor --shall automatically vest in the minor upon the death of the original owner. his wife as the beneficiary. suretyship. Kwin Transcripts Page 10 Kw PDF Created with deskPDF TS PDF Writer .’ The policy designates C as the beneficiary. SEC 6 Every person. SEC 5 All kinds of insurance --are subject to the provisions of this chapter so far as the provisions can apply. etc. marine. Let’s go now to the parties of the insurance contract. A predeceased B. unless otherwise provided for in the policy. The beneficiary is the one designated to receive the proceeds of the insurance. It refers to insurable interest. You have the five elements of an insurance contract. Father obtains a life insurance policy insuring the life of his son B. or casualty insurance. or corporation duly authorized to transact insurance business as elsewhere provided in this code. It applies to all kinds of insurance. Insurer. father obtained a life insurance policy of his son. Can you insure yourself or business on the possible risk of loss if someone wins? Or if you bought lotto tickets worth 1k. Sec 1 to 98. To begin with you have no insurable interest. a minor. representation.com . SEC 4 The preceding section --does not authorize an insurance for or against the drawing of any lottery. That is based on chance. but designates C. association. and because of that. but you create risk. Because insurance is a contract of indemnity. So obtaining an insurance policy on something which is based on chance like gambling or lottery or ticket in a lottery drawing a price is prohibited. principle of concealment. It is contrary to public policy. All rights. all of the funds will be given to someone who wins in the race. or for or against any chance or ticket in a lottery drawing a prize. Kadtong ‘automatically vests to the minor’ kadto ning the owner of the policy himself is the designated beneficiary. Why? What’s the reason? There’s a distinction between gambling and insurance. Is that insurance? No. he designates himself as the beneficiary. Sec 5 merely provides that the provision of this chapter… This is referring to chapter 1 that pertains to sec 1 to 98. What about if you are into car racing. Who are the parties of an insurance contract? Insurer. To whom will the proceeds of the insurance policy go? To the wife.DEMO :: http://www. In gambling. And to start. there is no insurable interest. You make monthly contribution of 2k.
with the same effect as if it had been performed by the mortgagor. What if the fire happened after the war. They will not be entitled to the insurance. If the house is 1m.docudesk. but it abrogates or terminates the policy. the value of the debt. where a mortgagor of property effects insurance in his own name providing that the loss shall be payable to the mortgagee. prior to the loss.com . who does not cease to be a party to the original contract. 35. So both of them have insurable interest. Because the nature of the contract of insurance is that it is aleatory and is a contract of adhesion. he may suffer a loss. and any act of his. We have the mortgagor and the mortgagee. --may be performed by the mortgagee therein named. The insured would no longer be entitled to recover still. Why? Because of the capitalization requirement. under the contract of insurance. who may insure the property? Both mortgagor and mortgagee have insurable interest in the property. the insurance --is deemed to be upon the interest of the mortgagor. In this case. As to the mortgagee. This talks about mortgage property.42 SEC 8 Unless the policy otherwise provides. Why is it regulated? Because it is imbued with public interest. The building insured got burned. If both of them insured the property. That ‘anyone’ must be capacitated to enter inter into an contract must have insurable interest must not be a public enemy. But normally right now. most insurance companies are juridical entities. The reason for that is because it in contrast with the principles of war where you want to cripple the resources of you enemy. but any act which. The mortgagee also has an insurable interest on the property because it serves as security on his lien. If something happens to the property then his lien would be unsecured. the value of the property. Because the effect of the insured becoming a public enemy does not merely suspend the insurance policy. Can you recover? No. which would otherwise avoid the insurance. What about abusayaf? MILF? Gangs? Are they public enemy? No. What is the extent of their insurable interest? As to the mortgagor. So germany and its citizens are considered public enemy. Who may be insured? Anyone who is not a public enemy. either with the same or different insurer. is to be performed by the mortgagor. Insured. they are not considered public enemy. 1m. What’s the effect in if you become a public enemy? Case: Filipinas cia de seguros v Christern Hueneferld and Co A german national obtained an insurance policy from a Philippine company. There’s a war against the Japanese and the gremans were allies with them. what are the effect? Kw Kwin Transcripts Page 11 PDF Created with deskPDF TS PDF Writer . The mortgagor can either obtain the insurance policy for his own benefit and at the same time designate himself as the beneficiary. although the property is in the hands of the mortgagee. including the citizens and subjects of that nation. The mortgagor being the owner of the property. for how much can the mortgagor and mortgagee recover? Mortgagor can recover the value property. Who is a public enemy? Public enemy is a nation who is at was with the Philippines. SEC 7 Anyone except a public enemy --may be insured. So in those cases. Mortgagee can recover only 500k. and the credit is 500k. SEC 8 talks about a situation where it is only the mortgagor who obtains the insurance policy. because that is the extent of is loss. because that is the extent of his insurable interest. even if the loss occurred after the war.DEMO :: http://www. Both of them can obtain insurance policy. or assigns a policy of insurance to a mortgagee.Insurance Kwin They must be duly authorized. Why? Because insurance business is regulated. --will have the same effect. or obtain the insurance policy for his own interest but designates the mortgagee as the beneficiary.
the value of the property.Insurance Kwin Let us first take the first situation where the mortgagor insured the mortgaged property for his own interest and designates himself also as the beneficiary. This time. Second situation. Kw Kwin Transcripts Page 12 PDF Created with deskPDF TS PDF Writer .com . the mortgagor obtained an insurance policy for his benefit or interest but he designates the mortgegaee as the beneficiary.docudesk. Can the mortgagee recover? No. if the property is lost. who can recover from the insurance company? Only the mortgagor. In that case. who is entitled to recover? This time it is the mortgagee who is entitled to recover. Is the debt of the mortgagor to the mortgagee extinguished? No. For how much will the mortgagor recover? 1m. The debt still subsists. if the property is lost or damaged. In that case. For how much can he recover from insurer? He can recover 1m being the designated beneficiary but he holds the excess of 500k in trust for the mortgagor. Because in this case the policy is only for the interest of the mortgagor.DEMO :: http://www. Is the debt extinguished? Yes.
Is there right of subrogation? Can the insurer after paying the policy go after the mortgagor? No. What happened to the excess of . He does not cease to be a party of the contract. Because that is the extent of his insurable interest. Mortgagee alone 3. Is the debt extinguished? NO. But it There are three situations: 1. Because in this case. Kw Kwin Transcripts Page 13 PDF Created with deskPDF TS PDF Writer . But as far as the third party is concerned. the debt was already paid.5? Can the mortgagor claim the . Who is entitled to recover the proceeds of the policy? Of course the mortgagor. The loss was made payable to the mortgagee. 2010 Last time we stopped at sec 8. Because the loss is made payable to the mortgagee. the 2m only serves as the maximum limit of recovery. The party entitled to recover is the mortgagor because he still has insurable interest. Mortgagor alone 2. does not mean that that is the amount the mortgagee is entitled to recover. any act which under the contract of insurance is to be performed by the mortgagor may be performed by the mortgagee. It is still considered as for his interest. Who is entitled to recover? Is the policy invalidated? The policy is not invalidated. But he keeps the . at the time it was burned. the insurer is subrogated.5M in trust for the mortgagor. Going back to our example: House: 2m Credit: 1. Because after payment by the insured to the mortgagee. can the mortgagee still recover? No more. Sec 8 talks about an insurance secured by the mortgagor but the loss is made payable to the mortgagee. Is there a right of subrogation? Yes. He can go after the mortgagor. For how much? 2m. Going back to the previous example where the policy was obtained by the mortgagee for his own benefit. Is the debt extinguished? No. Who’s entitled to recover in the policy? Mortgagee. can the mortgagee recover? Am I going too fast? What if it is the mortgagee himself who obtained the policy for his own benefit? Who is entitled to recover? The mortgagee? For how much? 1. there are two insurable interests.docudesk. That of the mortgagor and that of the mortgagee. although the property is in the house of the mortgagee. Because that is the extent of his insurable interest. sec 8 talks about a property that has been mortgaged. The policy was obtained by the mortgagor himself.Insurance Kwin July 16.5? No. It will have the same effect as if it was performed by the mortgagor.5m If the insurance was obtained by the mortgagor for his own interest but the loss is made payable to the mortgagee. If there is a property mortgaged. That is why any act of the mortgagor prior to the loss which would avoid the policy will have the same effect on the part of the mortgagee. For For how much? 1. the debt is extinguished.DEMO :: http://www. because he is not a party to the insurance contract. Can the mortgagor instead recover from insurer? No. Is the debt extinguished? Yes. For how much? 2m. To recap. the policy was obtained by the mortgagor. Because this time.5m. because there was no payment. In the same manner. What is the effect? We say that the mortgagor still remains a party to the insurance contract. Because he has no more insurable interest.com . Because he is not a party to the insurance contract. Mortgagor payable to mortgagee For second type.5m Policy: 2m The policy was obtained by the mortgagor alone with the benefit payable to himself. What if the debt is already paid. the debt was paid. at the time of the loss.
In the third example.docudesk. the debt is already extinguished. you have the same insurable interest and the same subject matter. When you go back to sec 8.Insurance Kwin Third example… Policy is obtained by the mortgagor but the loss is payable to the mortgagee. there is a condition that there is another insurance clause. Sec 8.com . the insurer imposes new condition or obligation. the rule is that. 1k should have been refunded to the mortgagor. The mortgagor stored gasoline or kerosene in the insured premises. making a new contract with him. In those policies. That would apply if the creditor His insurable interest is equivalent to So that’s sec 8. Sec 9 is STANDARD UNION MORTGAGE CLAUSE – the parties to the insurance contract is now the mortgagee and the insurer. --will have the same effect. The house was burned because of the flammable materials. the act of the mortgagor cannot affect the rights of said assignee. which would otherwise avoid the insurance. we do not have the same insurable interest. It was insured by the mortgagor and at the same time it was insured by the mortgagee. Because as discussed before. you have insured the same risk. the mortgagor and mortgagee have separate insurable interest. last paragraph: any act of his. But the . the mortgagor does not cease to be a party to the contract.DEMO :: http://www. like additional payment of premium. Mark:relating to palileo 12k 13k 1107 The policy was obtained by the mortgagee. although the policy is assigned or the loss is made payable to the motgagee. is the insurer subrogated? Can he go after the mortgagor? Is there right of subrogation? No. So sec 8 is normally referred to LOSS PAYABLE MORTGAGE CLAUSE. at the time of his assent. What if at the time of the loss the debt was already paid. No double insurance. – the mortgagor is still a party to the insurance contract. The imposition of the mew condition has the effect of NOVATION OF CONTRACT. if the policy contains a stipulation prohibiting storing of flammable materials. Case: Giogonia v CA He obtained fire insurance policy with two separate insurers. Kw Kwin Transcripts Page 14 PDF Created with deskPDF TS PDF Writer . prior to the loss. As if there is a contract created between the mortgagee and the insurer. If in addition to the consenting to the transfer or assignment. Sec 9 talks about the transfer of the policy from the mortgagor to the mortgagee wuth the consent of the insurer. and. After the insurer pays the mortgagee. You see the difference? If the policy is obtained but the mortgagee the debt is not extinguished because of the right of subrogation. Here the property was mortgaged. For how much? 2m The debt is not paid. But here comes sec 9. although the property is in the hands of the mortgagee. what is the effect of the imposition of the new condition? Mortgagor ceases to be a party to the contract. Such that the act of the mortgagor could no longer affect the act of the mortgagee. who can recover? The mortgagor. Because in this case. The policy was obtained by the mortgagor. If an insurer assents to the transfer of an insurance from a mortgagor to a mortgagee. What is the prohibition in the policy? It prohibits double insurance and coverage exceeding 200k. So the issue now in this case is WON there is double insurance. Can the mortgagee recover? No. he does not cease to be a party to the contract. imposes further obligation on the assignee. For how much? 2m. In this case.5m is held in trust for the mortgagor. (sec 8) Who is entitled to recover? Mortgagee. that the insured must inform the insurer the presence of other insurance policy. When we say double insurance. SEC 9. Because remember.
Spouses obtained a loan. of which death or illness might delay or prevent the performance. Was it able to recover from the insurer? No. Sec 10 talks about insurable interest.DEMO :: http://www. The property was insured by spouses but the loss is payable to PNB. And if there is an ambiguity it will be construed in favor of the insured. there is a perios in which you have to file your claim. INSURABLE INTEREST. Kw Kwin Transcripts Page 15 PDF Created with deskPDF TS PDF Writer . Because as a general rule insurance contract is a contract of indemnity. The first policy was obtained by the mortgagor with the loss payable to the mortgagee. As a security for the loan there was a mortgage with PNB. or respecting property or services. or in whom he has a pecuniary interest. If you have no insurable interest. The effect of the policy obtained by the mortgagor with the loss payable to the mortgagee is that it will extinguish the debt. Since it was not able to recover from the insurer. That’s why there is no double insurance. so it prevents the insured from obtaining profit. As a rule it is extinguished. So those are the reasons why the law requires insurable interest. and (d) Of any person upon whose life any estate or interest vested in him depends.docudesk. What’s the reason for obtaining an insurable interest? For reasons of public policy. Without insurable interest.Insurance Kwin And there was also ambiguity in the policy. Did PNB recover from the insurer? PNB allowed 7 years to pass before it filed a claim from insurer. Although it mentions pecuniary. of his spouse and of his children. You can only recover top the extent of insurable interest. PNB went back to the spouses. a gambling contract. Without insurable interest. take note. The issue now is WON PNB can still go after the spouses? No more. So we have a case of number 3. So deterrence on the part of the insured. As far as the spouses is concerned. in life insurance the benefit need not be pecuniary. Let’s go to a more interesting topic. The last case Case: PNB v CA There was a property mortgaged to PNB by spouses. If the other policy was mortgagor alone. their debt to PNB is already extinguished It’s the fault of PNB why he let 7 years to pass before filing a claim. The law requires that in all insurance policies. The other policy was mortgagee alone. the person obtaining the policy or insuring the life must have insurable interest. (c) Of any person under a legal obligation to him for the payment of money. as we will discuss later on. it would amount to a wagering contract. you will have no interest on the preservation of the thing or person insured. You are more interested in its destruction And also insurable interest serves as a limit of recovery. it gives temptation or inducement for a person who has nothing to lose and everything to gain. 1 year lang na. then there would have been double insurance. What is insurable interest? When can you say that you have an insurable interest? You have an insurable interest when you stand to gain some benefit or advantage from its preservation (if you preserve his life) and you stand to suffer a loss or a damage from its destruction. pray for the happening of the event that would make the insurer liable. (b) Of any person on whom he depends wholly or in part for education or support. Is the debt extinguished in this case? Yes.com . The property was destroyed by fire. SEC10 Every person has an insurable interest in the life and health: (a) Of himself. You have that relation or connection with that person or thing that you stand to benefit from its preservation or you stand to suffer a loss from its destruction.
who is also a friend of B. Kw Kwin Transcripts Page 16 PDF Created with deskPDF TS PDF Writer . this is valid. 39. the court may consider the policy as a wagering contract. the owner of the policy must have insurable interest. Although there are instances where it is the beneficiary who brings about the happening of the event. if A the owner of the policy insured himself and designates B. a person would bring about the death or harm to himself. contrary to human experience. Because the law requires that if you insure another person. So we refer to the provisions of the family code. a to d Spouse Children Persons on whom you depend for support or education Persons on whom you have pecuniary interest Who are those persons whom you are dependent for education and support? Are they enumerated in insurance code? No. It could be for his own benefit or the benefit of another person. A does not have insurable interest on the life of B. a neighbor as his beneficiary. The general rule is that he can designate anyone as the beneficiary.docudesk.? No. is the policy valid? Yes. The beneficiary has no insurable interest. So general rule if the owner of the policy is the one who is insured. In those cases. the law requires that A and C must have insurable interest on the life of B. Let’s discuss this one by one There are two kinds of insurable interest on life: Insurable interest on you own life Insurable interest on life of another On insurable interest on your life. If the insurance or the owner of the policy insures his own life. Is this valid? No. instance of the beneficiary. The second type is insurance on the life of another The subject of insurance is another person. or the subject of the insurance is his own life. anybody could be designated as a beneficiary. The fact that he insured himself is already evidence of good faith. and A is the beneficiary. That beneficiary need not have insurable interest on the life of the insured.DEMO :: http://www. OW the policy is not valid. What if A insured B friend and this time designates C as the beneficiary.47 Who are those persons on whom you have insurable interest aside from yourself? We are talking about the life of another person You have sec 10. we go back to the requirement of insurable interest.Insurance Kwin Sec 10 talks about insurable interest in life and health. first the requirement of insurable interest is satisfied. In this case if the person designated as the beneficiary is a third person. A the owner of the policy insured the life of a friend B. what is the requirement of the law? This time the law requires that the owner of the policy must have insurable interest on the life of the insured.com . But as a general rule. The premiums were paid by the beneficiary. Second. Because again. But there are instances where the law or court will consider the policy void even if the insured is the owner of the policy himself if there are circumstances like: the proposal to take out the policy was at the In that case. but the insurance code provides for sefeguards for that Now going back. Why? Because. Ex. Is this valid. there’s no question about it. according to law. Who are those persons whom you have insurable interest? Himself Spouse Children To person he is dependent for support To person whom he has pecuniary interest To person who has an obligation whose death or illness might delay or prevent the performance of the legal obligation To person upon whose life any estate or interest vested in him depends. We all have insurable interest in our own lives. Why? Because the requirement of insurable interest is already satisfied.
and Examples: A grandfather insuring grandson: A brother insuring his half sister: A sister insuring her cousin: An uncle insuring his nephew: has insurable interest has insurable interest no insurable interest no insurable interest Unless there is an expectation of pecuniary advantage Ex. In the same way the girl has pecuniary interest on the woman since the woman sends her to school. mere expectation of pecuniary benefit is sufficient. descendants and siblings. aunts. Because if you are an ordinary rank and file employee. As a rule. But the extent of the insurable interest if the creditor is only up to the extent of the debt. Like in the book. or respecting property or services. ascendants.DEMO :: http://www. At the time of the happening of the peril the debt was already paid. This is an exception to the rule of life insurance policy that it is unlimited. But this is an exception. the debtor with C himself as the beneficiary. Woman takes a child from the orphanage and takes care of her and provides her with basic needs. would there still be recovery of the policy? Yes. mere expectation of pecuniary benefit is not sufficient if it is not founded on existing right. And the death or illness of D might prevent or delay the performance of the legal obligation. So C may insure the life of D. It is the debtor who insures his own life but the beneficiary is the creditor. Because D has insurable interest in his own life. This is valid. where the insurable interest is limited to the amount of death. nephews. in laws (except wife). Can C still recover? No because he has no more insurable interest.Insurance Kwin Who are those persons obliged to support each other? Spouses. you can be replaced anytime. life insurance contract is not a contract of indemnity. For ascendants. Is this policy valid? Yes. There’s expectation of pecuniary benefit. If the debtor insures the life of the creditor and the creditor is the beneficiary. Because during her old age. Letter C (c) Of any person under a legal obligation to him for the payment of money. it is a contract of indemnity Can the D’s estate still recover? No. the insurable interest is based on blood relationship. (Find in FC) What about illegitimate brothers or sisters? Yes So please take note of these persons so that you will know WON you have insurable interest. Example of expectation of pecuniary benefit: Boy friend insuring the life of his fiancé? It depends if the GF provides the needs of her BF. You must establish that there is the expectation of pesuniary benefit. Assuming C insured the life of D to the extent of the debt of 500k with himself as the beneficiary. Either They have a legal obligation to you or There’s a contractual relation between the two of you There’s an expectation of pecuniary benefit. Unlike in property insurance. the bases of the relationship must be pecuniary. A creditor insuring the life of the debtor. the life insurane policy becomes a contract of indemnity. if it is C who insures the life of D. In this case. Another example of existence of pecuniary benefit: A corporation insuring the life of its employee. Is that policy valid? No. because D has no insurable interest on the life of C Kw Kwin Transcripts Page 17 PDF Created with deskPDF TS PDF Writer . It does not affect the policy. The proceeds will go to the heirs or estate of D. The woman who takes care of the girl has an insurable interest of the girl even though they are not related. of which death or illness might delay or prevent the performance. brothers and sisters whether full blood or half blood.docudesk.com . nieces. But for lesser degree of kinship not among those enumerated in family code like uncles. for you to have insurable interest in these person. C has insurable interest because D has the obligation to him. If the debt at the time of his death is already paid. But take note that the employee must be a key employee. descendants. the girl would take care of her. Take note: In life insurance.
The fact that there is no insurable interest. The devisee or legatee does not depend on the life A.com . it does not mention that it needs the consent of the insured Because the law considers that so long as you have insurable interest. **the doctrine of waiver and estoppel is not applied. There will still be return of premiums unless the insured is in pari delicto. B would not be interested in the preservation of the life of A But since it is in the last will and testament. it cannot be changed without his consent.DEMO :: http://www. it will take effect only upon his death. then it should go to the estate of D. If it has prescribed. But it does not invalidate the policy even if the debt is already paid The point there is that the payment of the debt does not invalidate the policy because the subject of the insurance is the life of D. You have insurable interest on the person under legal obligation. Ex. if I’m D and debt was already paid. that’s already evidence of good faith. Written contract prescribes in 10 years. But at the time off his death the debt was already paid. the usufructuary rights will also be extinguished. Kw Kwin Transcripts Page 18 PDF Created with deskPDF TS PDF Writer . B has no insurable interest on the life of A. the right to collect has already prescribed? Can C still recover? No. then there’s no more insurable interest. a friend as the beneficiary? Can C change the beneficiary to E? Is that valid? No. So the requirement of insurable interest at the time the policy exists and at the time of the death is important. it becomes a vested right at the time of the death of the insured. You cannot raise against the insurer that he is estopped. The basis for C in insuring D’s life is insurable interest. C insured the life of D at the time the debt still subsists with E. is if the subject of the life insurance is the life of the owner of the policy himself. In that case. What if at the time of death. absent any condition in the policy. – an insurance on your own life. there’s no more debt. In his last will and restatement A bequeathed/devised to B a property. the policy is void. In short wala nay obligation si D kang C. the proceeds will go to C. If the subject of the policy is the life of the insured himself. which is the payment of the debt.Insurance Kwin Going back. (d) Of any person upon whose life any estate or interest vested in him depends. the debt is paid. If the policy is silent and simply designates C as the beneficiary. letter d. **Statute of limitation refers to prescription. For a life insurance policy taken out by another person. Is the consent of the person necessary if you insure the life of another person? There are different views. Remember that this is a contract of indemnity. It’s necessary because obtaining consent is evidence of good faith. But if there’s a mention in the policy that it shall be paid only to C so long as the debt subsists. So in this case B has insurable interest in the life of A because B has an interest in insuring the life of A. I should change the designation of the beneficiary. A gives right of usufruct to B subject to the requirement that B will enjoy the right as long as A survives. And the last on. So in this case. It does not fall on the enumeration. even if the beneficiary has no insurable interest. OW if A dies. but we know that the intention of D why he made C as a beneficiary was for the payment of the debt. he can designate anybody as the beneficiary. must the creditor have insurable interest on the life of D if D insures his own life? No. But if you look at sec 10. Here. and at the time of death. The only time when the beneficiary need not have insurable interest. Because if you do not change it. In fact at the time it becomes a vested right. And in the policy there was mention made that the proceeds will go to C so long as the debt still subsists.docudesk. Can B insure the life of A? (they are not related) No. the both owner of the policy and the beneficiary must have insurable interest. E does not have insurable interest.
But if it is irrevocable. You can even say that the manager has a legal obligation whose death will delay or prevent the performance. Can I stop paying the premiums? Yes. There is insurable interest – pecuniary benefit. B is disqualified. without his consent.B is the woman he is co habiting. There was a policy obtained the company insuring the life of their manager.docudesk. the beneficiary does not acquire vested right. What is the effect if the designation of beneficiary is revocable? (remember that presumption is:revocable) So if the designation of the beneficiary is revocable. Since A insured his own life. the designation is presumed to be the irrevocable. then the beneficiary must have insurable interest on the life of the insured. There is already a vested right. Can I add another beneficiary? No. The proceeds will go to the estate of A. Kw Kwin Transcripts Page 19 PDF Created with deskPDF TS PDF Writer . What if A insured the life of B and designates himself as beneficiary? So it boils now if there is insurable interest on the life of B. But is the policy invalidated? No. concubinage because there’s a similarity between a cicl obligation and designating someone as a beneficiary. because it can be changed by the owner of the policy without his consent. Only the designation of the beneficiary is considered void. Here there is common law relationship. Since it’s a vested right can the designation be changed? No. B is not disqualified because they are not guilty of adulterous relationship. there will be a vested right. There is no income. (provision on void donations: guilty of adultery. He can designate anybody as beneficiary. If irrevocable – the proceeds of the policy will go to the estate of beneficiary. But if it is the insured himself is the owner of the policy. Under the old law. He is a key employee. The issue was WON the proceeds of the insurance is taxable. without his consent. Not the beneficiary can continue because he already has vested rights. manager.DEMO :: http://www. Is it taxable? No. if he was not able to designate a new one. Ex. He insured his own life and designated B as the beneficiary. But it is to compensate/indemnify a loss SEC 11. the beneficiary can be anyone so long as that beneficiary is not disallowed by law.Insurance Kwin Case el orient El Oriente is engaged in the manufacture of cigars. Who could be a beneficiary? If the insured person is not the owner of the policy. They live together as husband and wife without benefit of marriage. then the effect is that. the designation of the beneficiary is presumed to be revocable. A is a married man. and has been in 35 the company for 35 years. the designation is valid. where will the proceeds go? It will go to the estate of the insured. Is the policy valid? Is B disqualified from being a beneficiary? Yes. unless he has expressly waived this right in said policy. The beneficiary was El Oriente. The beneficiary is the person entitled to receive the proceeds. They’re both acts of liberality) What if there is no designation of beneficiary or the designated beneficiary is not qualified. What about persons living together without the benefit of marriage? A insures Himself and designates B as beneficiary. There is insurable interest. Is the policy valid? Yes. What is the effect if the beneficiary predeceased the insured? To whom will the proceeds of the policy go? It depends on the designation of the beneficiary. If revocable – the proceeds if the policy will go to the estate of the insured. What is the basis for insurable interest? The basis is on expectation of pecuniary benefit.com . Under the new provision. The insured --shall have the right to change the beneficiary he designated in the policy.
Exception is if you insure the life of your debtor. The only requirement is that he has insurable interest at the time the policy takes effect. she is disqualified from becoming a beneficiary. (hit by a branch of a tree) Woman is not entitled to the proceeds. but not exist in the meantime. then the beneficiary is still entitled. Who are these nearest relatives? So you refer to your rules in intestate succession. If the husband insured the life of his wife. It was not established that she has knowledge of the existence of the first marriage. Who is entitled? The designated beneficiary? The legal wife? Or the other woman? The designated beneficiary. But what if they are both single. Case: SSS v Davac There were 2 marriages.com . He died. can Aquilina still recover? No. The guilt of the spouse will not affect the insurance policy. Can the husband still recover? Yes. What if the act on killing the insured is an act of self defense. All sought recovery of the policy. SEC 12 The interest of a beneficiary in a life insurance policy --shall be forfeited when the beneficiary is the principal. He had 3 families. can she recover? Yes. So this is now the safeguard provided by law in cases where is you insure your own life. will the beneficiary still be disqualified? What the law intended here when it said willfully. their marriage was declared null and void. The guilt need not be conviction but through preponderance of evidence. SEC 19 An interest in property insured --must exist when the insurance takes effect. But take note that this case was decided under the old civil code when there was no provision yet on void donation. although she is not a legal wife because the fist marriage still subsists. Her guilt is not proven. (look this up) The law mentions about willfully bringing about the death of the insured. They are guilty of concubinage. in which event. the act must amount to felony If the act is an act of self defense.DEMO :: http://www. and when the loss occurs. They can recover. Sec10-12 Talks about insurable interest in life insurance policy. When must insurable interest on life exist? It needs to exist only at the time the policy takes effect. accomplice. Case: maio The policy failed to designate the beneficiary. Kw Kwin Transcripts Page 20 PDF Created with deskPDF TS PDF Writer . Case: southern Luzon Roman Conception has insurance policy and designated common law wife. To whom will the proceeds go? To the estate of the deceased. It need not exist thereafter. There is insurable interest. Aquilina and their children. the beneficiary need not have insurable interest.docudesk. Under the new law. The basis may not be marriage but may be pecuniary benefit. But she is actually not his legal wife. and interest in the life or health of a person insured --must exist when the insurance takes effect. In this case. the nearest relative of the insured shall receive the proceeds of said insurance if not otherwise disqualified. The designation of the second wife is not disqualified. or accessory in willfully bringing about the death of the insured.Insurance Kwin Case: insular life v ibrado Designation was revocable. At the her death. The designated beneficiary was the common law wife although designated as ‘wife’. What about the children of Acquilina? Not disqualified. Why? Because the rule in life insurance is that it is not a contract of indemnity. So there’s a tendency that he would wish something bad will happen to you. but need not exist thereafter or when the loss occurs. the guilt is not proven. Ex.
Example where ownership and possession of the goods is not required: You are the buyer of the goods and the goods are not yet delivered to you. What about the lessee? Can he insure the property? Does he have insurable interest? Yes. SEC 13 Every interest in property. can the seller compel the buyer to pay? Even the goods have been destroyed? What about perfected contract of sale. Can the owner of that restaurant insure the USC building? No.DEMO :: http://www. Still. EXITISNG INTEREST You have existing interest because you have a legal title. If he has not yet paid the amount. you have insurable interest because you have relation to the property or. 3 you have insurable interest because you have a connection to that property. The goods have not yet been delivered to you. But the proceeds of the policy will not go the executor or administrator. Take note: unlike in life insurance. especially if it’s specific. SEC 14 An insurable interest in property may consist in: (a) An existing interest. do you think that the buyer has insurable interest? Yes. you have insurable interest arising from the property itself 2. It’s not founded on existing right or legal right. Because even there is no payment of amount. The sources of insurable interest are 3: 1. because although you might have expectation of benefit or loss. When do you have insurable interest in property? Same as insurable interest in life. or (c) An expectancy. The mortgagor because he is the owner of the property. An example of insurable interest based on equitable title: you are the buyer. you will have continued profit. Kw Kwin Transcripts Page 21 PDF Created with deskPDF TS PDF Writer . But you have insurable interest. you have insurable interest in that property is you stand to benefit in its continued existence or you stand to suffer from its destruction or impairment from the happening of the event. But to the estate. It’s just a mere expectation. In the contract of sale. of such nature that a contemplated peril might directly damnify the insured. If the thing is destroyed. Most of its customers are USC law students. But the buyer already has insurable interest although ownership and possession has not yet been transferred. does he have rights na? There’s still insurable interest.docudesk. or any relation thereto. coupled with an existing interest in that out of which the expectancy arises. there is already a perfected contract of sale. whether real or personal. So ownership is not the only basis of the interest. I am interested in the goods. If something happened to the property.Insurance Kwin July 23 2010 We are to start on insurable interest in property. I may not have a liability to the seller but the fact that I am buying the goods. you acquire ownership upon delivery. Example: you are the owner Bakak in front of law building. Trustee and assignee. No ownership yet. Can the administrator/executor insure the estate? Yes. You think that if you preserve the building. (b) An inchoate interest founded on an existing interest. ownership and possession is not a requirement for you to have insurable interest. What is the basis of his insurable interest? is the buyer’s interest on the goods already existing or still inchoate? Doe s he have a relation that property that he will derive benefit from its preservation? Yes in fact it’s already an existing right on the basis of perfected contract of sale. He expects to derive profit from them. --is an insurable interest. There are rights because the moment the sale is perfected The obligations are reciprocally demandable. Example of insurable interest based legal title: The lessor has an insurable interest based on a legal and existing right or title. It’s the same as buyer or purchaser. he has existing interest. or liability in respect thereof. So what is the basis of the buyer’s insurable interest? The perfected contract of sale. If you look at the definition of insurable interest in property. mere expectation of loss or mere expectation of benefit is not sufficient to constitute insurable interest. What about consignee of goods? Yes.com .
com . Can I insure future boundaries? Yes. But is my expectancy founded on an existing interst? Yes. A entered into a contract with B for the sale of crops not yet harvested in the farm. But on the basis that I am the owner of the work.Insurance Kwin What about builders or contractors? Yes. That is my expectancy. Can I insure my work of art? Yes. Same principle with the corporation. What of I am a depositor in a bank and I have a huge deposit. can I insure my deposit? No. the corporation will distribute its assets and properties. Ex. What is my existing interest out of which my expectancy arises? What am I insuring? I insure the crops. There is no existing right on the bank. I will earn interest from that bank. The crops are my expectancy. On the other hand. there is still existing interest so long as the crops will belong to him. not on expectancy. The inchoate right is based on the existing interest. Another example: Construction worker has insurable interest on the building. there goes my deposit. Can I insure the bank? Because if something happens to the bank. But my expectancy is based on existing interest. The sake is for 300k. Which policy is valid? Both. A obtained an insurance policy from XYZ.docudesk. But what about my deposit? It’s just a mere expectation of loss not founded on the existing interest. not the stockholders. yes I have a time deposit but it doesn’t mean that I have an interest on the properties of the bank. What is that existing interest? The existing interest is based on being the stockholder of the corporation or the ownership on the shares of stock of the corporation. B’s insurable interest on the crops is based on an expectancy founded on an existing right (being the buyer). He already has equitable title. Provided they have not received payment EXPECTANCY COUPLED WITH EXISTING INTEREST OUT OF WHICH THE EXPECTANCY ARISES. existing interest.DEMO :: http://www. Can he insure the future profits of his business. Because the partnership has a separate personality from the partners themselves. A partner in the partnership has insurable interest also on the partnership assets. Another example: You are the owner of taxis. Or it may also be based on existing interest (perfected contract of sale). Even if there is no interest. Or the businessman. A’s insurable interest on the crops is based on an expectancy founded on an existing right (ownership of the crops). What is my existing interest? Being the owner of the taxis. I expect that 5 months from now. So it’s not a valid basis of insurable interest. That’s valid because the expectancy is based n the existing interest. B obtained an insurance policy on the same crops with ABC. What if I am not the owner of the land? Even if the farmer is the owner of the land. An artist. Why is the interest of the stockholder on the property of the partnership inchoate? Because the corporation owns the property of the corporation. What is the existing interest? I am the owner of the land. Could be… INCHOATE INTEREST BASED ON AN EXISTING INTEREST What do you mean by inchoate? A stockholder has an interest on the property of the corporation ion which he is a stockholder. Why? What is the expectancy on that? Maybe equitable title. payment is to be made upon harvest. The stockholders have inchoate interest because upon the dissolution of the corporation. Kw Kwin Transcripts Page 22 PDF Created with deskPDF TS PDF Writer . I own the business.
The basis is equitable title. A depository has insurable interest on the goods under his care or custody. What about the laundry shop? Can you insure the 501 jeans? Yes. What about the car repair shop? Yes. This is another basis of insurable interest The basis of sec 15 of the carriers insurable interest is on the liability to be created. In no case shall it exceed the value. Because when these goods are damaged. The term of shipment was cross and freight collect. Case: traders Archbishop was the lessor. Case: Filipino merchant The property subject to policy were consigned goods. So when there is shipment. So a carrier has an insurable interest on the goods in transit. Or vise versa. He has inchoate interest but it is not founded on an existing right. As long as the father is alive. Remember. The consignee/buyer insured the goods. there are three types of insurable interest: on the shipper: he can obtain insurance he has insurable interest based on existing right or legal title. Sublessee has insurable interest. we have the bailor and balilee (gibinlan): on the bailee: he can obtain insurance he has insurable interest based on liability that can be created. under sec 13. But only to the extent of the liability. You will have interest on that property of the loss or destruction of that property will result to your liability. different insurable interest. Normally there is a conditional deed of sale. manila. the property belongs to the father. Issue: if the consignee has insurable interest? Contention of insurer: The consignee has no interest yet because under the shipping terms ownership is transferred only at point of destination. Insurable interest is based on: existing interest/equitable or legal title. you have an insurable interest if you have a relation or connection in respect thereto or a liability in respect thereof. During his lifetime. Can the warehouseman insure the goods in the warehouse? Yes. B. The basis of insurable interest is equitable title. See? Same property. Kw Kwin Transcripts Page 23 PDF Created with deskPDF TS PDF Writer . on the consignee: he can obtain insurance he has insurable interest based on equitable title. to the extent of his liability but not to exceed the value thereof. he could dispose of those properties. the father cannot insure the properties of the son. So the basis of insurable interest is LIABILITY. He stands to suffer a loss if something happens to the property. Is the insurable interest? Yes. The destination is manila. they can become liable to the shipper or dipositor. He was already in legal possession of the property by virtue of the grant of legal possession.DEMO :: http://www. you need not have ownership or possession.docudesk. What is the nature of contract to sell? How is it different from contract of sale? Normally in contract to sell the perfection of sale is upon the payment of the price. SEC 15. only heir. If the son has properties. on the carrier: he can obtain insurance he has insurable interest based on liability that can be created.com . Because they may create liability. father owns several properties. The lessee entered into a sublease. A carrier or depository of any kind has an insurable interest in a thing held by him as such.Insurance Kwin A. In the depositary. Can B insure the properties (apartment units) of his father? No. Held: Consignee has insurable interest because there is already perfected contract of sale. To have insurable interest.
--is not insurable. What about: D borrowed money from C for 100k. Because what he has is an expectancy or an inchoate right which or not founded on an existing interest. Son insuring the property of his father is not insurable. the policy is 600k. XYZ can recover 420k id the wrongdoer was adjudged with 500k liability. He already received 80k. To what extent is his insurable interest? 500k Why not 420k? Because that is on the cost of the contruction. worth 100k. the value agreed by the insured and the insurer at the time the policy took effect is conclusive on the parties. The contract is that he has to build a house worth 500k. In short he is a judgment creditor. the car is part of the estate. But mere expectancy alone is not insurable. The credtor would now have insurable interest. So he can recover 600k. Remember right of subrogation. what happens to the liability? Only personal liabilities are extinguished. nor upon any valid contract for it.Insurance Kwin SEC 16 A mere contingent or expectant interest in anything. The creditor can go after the estate.docudesk. But what if at the time of the debtor’s death. Because the property insurance is a contract of indemnity. Would it change of the debtor is dead? Yes. Ex. Assuming that the loss was ascertained by the adjuster? to amount to 50%. And if it is an existing right. If the debtor dies. it must be based on a valid contract or perfected contract of sale to be insurable. Kw Kwin Transcripts Page 24 PDF Created with deskPDF TS PDF Writer . But for now. for how much can A recover? Only 500k because that is the extent of his loss. He has no insurable interest.com . What is the 600k? It is the maximum amount of recovery But later in our discussion. Can he now insure the car? Yes. C is an unsecured creditor. can A insure his construction? Yes. He has insurable interest – existing interest based on equitable title. The utang susbsists. for how much can A recover from XYZ assuming that it was a 100% loss? 420k. SEC 17 The measure of an insurable interest in property --is the extent to which the insured might be damnified by loss or injury thereof. A insure his house with XYZ. XYZ is subrogated the rights of A. But he must prove that the debtor has no other property out of which to pay the debt. The value of the house is 500k. You can only recover to the extent of your loss. the debt is already paid? Can the creditor still insure the car? No more. we just reiterate the requirement in Sec 14 that for an expectancy or a contingency to be insurable. You can recover only to the extent of the loss. D has a property. Because here. the extent of your recovery is limited to the extent of your loss and that is 500k. But what if the debtor is still alive and he has obtained a judgment against the debtor.DEMO :: http://www. How much can he recover? Only 250k. No inchoate interest based on existing interest No expectancy Not create liability But you mentioned: as long as the debtor is alive. Again. Ex. It talks about the contractor. Again. A is a building contractor who entered into a contract with B. it must be founded on an existing right. No existing interest based on equitable or legal title. If the third party who caused the loss paid A 80k. sec17 talks about the extent of insurable ointerest – extent he will be indemnified. B already paid A a down payment of 80k. car. If the house is completely destroyed. Because if it is a valued policy. Can the creditor insure the property of D? No. The example in your book is different. Or a husband insuring the property of the wife or vise versa. not founded on an actual right to the thing. There is no insurable interest. He has no right to the specific property of the debtor. it depends on whether it is a valued policy or an open policy.
no contract of insurance shall be enforceable except foe the benefit of the person having insurable interest. If the law says enforceable. B is his neighbor. A intead can recover the policy. has insurable interest. Lessor cannot recover based on sec 18.com . Let’s say A insured B’s house. sec 18 says it is not enforceable except for those having insurable interest. the policy itself will be void.Insurance Kwin SEC 18 No contract or policy of insurance on property shall be enforceable except for the benefit of some person having an insurable interest in the property insured. The insurer cannot waive the requirement of insurable interest. the lessor claimed the proceed of insurance policy on the basis of their lease contract. In short. The issue is WON the lessor is entitled to the proceeds. the proceeds of the policy will automatically go to the lessor. the beneficiary must have insurable interest.docudesk. They both have insurable interest. If something happens to A’s house. What if A insured his own house. Kw Kwin Transcripts Page 25 PDF Created with deskPDF TS PDF Writer . In fact there was a case (unassigned): Cha vs CA Cha entered into a contract of lease. When fire broke out. what happens? Is the insurer free from liability? No. Why is the policy not void? Because A has insurable interest. Basis: existing right and equitable title. Or you cannot raise the defense that the insurer is already estopped from raising the question of insurable interest. What if it was the building was insured? Either can recover depending on who is the beneficiary.DEMO :: http://www. To be able to enforce the policy. No. Because A has no insurable interest over the house of B. Lessor has no insurable interest. he designates B. Can A insure B’s house with himself as the insured? Is this policy valid? No. As discussed before. it talks about the policy owner and the beneficiary. it is not founded on existing right. A think that because of B’s house it will ensure the value of his property as well. No existing right. can B go after the insurer? No. since B has no insurable interest. If ever he does not obtain the consent . his friend as the beneficiary. Even there is expectancy of increase in value of property. Can A enforce the contract against the insurer? No. Cha is entitled to the proceeds. Is the policy invalidated? No. Because it’s contrary to public policy. under sec 18. but he did not obtain the consent of the lessor. doctrine of estoppel or waiver is not applicable. It provides that lessee must obtain the consent of the lessor if he insures the building. But this time. The lessee insured the goods stored in the building. It would be different if the power of the policy himself has no insurable interest. But in this case. the policy is not invalidated only the designation of B is invalidated. because the lessor is the owner of the goods insured.
Kw Kwin Transcripts Page 26 PDF Created with deskPDF TS PDF Writer . 7-1-10 policy takes effect 7-5-10 sold B 7-17-10 acquired back property 7-20-10 destroyed by fire Who can recover from XYZ. And it must exist at the time of loss because it 8is a contract of indemnity. In life? GR: Unlimited. C has no insurable interest at the time the policy took effect and at the time of loss. Why? Because the nature of property insurance is that it is a contract of indemnity. Illustration: A insured A’s house. insurer? A can recover because he has insurable interest at the time the policy took effect and at time of loss although he lost his insurable interest. insurance interest must exist at the time the policy takes effect. What about life insurance? Same. A cannot recover because A has no insurable interest at the time of loss.com . 7-1-10 policy takes effect 7-5-10 sold B 7-20-10 destroyed by fire Who can recover from XYZ. B cannot recover because B has no insurable interest at the time the policy took effect. What about life insurance? GR: No. This time it becomes a contract of indemnity. EXPT: If the creditor insures the life of the debtor. can C recover? No. Illustration: A insured A’s house. 7-1-10 policy takes effect 7-10-10 creditor insured property 7-20-10 destroyed by fire On XYZ. but not exist in the meantime. who can recover? A What is the extent of the insurable interest of the property? To the extent of its value or the extent it will suffer loss. A insured A’s house with XYZ. It must exist at the time policy takes effect. it must exist at the time the policy takes effect to prevent it from becoming a wagering contract. C insured A’s house with RST. And the property must exist at the time of loss. insurer? No one. When must there be insurable interest? To distinguish property and life insurance: PROPERTY LIFE Exist -takes effect -takes effect -time of loss -need not be at time of loss -not on intervening p.Insurance Kwin SEC 19 An interest in property insured --must exist when the insurance takes effect. Going back to property. Expt:creditor-debtor Extent: -value -unlimited EXpt:creditor-debtor In property. The insurable interest is up to the extent of the debt On RST. Time when insurable interest must exist. But it need not exist in the meantime.DEMO :: http://www. the law does not require it to exist in the meantime. because life is not a contract of indemnity. You have nothing to lose. In between you need not have insurable interest. EXPT: D-C relationship. It will indemnify only if you will suffer a loss. Why? Because then it will be similar to a wagering contract. and interest in the life or health of a person insured --must exist when the insurance takes effect. but need not exist thereafter or when the loss occurs.docudesk. Illustration: A has a debt to C. and when the loss occurs.
C insured A’s house with RST. A has insurable interest at the time the policy takes effect since he is the owner. existing right. A insured A’s house with XYZ. If there is deficiency.DEMO :: http://www. A insured A’s house with XYZ. He has a right of redemption after the foreclosure. Can C recover from RST? No. Illustration: A has mortgaged his house to C. At the time of the loss. Illustration: A has mortgaged his house to C. provided at the time of the loss. C insured A’s house with RST. and in the cases of life. -when is that revived? 1. --suspends the insurance to an equivalent extent. still he cannot recover. and health insurance. SEC 20 Except in the cases specified in the next four sections. 7-1-10 policy takes effect 7-10-10 creditor insured property 7-20-10 destroyed by fire Can C recover? Yes. policy is transferred or there is an assignment Why is it that there is no automatic transfer? Because one of the nature/characteristic of an insurance policy is that it is PERSONAL CONTRACT. deficiency can be recovered. -the insurance is suspended. he can go after A. v Insurance Commission He obtained a loan from Taitong. So if there is a deficiency. there must be an assignment or there must be the consent of the insurer. GR: NO AUTOMATIC TRANSFER -if you transfer your property. because the mortgagee has insurable interest. As security. does it mean that he has insurable interest? No. C has no insurable interest at the time of loss. Because the property is only to satisfy his credit and that is already sold as security of the debt. D 7-20-10 destroyed by fire Can A still recover from XYZ? Yes.com . A insured A’s house with XYZ. ownership is transferred. Because C does not have insurable interest at the time policy took effect.Insurance Kwin Illustration: A has a debt to C. Although C has insurable interest at the time of loss because in dation en pago. he has the right to recover the deficiency. C has insurable interest at the time the policy took effect because he is the mortgagee. The insurer may be willing to insure the property if you are the owner. they obtained a mortgage over land and building. Taitong insured the building. 7-1-10 policy takes effect 7-10-10 creditor insured property 7-19-10 mortgage is foreclosed and sold to HB. C insured A’s house with RST. Nether the original or subsequent owner of the property. he is already a mortgagee at the time of loss. For there to be transfer. until the interest in the thing and the interest in the insurance are vested in the same person. Case: Tai Tong Chuache & co. accident. the debt is not yet paid or cancelled. policy owner reacquires the property 2. He has existing right because he is the mortgagee. What if the public sale there was a deficiency? As a rule in real estate mortgage. Kw Kwin Transcripts Page 27 PDF Created with deskPDF TS PDF Writer . it’s not automatic that the insurance policy will also follow. on the basis of legal title. what is the effect? Nobody will recover.docudesk. 7-1-10 policy takes effect 7-10-10 creditor insured property 7-19-10 agreed in dation en pago 7-20-10 destroyed by fire Can C recover from RST? No. If the policy is suspended and the loss happened during the period of suspension. At the time the policy takes effect. But he may not trust the transferee or the insurable risk might increase. A has insurable interest at the time of loss. a change of interest in any part of a thing insured unaccompanied by a corresponding change in interest in the insurance.
Reason: GR – the transfer of property suspends the policy Here. Half of the house got destroyed. He paid 1 premium for one policy of 200k. Is the policy suspended? Yes. GR: EXPT: If you transfer the property without transferring the policy. house.docudesk.Insurance Kwin It will only be revived if: 1. A insures his house and designates B as the one who will inherit the house. there is still insurable interest. sec 20. motorcycle. A cannot recover. Ex. Ex. Ex. Sec 21 – loss has already occurred If the loss has already occurred even if you transfer the property. the interest over the property also transfers to B. three days after. he has no insurable interest at the time of loss. we talk about several things which are separately insured but are in one policy. there is an assignment 2. A insured his house. After the fire. sec thru will or succession There is a change in interest but it is made thru will. So automatic sad na ang interest in the insurance policy. How do we determine if it is divisible? If they are separately valued. the car got lost. sale. Because although he transferred the interest the transfer was made after the loss. At the time of the loss. A day after the policy took effect. there is a transfer but the transfer is thru will or succession. But take not that what the law refers to here as transfer must be absolute transfer. How do you determine? In the language used by the parties. estate or succession upon death of the owner of the policy. Kwin Transcripts Page 28 Kw PDF Created with deskPDF TS PDF Writer . boat 300k. the policy is suspended.DEMO :: http://www. the liability of the insurer is already fixed. B is the devicee. Ex. the owner reacquires the property So if he did not reacquire back. he sold the car to B.com . Can B recover from XYZ? No. That’s why we have to determine whether the policy is divisible or not. because mortgage is not an absolute transfer. bisan walay assignment of policy. house 500k. Car got destroyed. If there is a will. A sold to B the remainder of the house. sec Separately insurable Take note that for the policy not to be suspended. B can no longer recover because B has no more insurable interest. motorcycle 200k. You can still recover. Sec 20 – life health or accident insurance Because IT needs to exist only at the time the policy takes effect. 4. If A died on 7-10-10 and the fire broke out in 715-10. But it’s different of B insured the house and A died. In fact after the loss. property is transferred without corresponding transfer of policy 2. Why? (legal basis) 1. 3. mutransfer sad whoever inherits the property. He sold the car for 100k to B. so automatic. you can even assign your claim. Who is entitled to the policy? B. the policy is indivisible. B inherits the property by virtue of a will or by succession. 1. Ex. Neither if you have it rented. B inherits the house and its proceeds. it will not suspend the policy. 2. A obtained an insurance policy and paid the premium of 200k. you must determine whether the policy is divisible or not. Can A recover from XYZ? No. Here. In this exception. The policy will go to the heirs of to whoever acquires the interest in the property. Such that if you mortgage the property. boat. A has the following properties: car. If there is no will and B does not inherit. But if the policy says: the car is valued at 100k.
com . What is concealment? When is there concealment? ART 26 A neglect to communicate that which a party knows and ought to communicate.DEMO :: http://www. Can A recover on the house? Yes because he has insurable interest at the time the policy takes effect and at the time of loss. knowledge of the fact and 2. or if he will accept it. particularly information concerning the subject matter of the insurance and the circumstances surrounding the risk. in order for the insured to make the decision on WON he would accept the risk. has no insurable interest at the time of the loss. to what extent and what premium he is going to charge. material information to the contract of insurance Kw Kwin Transcripts Page 29 PDF Created with deskPDF TS PDF Writer . duty to disclose So we have the elements of concealment (sec 26 and 28) 1.party concealing makes no warranty 5. That’s why the insurer developed certain devices to help the insurer in obtaining information from the insured. Because of this nature of insurance contracts. specially on the part of the insurer. On the car. other party has no means of ascertaining the information concealed 4. Concealment and representation are devices used by the insurer to obtain necessary information before he will make the decision WON he is going to accept the risk.Insurance Kwin Who is entitled to recover? Can A recover? July 30. he cannot recover because he no longer has insurable interest. duty to disclose 3. But for the rest of the properties. Devices: Concealment Representation Warranties Conditions Exceptions Tonight we’re going to discuss the device called concealment. There must be: 1. Because these properties are lost. is called a concealment. there are so many variables unknown. This may be made by either party. one of it’s characteristics is that it is aleatory – the obligation of the insurer shall arise only upon the happening of the contingency. the transfer of the car will not suspend the policy. knowledge of the fact 2. No. 2010 Before when we discussed about the characteristics of an insurance contract.docudesk.
2010. What makes the contract voidable? There is vitiation of consent Kw Kwin Transcripts Page 30 PDF Created with deskPDF TS PDF Writer . there is no need to disclose. A week after the insured died because of hypertension. That would render the contract voidable. Why is the time of knowledge important? The assessment comes in before the effectivity of the policy. Illustration: July 10 -issue policy Between -obtained significant information material to the insurance contract Aug 10 -applied for amendment modification of the insurance policy In this case the insured must disclose the information to the insurer. There is already concealment. He was confined to hospital and was diagnosed with hypertension. if the knowledge was acquired after the effectivity. at the time of the effectivity of the policy. is that a valid defense? No. the insured is bound to disclose to insurer information subsequently acquired.com . It will also apply if even if at time of the application he has no knowledge yet. July 30. then there is concealment. SEC 27 A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance.DEMO :: http://www. But of there is no modification or amendment. you must have knowledge at the time of the effectivity of the policy. This time that information is significant. he has no knowledge. 874) Illustration: Application: Jul 10 Approved/effectivity: Aug 10 Diagnosed: Aug 15 What if instead he was confine in hospital in Aug 15. and one week later he died. Except in sec 47: if after the effectivity of the policy. 2010.Insurance Kwin KNOWLEDGE When must the party have knowledge of the fact concealed to be guilty of the concealment? TIME OF KNOWLEDGE: At the time the policy takes effect If the insured has knowledge at the time of the application of the policy and he concealed that. It could now have an influence on the insurer in deciding WON we agree on the modification or on the amendment. But after the application before the effectivity of the policy. Here the information happened after. There is still concealment because at the time of the effectivity he already has knowledge. the policy was issued. Can he recover? Yes What if the reason why I failed to disclose was that I forgot or I made a mistake. Subsequent events would no longer influence the insurer in making the decision on WON he will accept the risk. In this case. On August 1. Although at the time. And it was the approval on Aug 1. but subsequently he acquires information after the application but before the effectivity of the policy. Because the knowledge was acquired after the effectivity of the policy. So he already has knowledge of the heart condition. The insured should have disclosed that fact to the insurer. then there is concealment. that information would no longer affect the policy. (As amended by Batasang Pambansa Blg.docudesk. increase coverage). the insured already had knowledge if the material fact. But take note on the ‘after’. Application was forwarded to head office for approval. Illustration: Application: Jul 10 Diagnosed: Jul 30 Approved/effectivity: Aug 1 A applied for insurance policy in July 10. If he failed to disclose that. Can he recover the policy? No. Even if he did not disclose. As a rule. the policy was issued in Aug 10. 2010. Here to have concealment. even oif he disclosed it there is no concealment. A was confined in the hospital because he was having chest pains and he was diagnosed with hypertension. There is no more concealment. He has already issued the policy. it is possible that the insured could make amendments in the policy or some modification (ex. but after application but before the effectivity of the policy he was already confined in the hospital.
there is concealment WON there is failure to disclose is intentional or unintentional.Insurance Kwin Under the new provision. Case: Musngi v resco At the time he applied for the policy. are you in good health? A:yes The insurer granted the policy. When can there be concealment on the part of the insurer? Ex. The fact that you concealed it. There was concealment because in the application form he was asked if he consulted the doctor. It’s difficult to prove. Kw Kwin Transcripts Page 31 PDF Created with deskPDF TS PDF Writer . Once you establish knowledge. There test to know if there is concealment is : There must be vitiation of consent When is there vitiation of consent? If he was misled or deceived into entering into a contract. Verbalife denied the payment of the premiums. Father demanded for proceeds. What if the child is authestic? Is the information material? Yes. Is that information material? Yes. so long as the other elements are present. It was a non medical insurance. There is insurable interest. that the child was mongoloid. He said yes. In this case. When we apply there is an application form. What he disclosed was only the confinement for the cough and flu but not the confinement in the lung center due to renal failure. Case: great pacific Life insurance. rendering the contract voidable. It’s not necessary the fact that he concealed hypertension. then it entitles the other party to rescind the contract. If non medical. that is presumed to be material. 41. There was no autopsy conducted. Concealment is very clear. An information is considered material if it is a subject to a special inquiry.39 There is another case. the father did not disclose in the application for. Effect: return what you have received. There should be knowledge of the fact. Case: Sunlife v CA POLICY: Double indemnity in case of accidental death. Cause of death is plane crash. Is there concealment? Yes. the insured himself knew that he was already suffering pulmonary tuberculosis. What was the cause of death? Hemorrhage secondary to hypertension. Is there knowledge here? Was the allegation considered conclusive? No. there is a waiver of medical examinations. Denied because there was concealment. What can the insured do? Rescind the contract. The fact that you concealed need not be the cause of your death.docudesk. in your book where father obtained a policy for mongoloid child. Therefore it renders more important the information supplied by the insured. Q: have you ever consulted the physician for any physical impairment? A: Yes Q:To the best of your knowledge. Since there is no knowledge there is no concealment. There is no need of connection between the fact concealed and the cause of the death. Sunlife rejected the claim because the insured did not disclose material fact. Intent is a state of mind. Was there concealment? No. (b4 intentional lang) Why? Under sec 27 there’s no need to prove presence of fraud. Could there be concealment on the part of the insurer? Yes. the premium paid is not correct. It was not established the insured had knowledge of hypertension or any disease. Extent of benefit to be received.DEMO :: http://www.com . you need not prove that the concealment is intentional or not. He was confined in the hospital and consulted a doctor who treated him for that ailment. Extent of coverage. Concealment presupposes knowledge of the fact concealed and whoever alleges the existence of concealment must prove that the person concealing has knowledge. Let’s go back to the elements of concealment. or if he would have entered into the contract.
The fact that you have knowledge and you have the duty to disclose and you make no warranty on the material fact. he was already treated and diagnosed with acute bronchitis.com . It doesn’t mean that at the start they will make the inquiry. Test of materiality is not based on the event but on the probable and reasonable influence on the insurer. there is no obligation on the part of the insurer to make further verification.Insurance Kwin Here he died of plane. We will discuss later on when there is waiver of information. So you must disclose all the significant information So under sec 28 there is a duty to disclose facts which are Within your knowledge. Later on the insurer refused to pay on the ground of concealment. Having disclosed this fact. Case: arjente There were questions: Q: have you ever consulted a physician? A: no Q:have you ever consulted for any ailment or disease? A:yes Q:nature of ailment? A:scabis Q:have you ever consulted a physician for brain and nervous system? A:no The obligation to disclose that fact is on the insured and not for the insurer to rescind the contract every time he knows that you have knowledge. Case: Vda de canilang Prior to application for the insurance. They have the right to rely on the information. is already concealment. (kanang maga pangutana nimo) -ex. Is that a defense? No. normally when there is a waiver of medical examination. And if he issued the policy without further inquiry.DEMO :: http://www.docudesk. if he will accept it. in good faith. The contention of the insured was that he did not know because he did not understand. it’s material: if it increases the risk if knowledge of that. You cannot say that you did not disclose because you are shy to tell the information. the insurer would not have issued a non medical insurance or the insurer would have made further inquiries. or if it decided to accept that risk. what rate of premium or what extent. So those fact that he concealed was material. it is not considered as waiver. all facts within his knowledge which are material to the contract and as to which he makes no warranty. Let’s discuss materiality When is a fact considered material? It’s not based on the event but more on the probable and reasonable influence on the insurer in deciding whether or not he will accept the risk. But if there is no waiver like what you answered there is complete on its face. That’s why it is called the contract of adhesion because some of the terminologies are so technical. Because there are cases wherein there is concealment because the insurer himself waived further information. and which the other has not the means of ascertaining. It’s not necessary that the fact that you concealed is the cause of the death. the insurer will increase the premium Matters subject of inquiry are presumed to be material. The contention of the insured was that the fact concealed has nothing to do with the cause of death. So again. There is this case where the insured is Chinese and he does not know English. Sec 28 Each party to a contract of insurance must communicated to the other. it would charged higher premium. Because of insurance is a contract of utmost good faith. life insurance: Removal of cist Cancer Diabetes Hypertension Dengue In to extreme sports Cement fatory worker Property insurance: Other insurance is obtained In non medical information. Material to the contract The other party has no means of ascertaining For which you make no warranty Kw Kwin Transcripts Page 32 PDF Created with deskPDF TS PDF Writer . the insurer will decide not to accept the risk if knowledge of that. But the ruling of the court is that he who wishes to enforce the contract has the burden of proving that the contract was not explained to him. The connection is not needed. it makes it more material the information that you supply.
If you make a warranty. If you were operated on as a kid and you have forgotten about the operation and you did not disclose it. (b) Those which. wine spirits? A:beer in small quantity Q:have you ever consulted a physician for brain and nervous system? A:no Q:are you in good health? A:yes But the truth is. di nata kinahanglan mudisclose. But this time. can that still be considered as knowledge? Yes. There was concealment If you conceal that and the act of concealing is intentional or fraudulent.com . you violate your warranty. and (e) Those which relate to a risk excepted from the policy and which are not otherwise material. So there is concealment whether intentional or unintentional. GR: whether intentional or intentional.Insurance Kwin Wife was asked: Q:do you use beer. Diba in elements of concealment.DEMO :: http://www. SEC 30-35 These sections talks about information where there is no duty to disclose. If there is a conspiracy between the agent and the insured. (d) Those which prove or tend to prove the existence of a risk excluded by a warranty. There was a contention of the wife that she did not know that the operation was about cancer. because that fact will tend to prove the falsity of your implied warranty that the vessel is sea worthy. you make no warranty. and which are not otherwise material. SEC 30 SEC 29 An intentional and fraudulent omission. It is not concealment but breach of warranty. in the exercise of ordinary care. Because knowledge does not refer only to those which you know. Because it’s easy to say you forgot about it. then the law requires that you must make a disclosure. in which case it will not bind the insurer. So if the agent has knowledge. and the other party knows about that already then there is no concealment. manic depressive and psychoneurosis.docudesk. you must disclose that. entitles the insurer to rescind. to communicate information of matters proving or tending to prove the falsity of a warranty. But here the concealment must relate to the fact on which you make a warranty. concealment entitles the injured to rescind the contract But ere we have sec 29 wherein the concealment must be intentional or fraudulent. the agent is an extension of the personality of the principal. The effect is the same. it must be proven na ang uimong pagconceal is fraudulent or intentional. and of which the former has no reason to suppose him ignorant. THOSE WHICH THE OTHER KNOWS Even if you did not disclose that. Neither party to a contract of insurance is bound to communicate information of the matters following. Meaning: It is in good condition It is manned by a competent crew It is equipped with navigational equipment So you do not need to disclose that you have complied with those mentioned above because it is covered by the warranty. Case: saturnino Operated for cancer – not make the disclosure. then it entitles the party to rescind the contract. on the part of one insured. If you did not disclose that fact. But in a case it is referred to things that you know and ought to know. Because the relationship of the principal and the agency. that fact . except in answer to the inquiries of the other: (a) Those which the other knows. the other ought to know. You should have disclosed that. It entitles the party to rescind the contract. Ex of warranty: Implied warranty of the vessel that it is sea worthy. It’s not limited only the facts personally known to the insurer but also the facts known by the agent. she has been hospitalized with alcoholism. or the crew is not complete. That it a material fact. then the principal also has knowledge. But if that fact would tent to prove the falsity of the warranty. Kw Kwin Transcripts Page 33 PDF Created with deskPDF TS PDF Writer . Even if you have knowledge of this information you have no need to disclose. If there is a fact that a week prior to your insurance. ang imong vessel kay nasanghyad or nabuslot and hull or there’s a defect in your engine. Diba the rule is that you need not disclose of a fact wherein you make a warranty. But the court said that the fact that you did not conceal the operation itself is already concealment. (c) Those of which the other waives communication.
If the insured did not answer the question or if it was incompletely answered. the insurer sent an agent. Because it is presumed that the knowledge of the agent is the knowledge of the insurer. Peace and order situation He insured his oil tanker in Iraq. If in the application form there’s the question: Q: Is the policy encumbered. where they are distinctly implied in other facts of which information is communicated. Kw Kwin Transcripts Page 34 PDF Created with deskPDF TS PDF Writer . Express waiver when it is expressly stipulated in the contract or by the express terms of the contract. He waived the right to further information on those questions which are incompletely answered or on those questions which are unanswered. either by the terms of the insurance or by neglect to make inquiry as to such facts. WAIVER OF COMMUNICATION SEC 33 The right to information of material facts may be waived. The answer is not complete. But if the answered is apparently complete and you issued a policy. Ex.DEMO :: http://www.com . The agent went to your place and surveyed your house. Because the answer is complete upon its face. equally with that of the other. Ex. Because this is a matter of public knowledge. Ex. Is there implied waiver? No. Is there concealment? No. So if you issue a policy without making further inquiry. there is implied waiver. But the truth is. When is there implied waiver? When there is a neglect to make further inquiries on facts which are distinctly implied from other facts on which the other information is communicated. This refers to information of public knowledge.docudesk.Insurance Kwin Ex. Because the answer is apparently complete on its face. Is there implied waiver such that the insurer could no longer raise the defense of concealment? No. The insurer cannot say that the injured did not say that he did not disclose that thee was an oil tanker in Iraq. Because I issued a policy without further inquiries. In that case. A: Yes mortgaged to Mr A for 500k The insurer without making further inquiry issued the policy. and the insurer. there is implied waiver. No problem with express waiver. for what amount. Waiver could either be express or implied. But the truth is A has been confined in Chong Hua and Perpetual. without making further inquiry issued the policy. But if the answer is yes lang and I issued the policy without further inquiry. if yes. When can we say that there is an implied waiver on the insured? When there is a neglect to make further inquiry on facts distinctly implied on the other facts already communicated. and for what ailment? A: yes at CDU on june 30. then there is implied waiver. there is a second mortgage. and all general usages of trade. and which may affect the political or material perils contemplated. then there is an implied waiver. Is that an implied waiver? Yes. You applied for property insurance. But if the question were answered and the answer was apparently complete on its face. and the neighboring area. there is no implied waiver. If in the application form there are questions. When you submitted for the application. There is no concealment because the other party knows of it already. and the insurer without further inquiry issues the policy. the insurer cannot say that the insurer cannot say that he concealed the fact that the material of the neighbor’s house is made of wood/light material. 2010 for dengue The insurer without making further inquiry issued the policy. Ex. Q:have you been confined in the hospital. IN EXERCISE OF ORDINARY CARE – SHOULD KNOW Relate that to sec 32 SEC 32 Each party to a contract of insurance is bound to know all the general causes which are open to his inquiry. If the question is unanswered or if the answer is incomplete. and you issued without making further inquiry.
These are questions answerable by your judgment or opinion. ulcer of the stomach and the tumor taken was the size of a hens egg. the question is Q: have you ever admitted yourself top a hospital? A: yes. there is no duty to disclose your insurable interest. you should have asked. But if the answer is just yes and I issued the policy.docudesk. riot where the property is situated. If there is an inquiry 2. -Do you think you are a good driver? If you say yes. information of his own judgment upon the matters in question. What if the policy excludes death arising from suicide whether committed while sane or insane. But it will matter if you said yes and you do not know how to drive. there is no misrepresentation or concealment. sedition. Kw Kwin Transcripts Page 35 PDF Created with deskPDF TS PDF Writer .com . Fire insurance policy. SEC34 Information of the nature or amount of the interest of one insured need not be communicated unless in answer to an inquiry. Later he died of cancer. CDU june 30 . In this case there is no implied waiver. If the policy states that storage from flammable materials are excluded and I store in my building gasoline and I did not disclose that. When do you need to disclose the insurable interest? 1. You are not absolute owner Ex. SC said that there is no concealment because the insurer when he issued the policy. Can I raise later on the defense of concealment? No. Because if you are a prudent insurer. Insurer issued a policy without making further inquiry. The policy excludes the risk arising from rebellion.DEMO :: http://www. even upon inquiry. what hospital. for what ailment. it will not matter. I did not disclose the fact that I have suicidal tendency. coup d’etat. e.Insurance Kwin Here. Is there concealment? No. The issue here was that WON the insured was guilty of concealment. b. d. -How long will do you think you will live? If you answer this and it turns out that you are not correct. PROVE EXISTENCE OF RISK Ex. Ex. But the truth is he was operated on peptic ulcer an not mere tumor. there is no duty to disclose Except in answer to inquiry. You did not disclose the facts that there are rebels. Because the answer is apparently complete. So the insurer has the right to imply that you are comfined only in CDU and not in other hospital. Is there concealment? Because accepted man siya sa warranty and not otherwise material. c. Those are the accepted risks. It now becomes material In sec 24. and then you met an accident. is there an implied waiver? Yes. And gi exclude lang is fire from kerosene but it would somehow increase the risk/hazard. Neither party to a contract of insurance is bound to communicate. In this case there is already misrepresentation. there was an implied waiver of further information. Is that concealment? That knowledge will not matter to the insurer? It is excluded from the policy but is that material? It is material.dengue. except as prescribed by section fifty-one. Mortgagee/Lessee SEC 35 Case: Operated for myoma. Take note under a.
GR: EXPT: Since they are collateral inducements. In what form must representation be given? There’s no form prescribed by law.Insurance Kwin Aug 13. these normally precede the execution of the contract. 2010 REPRESENTATION This is the device developer by the insurer forpurpose of obtaining necessary information on the risk it’s going to assume. If it is true in a material aspect. It need not be literally true. Is there misrepresentation now? No because the answer is substantially true. And since these are collateral inducements. So representation can be made orally or in writing. then there is no misrepresentation. So same as concealment. What about when you apply for insurance coverage in motor vehicles? You represented that the color of the motor vehicle is white But it turned out that the color is black. Concealment pertains to knowledge acquired prior to the effectivity of contracts. Question as to illness Q: Have you suffered any illness? Confined in the hospital for any illness or sickness? A: No. they are construed liberally in favor of the insured in the sense that representations are required only to be SUBSTANTIALLY OR MATERIALLY TRUE. Ex. And these information concerns about the risk that is to be assumed by the insurer. But the truth is you drink at parties or after exams. unlike warranties.DEMO :: http://www. Why? The purpose of the representation is to induce the insurer. it must not be incorporated in the policy. plate number. Is there misrepresentation? No. these are given before the effectivity of the contract. So in short these are collateral inducements for the insurer to decide whether to accept the contract or not. sec 47 (to be discussed later) How are representation construed/ interpreted? Same rule as in statutory construction. Illness must refer to serious illness. OW it now becomes a Condition Warranty or Executory term of a contract. There is no misrepresentation so long as the major description of the vehicle like chasis number. this must be given at the time or prior to the effectivity. If the language is clear. But with respect to representations. But in insurance. it is the insured who is giving information for the purpose of inducing the insured to assume the risk. model it exact.docudesk. a week prior to that you have a cold/fever/soar eyes/diarrhea. Because it would no longer influence the insurer. Ex. So what is representation? These are factual statements made by the insured to the insurer. Kw Kwin Transcripts Page 36 PDF Created with deskPDF TS PDF Writer . Such that information acquired after the effectivity of the contract would no longer affect the policy. they make representations about the product or the service. engine number. But the truth is. And what is the purpose of these statements? Why do you give the statements to the insurer? Because you want to induce or convince the insurer to accept the risk. Just like marketing agents or salesmen when they want to sell a product. Or in writing like your answers in the application form. When are they given? Before are given before at the time if the effectivity of the policy. But take note. Is there now misrepresentation? No because the answer is substantially true. then it should be given its plain and ordinary meaning. Same with representation. Question as to use of liquor is understood to mean habitual or excessive use. Question as to the use of spirits Q: Do you drink beer/wine/liquor? A: No. Ex.com . Orally like in questions made by the agent. If it is ambiguous. the ambiguity should be resolved in favor of the insured and strictly against the insurer.
com . “I will install fire sprinklers in all floors of the building” Because it is to be done after the execution of the contract. residential na siya. 2. as to the representation that you made. oral/parol promise 2. Maybe he just made it fraudulently to obtain a lower rate of premium. So in the written contract. what is required by law? What is promissory representation? Something to be performed/to be done after the contract took effect. I affirm that this building has working fire alarm system. the fire alarm system is no longer working? Is there misrepresentation? No Because in the affirmative representation. What if the promised is not fulfilled? Then the insurer is not liable. What if at the time of the loss. 3 fire hydrants. like 10 fire extinguishers. You promised to put a a sufficient fire protection measure. It requires too be substantially complied. you will not be liable as a misrepresentation. you only affirm as to the existence of a fact at the time the contract begins. Kw Kwin Transcripts Page 37 PDF Created with deskPDF TS PDF Writer . If the promise is incorporated in the policy. PROMISSORY It it made before the application but the performance is to be done after. Because it’s a breach of warranty. What’s the rule? So the insurer cannot use the oral promise to prove that there is a breach of contract. KINDS OF REPRESENTATION 1. so at the time I made my application. It will not affected by the subsequent change of the representation. It is not a continuing guaranty that the fire alarm system will be working so long as the time the contract begins. condition or part of the term of the contract. So long as it’s true at the time the contract begins then that’s a valid representation. So again it requires only to be substantially or materially true. it was not incorppoarted But the insurer can use the defense that he made that promise in bad faith. You will not be liable for misrepresentation. Is there misrepresentation? No because promissory representation needs only be substantially complied with. So there is now an issue as to whether there is misrepresentation. Because that will violate the PAROLE EVIDENCE RULE. “this house is used for residential purposes” There is a subsequent change of the use of the house At the time of the loss. it could be a warranty. AFFIRMATIVE REPRESENTATION You affirm or allege as to the existence or non existence of a fact existing at the time the contract begins. Di kinahanglan word for word. It’s a non fulfillment of a condition. Case: In his application form. Meaning he made the promise with no intention to fulfill that promise. incorporated promise Ex. the subsequent change will not affect you representation.Insurance Kwin Ex. So the law requires only to be substantially true. With respect to promissory representation. It would change the decision of the insurer. Because your model is a material fact. the insurer will be liable But my point is. Then it has been substantially complied with. But what If oral lang gimade? It was not incorporated in the policy. It may no longer be insurable if daan na kkaayo ang sakyanan. he promised that he will provide a sufficient fire protection measure. What if you misrepresented the model. is there misrepresentation? Yes.docudesk. Ex. -kinds: 1. But of course there are some policies that provide that if there is some change in use.DEMO :: http://www. That rule forbids the admission of oral testimony to alter the terms of a written contract. 5 fire hydrants… But it turns out that he only installed 5 fire extinguishers. Ex.
it turned out that the building is used for commercial purposes. would the insured be liable? No. Meaning the insurer assumed the risk of a commercial building. !!! SEC 40 A representation cannot qualify an express provision in a contract of insurance. he had no intention to have the place occupied. That is already a misrepresentation. Q:Are you a good driver? A:Yes. change or amend an implied warranty. -this house can survive a strong typhoon -there would be no misrepresentation because by the nature of the insurer has no reason to rely on the statement.Insurance Kwin Like the example given in the book: you promised that the house will be occupied. Kwin Transcripts Page 38 Kw PDF Created with deskPDF TS PDF Writer . If the insured is an expert on appraisal? That is still a statement of belief or expectation. I believe that I am healthy. you will not be liable. And the insurer has no right to rely on the statement to make further inquiry. Would the insurer be liable? Can the insurer raise the defense of misrepresentation? What kind of representation is that? That is a promissory representation. Since the promise was just oral. And that promise was not made part of the policy Can the insurer refuse payment by saying that there is misrepresentation? No. Ex. It was not incorporated in the policy. Ex of statement of belief or expectation: -this machine will still have a life of five years.com . he must prove that the promise was made in bad faith. The house was not occupied at the time of the loss. The promise was not incorporated in the policy. This is just a statement of belief or misrepresentation. would you be liable now for misrepresentation? Yes. he really wanted to have the house occupied.DEMO :: http://www.docudesk. Representation: ‘this house is used for residential purpose’ Policy: ‘the building is used for commercial purposes’ At the time of the loss. So the important factor with respect to oral misrepresentation is: BAD FAITH Although as a general rule. for the insurer to raise that defense. What is the effect? Insurer is liable. For the insurer to raise that as a defense. if it is not fulfilled or if it turns out to be false. Q:How long do you think you will live? A:20 years. misrepresentation need not be intentional. But it may qualify. If it turned out that you are not really a good driver. The statement is just a belief. If it turned out that you do not know how to drive. In that case. the insured will not be liable for misrepresentation. Unless there is fraudulent intent. Ex. you will not be liable in case of non fulfillment. But with respect to promissory representation. and no body occupied the house. but it may qualify an implied warranty. Ex. Provided there is no fraudulent intent. That at the time he made that promise. he must prove that the oral promise was made in bad faith. But it could be unintentional and intentional. How do you differentiate a promissory representation to a statement of belief or expectation? It’s a statement of belief or expectation if it is something which by nature oft the statement is contingent. The insured will not be liable. But if the promise was done n good faith. amend modify an express provision of a contract. What do you mean the word qualify? It means that you cannot change. And the effect of a statement or expectation. Ex. Your representation cannot change the express provision of the policy. But it turned out that you have a serious ailment. Q:Do you think that you are suffering from any serious ailment? A:No. So if it just a statement of belief or expectation. Meaning: (why can it change implied warranty?) Implied warranties are not incorporated or stipulated in the policy.
but not afterwards. So the representation must be true at the time the contract takes effect. it was found out that there is a defect. Because it is true at the time the policy takes effect. Is there misrepresentation? No. At the time of the loss.Insurance Kwin If it turned out that the building is really used for residential purpose? Is there misrepresentation? Is the insurer liable? No. 1. you cannot change that by making an opposite representation. the insured is not able to comply. Reason: that is just an implied warranty. it is in Manila. what should you do? You should alter or withdraw your representation. Whereas if it is expressly stated in the policy. So if before the effectivity. Is there misrepresentation? No. But a representation may qualify an implied warranty. would you be liable for misrepresentation? No. because by the nature of things. But at the time it took effect. If at the time of the loss. Ex. Because representation cannot modify an express warranty. But with respect to age. As a remedy. because it is true at the time the contract takes effect. The difference with the implied warranty is that it is not incorporated in the policy. you are already 22. Is the insurer liable? No. the act you represented has already change. If you did not disclose that. then that representation can modify the representation can modify the implied warranty that the vessel is sea worthy. Ex. is the insurer liable? Not liable. Kw Kwin Transcripts Page 39 PDF Created with deskPDF TS PDF Writer . because the insured already had that knowledge. At the time of the loss. the insurer already knows that the first three floors are with extinguisher and despite that knowledge. Because a representation cannot change the express provision of the policy. SEC 42 A representation must be presumed to refer to the date on which the contract goes into effect. you represented: first three floors only. you will be liable for concealment or misrepresentation. When you say ‘all floors’. Application form. Ex of an implied warranty: In marine insurance: vessel is sea worthy.06. If you told the insurer that there is defect. But if you say that the vessel is in manila? Is there misrepresentation? No.docudesk. Policy: all floors of the building will have fire extinguisher. Not passenger. If only the first three floors have extinguisher. But after the application but before the effectivity you contracted a serious disease. di pwede mubalik ang edad. It must be true at the time the policy takes effect. at the time you signed the contract you said you are 21. because I did not insure cargo. **It would only be estoppel if during the term of the policy. What would be binding is what is stated in the policy. At the time you applied for a policy. You represented that the vessel subject to insurance is in Tokyo. he continued. As a remedy. Ex. what should you do? So you either withdraw you representation and change it or tell the insurer that you have contracted the disease. it must be strictly and literally complied with. Representation must be presumed to refer at the time the policy takes effect. you can alter or withdraw.DEMO :: http://www. At the time you said that it’s in Tokyo. it becomes now a warranty. So since the reckoning point of the representation is the time the policy takes effect. it’s already in Manila. you said that you have not had any serious ailment. If it is incorporated in the policy. Ex. then there is a violation of the implied warranty that the vessel is seaworthy. If it turned out later on that there is a defect in engine or it is not completely manned. At the time the policy takes effect. SEC 41 A representation may be altered or withdrawn before the insurance is effected. But at the time it took effect. If the vessel is cargo Policy: insure passenger. Is there misrepresentation? Yes.com .54 8-13-10 kwin But if you say that the vessel is in Manila. the vessel is really cargo. So it can be changed by a representation.
Common example of information coming from the third person: information as to the cause of death of your parent. In that case. And in such case. he knows that it is untrue. you will not be liable if the information turns out to be false.com . You are now liable to disclose. with the explanation that he does so on the information of others.docudesk. to the insurer. Sec 43 talks about the insured not having personal knowledge. in its whole extent. It’s still substantially true. But he acquire that information from third person. you must explain to the insurer that that information is based only from the information from third persons. unless it proceeds from an agent of the insured.Insurance Kwin SEC 43 When a person insured has no personal knowledge of a fact. and in neither case is he responsible for its truth. Because the ship captain (agent) has knowledge. Q: did you ever spit blood? A: no. you say something that is not true. In first question. So there is misrepresentation It must be false in substantial and material aspect. Kwin Transcripts Page 40 Kw PDF Created with deskPDF TS PDF Writer . he may nevertheless repeat information which he has upon the subject. Knowledge of the agent is knowledge of the agent s considered to be knowledge of the principal. or he may submit the information. there is no misrepresentation because it refers to habitual use. represented to the insurer that the vessel is safe at port. Do you remember concealment? You will be guilty of concealment if you have knowledge. That’s the general rule. the insurer can still raise the defense of misrepresentation/concealment. Such that even the incontestability clause will not apply. Exception: If the information comes from your agent.DEMO :: http://www. If you did not disclose that you will not be liable for concealment. WON there was a waiver on the part of the insurer because they issued the policy even if in the medical report it says that he is very healthy. whose duty it is to give the information. There is the storm. As a rule. A ship captain is considered as the owner of the vessel. SEC 44 A representation is to be deemed false when the facts fail to correspond with its assertions or stipulations. But so as for you not to be liable in case it turns out to be false. The owner who does not have knowledge took policy and Case: insular life In application form Q: do you drink beer and other intoxicant? A: no. You have no personal knowledge if they died when you are still young. Or without knowing it to be true. The fraud committed by Dominador is what you call –FRAUD OF A VICIOUS TYPE: you substitute a healthy person for a sick person. So even if two years have lapsed. In short. On last question. Under sec 43. and which he believes to be true. So when is there misrepresentation? When are you liable for misrepresentation? When you say something as a fact when it is untrue. if the information is coming from your agent. It actually defines what is misrepresentation. So if the ship captain has information that the vessel is in the middle of the pacific ocean. In that case. he states it as true. there is no duty to disclose. the truth is he suffered from chronic cough. you must attest to the truthfulness of the statement. is there a duty on your part to disclose that information? No. you have the discretion to disclose that information coming from third person. And you are liable for the truthfulness of the statement. So there is sputum. It doesn’t mean you have ailment in lungs. Case: Iguaras He was substituted by another person who was healthy. only occasionally. It is material to the risk. You can disclose that information that that is based from relatives. you are not only required to disclose it. then you will not be liable. But if the information comes from the agent like the ship captain. There is no misrepresentation. Would the ship owner be liable for misrepresentation even if there is no personal knowledge? Yes. Q: do you suffer any ailment on lungs? A: no. And that agent has the duty to give you that information. Doctor states he was healthy. And at the time he states that. if it turns out to be false. Despite that he was suffering from chronic cough. Or you just give the information to the full extent.
the insurer could already see that the insured is no loner qualified. realizing that he is paying a higher rate of premium. Unless if the policy says that in case there is a change in us. You must prove that the insurer already has knowledge of the violation of the policy. Then that would be considered as a waiver. (As amended by Batasang Pambansa Blg. The court considers the insurer already in estoppel. Mr. A applied for the policy he stated his date of birth – 1940. Ex. That is already waived. So he’s already 70 years old If despite the disclosure of the age of the insured. The policy covers also for residential purpose. He represented that there’s no more bakery Take note: when did he make the representation? After the effectivity of original policy. then he must exercise the right to rescind. Kw Kwin Transcripts Page 41 PDF Created with deskPDF TS PDF Writer . because the representation was true at the time the policy takes effect. now he applied for an amendment in the policy wit the intention to have the premium reduced. the insurer issued the policy. SEC 46 The materiality of a representation is determined by the same rules as the materiality of a concealment. The remedy for the misrepresentation is same as in concealment. When is there a waiver on the right to rescind? If he accepts the premium and at the time if acceptance he has knowledge. Ex. the use is already changed to commercial. SEC 47 The provisions of this chapter apply as well to a modification of a contract of insurance as to its original formation. Test of materiality is the same. At the time of application. Probable and reasonable influence on whether you will accept the risk or not. at the time the policy took effect. In the application form. Effect: the same. would the insurer now be liable for misrepresentation? Yes. When is the fact material? When it would influence the insurer. you represented that the house is for residential purpose. The right to rescind granted by this Code to the insurer is waived by the acceptance of premium payments despite knowledge of the ground for rescission.docudesk. And yet he continued to accept the premiums or renewed the policy. Subsequent knowledge after would no longer have an effect.Insurance Kwin SEC 45 If a representation is false in a material point. Mr. So misrepresentation and concealment. the injured party is entitled to rescind the contract from the time when the representation becomes false. would the insured be liable for misrepresentation? No. Assuming there is no provision in the policy as to change of use. Ex. can the insurer later on refuse payment? No. Although it was made after the effectivity of the policy. Or he has already knowledge that the insured is suffering from a serious ailment and yet you still continue to accept premium and not exercise right to rescind. 874). If it turn out that there is still a bakery. Except if there is modification or if the insured applies for amendment in the policy.com . But at the time of the loss. It entitles the insurer to rescind the contract. So if he already has knowledge that the representation has become false. He could rescind the contract from the time the representation becomes false. in your book: Policy states that coverage was only for persons aging 16-60 years old. it is considered waiver. sa ubos nay bakery. despite the knowledge that the jeepney is not public but private yet he still renewed the contract. It means that the rules on representation and concealment applies not only to the original provision of the contract but it also applies to modification. it was made before the effectivity of the modification.DEMO :: http://www. A applied for insurance policy. whether affirmative or promissory. the insurer will not be liable. There is no waiver by simply accepting the premium. We discussed earlier in misrepresentation and concealment that it refers only to facts at the time or before the issuance of the policy. How is it different? Misrepresentation is considered as active form of concealment.
Raise defense? Yes Buttake note that there is a case where after the loss has occurred.com . He can have other defense of concealment or misrepresentation. When you say you want to have the contract. it was rejected by the insured. So the right of the insurer to rescind the contract must be exercised B4 COMMENCEMENT of an action by the court. Although you can no longer rescind the contract. you are not rescinding the contract but you are simply raising the defense to defeat recovery. because case is already filed. Five months after he got sick with serious ailment. he said he is in good health. The policy was issued. Question was WON the rescission was made on time. there is concealment on the part of the insured. the insurer cannot prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or misrepresentation of the insured or his agent. First par applies to both life insurance and property insurance. 2009 Filed claim: jul 8. the insured can no longer question the validity of the policy.DEMO :: http://www. SC said that the case was made on time. He is liable for misrepresentation. The insured now filed a case in court. the law considers two years as enough time for the insurer to verify the statements. filing complaint with insurance commissioner is considered commencement of an action. would the insurer still be liable? Not necessarily. Subsequently he applied for increase in coverage. you’re saying you want it cancelled. After a policy of life insurance made payable on the death of the insured shall have been in force during the lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement. you could no longer question the validity of the policy. So after the lapse of two years. Why is this still considered material? Because it will still influence.Insurance Kwin Ex At the time the policy takes effect. Ex.docudesk. Is rescinding a contract the same from raising a defense? Yes. he couls no longer raise the defense of misrepresentation or concealment or that the contract is void ab initio for reason of misrepresentation or concealment. 2010 Rescind? No. But when you raise the defense. Although it was made before the effectivity of the modification. When is an action considered commenced? Upon filing of the case in court. there is peace of mind that after the lapse of certain number of years. Par 2 applied only to life insurance. Right now. That is what we call the INCONTESTATBILITY CLAUSE. He did not disclose that he got sick. And after that. If you could no longer rescind the contract because you have already filed a case. (evidence is no longer available) On the part of the insurer. such right must be exercised previous to the commencement of an action on the contract. Before the insured has filed the case in court. What’s the purpose of the incontestability clause? On the part of the insured. the insurer offered to return the premium and denied the claim. SEC 48 Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter. you can still raise the defense of concealment and representation. The insurance commissioner has the power to adjudicate insurance cases. So what does it mean? Is he liable? Kw Kwin Transcripts Page 42 PDF Created with deskPDF TS PDF Writer . Because the offer of the return of premium and the denial of claim was equivalent to rescission. Incontestability in a sense that the insurer could no longer rescind the contract. the insurer could no longer rescind the contract. Policy takes effect: jul 1. So if the insurer has already filed a case in court. It will have an effect on the decision of the insurer on whether he would accept the modification or not.
The action to rescind must be made before an action is commenced. condition in policy that they will not be liable if you join war 5.Insurance Kwin For incontestability clause to apply. 2 years is counted from the date the policy takes effect to the date of death – because it should be enforced during the life of insured. 3. 2006 Filed claim: jan 20.DEMO :: http://www. if the incontestability clause already apply.com . If you have no insurable interest -the policy is null and void. 2. 2009 Filed: aug 1. excepted risk/excepted peril -ex. it must be payable upon the death of the insured. Kw Kwin Transcripts Page 43 PDF Created with deskPDF TS PDF Writer . But even if you filed it on time. 2007 Insured died: july 30. it must be a life insurance policy 2. fraud 6. 2010 Rescind? No Raise defense of misrepresentation? No From the time the policy was issued to the time of death. necessary proof of death is not given Par 1 – applies to both life and property. 2007 Rescind? no Raise defense? no It’s already more than 2 years jan 2004-dec 2006 Exception to incontestability clause: Even if the incontestability clause will apply. 2004 Filed: dec 20. the policy was already enforced for 2 years or more. Defense of estoppel is not applicable. then the insurer is…. it is enforced during the lifetime of the insured for at least two years from the date of issue or the date of reinstatement. It cannot be waived. Policy took effect: jul 1. the policy did not cover death arising from drowning. fraud is of a vicious type -substituting another person/ replacing specimen 8. the following requisites must be present: 1. to murder the insured 7.docudesk. Policy: jan 25. he can still rescind the contract and raise defense of misrepresentation or concealment: 1. there is no premium pay -cash and carry rule from insurance contract 4. -risk is not included 3.
docudesk. Tang was a Chinese illiterate. What about duty read the policy? Is there a duty on the part of the insured to read the policy? No. It also serves as the. Must in be in any form? Does the form require approval? Right now. there is no guarantee that you understood it. which fact she concealed from the insurer. In the application form. The contention of the beneficiary that there could be no concealment or misrepresentation because in the first place. In modern day insurance. 2010 AFTER MIDTERMS 37 min POLICY. he was able to state the answer that she was healthy. there is a duty on the part of the insurer to prove that the insurer explained to the insured the contents of the policy. he must show that he is covered in the terms of the insurance contract. The insured will still recover. But what if there is no concealment or misrepresentation? And you want to enforce the contract? and the insurer wants to rescind the contract? Never mind. you would have known that that is an excepted risk or di na covered na risk or there is that condition. the policy has to be in writing because it states that it is a written document.Insurance Kwin September 3. Is there a duty on the part of the insurer to explain? What if the insurer is not able to explain to the insured? Case: Tang v CA Insurer refused to pay on the ground of concealment and misrepresentation. In this case. Can the insurer later on say na gadanghag lang ka. In this case.DEMO :: http://www. What about the language of the policy. But it turned out that she was suffering from lung cancer. the court said no. There will be administrative case for issuing a form that has not been previously approved. And second. So the issue now on this case in WON there is a duty on the part of the insurer to explain the contents of contract of the policy. Was it fully explained? Is there a need to prove that there was explanation made by the insurer? SC applied the provisions of the civil code. So kung ikaw ang interesado to enforce the contract. And for the insured to recover. In fact it is the insurer that will be held liable. Actually there were two views.com . the insurer refused payment by saying that concealment or misrepresentation. then you have the burden of proof to show that it was not explained to you. any policy issued by any insurer must be in a form previously approved by the insurance commissioner. It is not a defense. The first view says that if the insured has accepted the policy without reading it. Even if you have read it. So in this case. there is no duty on the part of the insurer to show that it has fully explained to the insured the language of the policy. The insurer cannot raise his own fault of not having the policy approved by the insurance commissioner. measure of the insurer’s liability. The jurisprudence favors the second view or the majority view. Had you read the policy. It does not affect the validity of the insurance contract. And she does not know English language. who was the party interested in enforcing the contract? The insured or the beneficiary. the party who seeks to enforce the contract has the burden of proof to show that the contract was fully explained to the other party. If one party is unable to read or if the contract is in the language not understood by him and mistake or fraud is alleged. wala siya kasabot. it was clearly established that there was misrepresentation. She did not understand the questions in the application form. in fact it was seeking to rescind the contract. For the reason that the contract of insurance is a contract of adhesion. Must it be in writing? Yes. But there’s another view that states that the fact that you have accepted the policy without reading it does not really amount to negligence. Kwin Transcripts Page 44 Kw PDF Created with deskPDF TS PDF Writer . When the beneficiary. It governs the relationship of the insured and the insurer. Art 1332. The insurer is not interested to enforce the contract. It is very technical. What is a policy? It’s the evidence of the contract of insurance. What is the effect if the form is not approved by the commissioner? Does it invalidate the policy? Can the insured still recover from the insurer? Can the insurer raise the defense that he cannot recover because it is not in the right form? The insured can still recover. Is that fair? Baliktad man diba? I don’t understand also. that is already considered as negligence.
warranty or endorsements are like additions to the insurance policy. it’s only the insurer. mark. sign. provided certain conditions are complied. Idungan sila or issue. a warranty or an endorsement. there are certain conditions or requirements. So in effect the rider would modify the provision stated in the original policy. phrase. the insured wants to have explosions as covered risk or death arising from drowning would be a covered risk Instead of modifying the policy. Kw Kwin Transcripts Page 45 PDF Created with deskPDF TS PDF Writer . what they do is just insert a rider. What is the biding effect? What are these things? A rider. Group insurance and group annuity policies. unless the descriptive title or name of the rider.docudesk. Instead of amending or revising the entire policy. In order for this rider to be binding. clause. or word necessary to complete the contract of insurance --shall be written on the blank spaces provided therein. clause. warranty or endorsement. clause or warranty. Example of a rider: In a policy. and all you have to do is to fill in the blanks and spaces. clause. Parang pre printed form na. which countersignature shall be taken as his agreement to the contents of such rider. Unless applied for by the insured or owner. clause. number. it needs your signature as proof that you agreed to the provisions of the rider. clause. What are the requirements? 1. Signature of the insured where the signature is needed or necessary As a rule. in the policy of insurance. The rider has the same binding effect as the original policy as if it was embodied in the policy. But what about the rider? Is there a need for the insured to sign the rider? When is the signature of the insured needed and when is it not needed? There’s no need for signature of the insured if the rider was issued together with the original policy.com . and any word. 2. however. Descriptive title of the rider is mentioned in the policy. But if issued after and you did not apply. a clause. normally. clause. The purpose is to modify the provisions of the original policy. signature. any rider. kinahanglan ban a insured must sign? No. warranty or endorsement purporting to be part of the contract of insurance and which is pasted or attached to said policy --is not binding on the insured. they would just insert a rider. Sec 50 talks about a policy where there are blank spaces. certain conditions must be present. But it does not affect the provisions of the policy. Or even if the rider was issued after the original policy was issued if the rider was applied by the owner himself There is a need for signature if the rider was made after the policy was issued and it was not the insured himself who applied for the rider. symbol. what is the effect? The rider is not binding. warranty or endorsement is also mentioned and written on the blank spaces provided in the policy. Any rider. The rider now would state that death by drowning or damage through explosion is now a covered risk.DEMO :: http://www. And it is contained in a separate instrument and it is attached or incorporated to the original policy. warranty or endorsement issued after the original policy --shall be countersigned by the insured or owner. But in order for this rider to be binding. That’s still a valid policy of insurance.Insurance Kwin SEC 50 The policy --shall be in printed form which may contain blank spaces. Because the signature is to be taken as agreement to the rider. Like in the policy it must be printed there that: Sec 3 is subject to clause G and F indicated in a separate instrument or Sec 5 is subject to the rider What if the descriptive title is not mentioned. --may be typewritten and need not be in printed form. For payment of higher premiums. It also mentions about a rider. it excludes damage arising from explosion or death arising from drowning.
To provide temporary protection. lifestyle. what are the factors to be considered by the insurer in fixing the premium? Age. (c) The premium. Ang miss nhimog misis. term or duration of insurance So basically these are the important contents in the policy of insurance. We have. even if the formal policy is not yet issued. smoker). SEC 52 Cover notes --may be issued to bind insurance temporarily pending the issuance of the policy. 2. risk insured Of course this is very important. This is the face value of the policy. 7. Such that if something happens to the goods pending the issuance of the policy. In preliminary contract of present insurance. the insured will be entitled to recover. (b) The amount to be insured except in the cases of open or running policies. whether it covers fire. ex for commercial transaction. you are a businessman and you want to ship your goods.com . what are the factors used by the insurer in determining premium? Location. including within its terms the identical insurance bound under the cover note and the premium therefor. Under the cover note. As protection. (d) The property or life insured. Incorrect designation of the insured does not affect the policy. But the insurer cannot issue yet the formal policy because there are certain information needed.docudesk. Not necessarily the amount to be paid by the insurer. contents. preliminary contract of future or executory insurance. What is a cover note? What’s the purpose of the cover note? What is the importance of a cover note? Is it distinct from the insurance policy itself? Do I need to pay separate for premium for the cover note? It provides temporary protection The purpose of cover note. 3. amount to be insured Because the amount serves as the limit of the insurer’s liability. But cover notes are of two types: These are what we call preliminary contract of insurance. premium So in life insurance. Sec 51 Contents in the policy What must be indicated in the policy? 1. occupation. these are the types of cover notes which already provides of immediate protection. a policy --shall be issued in lieu thereof.DEMO :: http://www. activities (alcoholic. Within sixty days after the issue of the cover note. 1. etc What about property. the insurer simply undertakes to insure you at some future time.Insurance Kwin SEC 51 A policy of insurance must specify: (a) The parties between whom the contract is made. property or life insured 5. industrial) 4. sex. But you cannot wait for that because you want to ship your goods. he cannot yet quantify exactly how much is the premium to charge. (f) The risks insured against. earthquake etc. use (commercial. So meaning if something happens to the goods. What risk is assumed the insurer. parties The name of the insurer and the name of the insured. The Commissioner --may promulgate rules and regulations governing such extensions for the purpose of preventing such violations and may by such rules and regulations dispense with the requirement of written approval by him in the case of extension in compliance with such rules and regulations. Or ang male nahimog female. or if the insurance is of a character where the exact premium is only determinable upon the termination of the contract. Ex. (e) The interest of the insured in property insured. preliminary contract of present insurance 2. the insurer will issue you the cover note. you want to insure your goods. Kwin Transcripts Page 46 Kw PDF Created with deskPDF TS PDF Writer . previous health condition. interest of the insured But you only need to disclose this if you are not the absolute owner 6. Wala pa siyay gihatag na immediate protection. preliminary contract of executory insurance. residential. Cover notes --may be extended or renewed beyond such sixty days with the written approval of the Commissioner if he determines that such extension is not contrary to and is not for the purpose of violating any provisions of this Code. it already provides you immediate protection. if he is not the absolute owner thereof. What if the name is misspelled? Does that affect the policy? No. and (g) The period during which the insurance is to continue. a statement of the basis and rates upon which the final premium is to be determined. the insured would be entitled to the policy. The other one.
How would you know if it’s a preliminary contract of executory insurance? If the cover note would state that the insurance is effective only upon approval of the insurer. But if the cover note already states that it already insured the goods, then in that case, that is a preliminary contract of present insurance. You are already entitled to recover. Payment of premiums. Is there a need for separate payment of premiums for cover notes? There is a case where the insurer issued a cover note. It was a preliminary contract of present insurance. But the insured did not pay a separate premium. Later on the insurer refused to pay by saying that insured did not pay insured for the cover note. Is that correct? A separate premium is not needed for the cover note to be effective. A cover note is not considered different from the formal policy. The premiums that you pay for the formal policy aready covers for the cover note. So even if you have not paid any premiums, so long as the insurer has already insured a cover note, you are already covered or protected. Provided it’s a preliminary contract of present insurance. PERIOS For how long can you issue cover note? 60 days. After 60 days, the insurer should have issued you a policy. But if di gyud mada, can it be extended? Yes. Provided there is permission from the insurance commissioner. SEC 53
The insurance proceeds --shall be applied exclusively to the proper interest of the person in whose name or for whose benefit it is made unless otherwise specified in the policy.
party, the third party can go after the insurer.
If you are not the owner of the policy neither are you the beneficiary, then you are not entitled to recover. We have discussed this before. The policy obtained by the mortgagor for his own interest accrues only to the mortgagor. Unless there is a loss payable clause. In the same way the policy obtained by the mortgagee accrues only to the benefit of the mortgagee. Except if the policy contains a stipulation in favor of the third party. You call that a stipulation pour autriu. Or if the policy itself is for liability against third party. The effect is that if there is a stipulation in favor of third person or if there is a stipulation for liability against third
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September 11, 2010 SEC 53
The insurance proceeds --shall be applied exclusively to the proper interest of the person in whose name or for whose benefit it is made unless otherwise specified in the policy.
For you to be entitled to the proceeds of the policy, it’s either you are a beneficiary of the policy or you are a party to the insurance contract (owner of the policy) So in sec 53, unless you are mentioned or you are a party to it, then you are not entitled to recover. Because we have discussed before that in a single property, there could be several insurable interest. Like a mortgage property, the mortgagor could have a different insurable interest than the mortgagee. Such that the insurance obtained by the mortgagor is distinct from the interest of the mortgagee unless there is a LOSS PAYABLE MORTGAGE CLAUSE. So if you are not a party to the insurance contract; you are neither the beneficiary, you are not entitled to recover.
insurance? Is it the designated beneficiary or Bonifacio and Ayala? Court said that the person entitled to the proceeds is Reyes It’s clear in sec 53. They are not parties to the contract and they are not designated as a beneficiary. If they have a claim against Mora, it’s not based on the contract of insurance but another contract. It is civil. Maybe payment of repairs or payment of spare parts but not under insurance proceeds. Case: Dingon The only time where third party has right to claim the proceeds from insurance is when 1. it is specified in the property or 2. it is expressly stipulated in favor of third persons or there is stipulation pour autrui or policy itself provides for indemnity to third party. In this case, in motor vehicle, there’s compulsory third party liability insurance. WON the heirs of the victim are entitled to the insurance proceeds obtained by the owner of the jeepney? They are considered third party right? So are they entitled? Yes. The policy contains third party liability and insured agreed. The policy itself provides for indemnity against third party liability. But to what extent? Ex. A is the owner of the policy. G is the victim. The court adjudged A under torts to be liable for 100k. We said that the heirs of the victim can go after the insurer by virtue of the third party liability clause. But the proceed of the insurance was only 80k. For how much can heirs of G go after the insurer? Only 80k. Why? Because the basis of liability of the insurer is under the contract of insurance. It does not mean that although the third party can go after the insurer, the insurer is now solidarily liable with A. because his liability is based on torts whereas the liability of insurer is based only on contract of insurance. It is limited only on the value that is assumed.
Case: del val v del val Del val was the owner of the policy. He died. He designated his son as a beneficiary. There is an issue who is entitled to the proceeds, either the beneficiary, the son or to estate, as contended bythe other siblings. The other siblings applied rule in succession – collation. – If the donation during his lifetime made a gift or donation to any if the compulsory heirs, it will be considered advance legitime. It should be collated to form part of the estate. He court said that the proceeds belong to the beneficiary. Is there a conflict between insurance code and civil code regarding succession? What did the court say on that? Special law should be followed. Therefore the insurance proceeds should accrue exclusively to designated beneficiary. What you collate are gifts and donation. Designating son as a beneficiary is not included as a gift/donation. It’s clear that the son is designated as a beneficiary. So insurance law should govern.
Case: Bonifacio brothers The owner of the policy is Mora. He mortgaged the policy to Reyes (mortgagee). Reyes is the same time the beneficiary. There is a loss payable mortgage clause. Meaning the proceeds shall accrue to the mortgagee. The car was damaged and the repairs were made by Bonifacio. The supplies were given by Ayala. Both Bonifacio and Ayala claimed that they are entitled to the proceed of the insurance. So the issue now is who is entitled to the proceeds of the
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Take note, you have to determine if it is determine if it is indemnity for liability against third party or indemnity against actual loss. Because if it is just indemnity against actual loss, meaning the insurer binds himself to pay the insured for whatever loss it suffered or may be liable. But if it is third party liability, the insurer binds himself to pay gyud third party. So if it’s indemnity for third party liability, the third person can go after directly against the insurer. But it’s just an indemnity for actual loss; the third party cannot directly go after the insurer. He has to go after the insured. Even if you are not an owner of the vehicle, before you are issued registration, you have to get TPL. Case: Coquia Similar principle in Gingon. Owner of the taxi insured one of its units and the taxi met an accident. Heirs o the victims filed a claim against the insurer. So the issue again is WON the heirs are entitled to the proceeds. The court says yes. Policy itself contains a stipulation in favor of third persons. SEC 55
To render an insurance effected by one partner or part-owner, applicable to the interest of his co-partners or other part-owners, it is necessary that the terms of the policy should be such as are applicable to the joint or common interest.
So the presumption is that if the policy is obtained by a coowner, it is presumed to cover his own interest. Unless the policy clearly states that it covers not only his own interest but also the interest of co-owners of copartners. SEC 56
When the description of the insured in a policy is so general that it may comprehend any person or any class of persons, only he who can show that it was intended to include him --can claim the benefit of the policy.
If the description is in general term. Example of general description: Beneficiary are class 404 co heirs children here, you present proof that you are a part of that group. SEC 57
A policy may be so framed that it will inure to the benefit of whomsoever, during the continuance of the risk, --may become the owner of the interest insured.
When an insurance contract is executed with an agent or trustee as the insured, the fact that his principal or beneficiary is the real party in interest --may be indicated by describing the insured as agent or trustee, or by other general words in the policy.
This talks about the policy obtained by an agent. Ex. A property belonging to the principal. The policy may be obtained by the agent. He must disclose that he is obtaining the insurance for and in behalf of the principal. But can the agent also insure the property in his own name? Yes. He has insurable interest. It may create a liability against him. If something happens to the property while he is designated as an agent, it may create a liability. But in this case, what sec 54 is talking about is insurance is obtained by the agent not for his own interest but for that if the principal. But in order for it to cover the interest of the principal, that fact must be stated in the policy. OW, it will only be for the interest of the agent. Then there’s now an issue whether he has a right to insure it on his own name.
Sec 57 in relation to sec 20, is an exception. GR in sec 20, regarding transfer of interest of property without corresponding transfer of interest in the insurance: It has the effect of suspending the policy. Exception in sec 57: Policy is so framed that it will inure to the owner of the interest insured. Kung negotiable instrument, murag payable to bearer. So whoever is the owner of the policy is also entitled to the proceeds of the insurance. So in order for this to apply, it must be EXPRESSLY STATED IN TH EPOLICY. SEC 58
The mere transfer of a thing insured does not transfer the policy, but suspends it until the same person becomes the owner of both the policy and the thing insured.
This is similar to sec 20. The transfer to interest of the thing insured does not transfer the policy. But instead the effect is that the insurance is suspended.
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SECS 59-62 – KINDS OF POLICY Kinds of policy: 1. open policy 2. value policy 3. running policy 1. OPEN POLICYIf the value of the policy is not agreed upon. It is not stated in the policy. But it is determined at the time of loss. Although the policy contains a certain amount. But it is only on reference of the face of the policy. The purpose of the face of the policy is the maximum limit of the insurer’s liability. SITUATION: Face: 2m Value: 2m So if it’s an open policy, for example, A insured his house for 2m, that’s the face value of the policy. Assuming that A believes that his house is also worth 2m, at the time of the loss, if it’s an open policy, it’s not a guaranty that the insurer would indemnify the insured for 2m. The valuation at the time of effectivity is not binding to the insurer but the value of the house is to be determined only at the time of loss. Meaning the insurer may submit evidence to prove that the value of the house is not really 2m but less tan 2m. SITAUATION a: Example if at the time of the loss it was determined that the value of the house was 1.5m, for how much can the insured entitled to recover? Only 1.5m SITUATION b: But if it was determined that at the time of the loss is 2.5m, for how much is the insurer liable? Only 2m. it is determined at the time of the loss but in no case shall it exceed the face value. 2. VALUE POLICY It’s a value policy it there are two amounts: 1. Face value and 2. Agreed valuation SITUATION: Face value 2m Agreed valuation 2m Here, the parties to the contract already agree that the value of the house is 2m. In the absence of fraud, this value is conclusive to the parties. Such that at the time of loss, it is determined that the agreed valuation is less than the actual value of the house, the insurer is still liable to pay 2m. Or if at the time of the loss it is determined that less than nalang diay ang value of the house, the insurer is still liable to pay 2m. Or at the time of the loss it was determined that the value of the house is more than 2m, the insurer is still liable for 2m. ILLUSTRATION: Face value 2m Agreed valuation 2m Value at of loss- Loss 1.5m 100% 2.5m 100% 1.5m 50% 2.5m 50%
= = = = =
Amt recoverable 2m 2m (underinsured) 1m ( ½ of agreed valuation) 1m ( ½ of agreed valuation)
ILLUSTRATION: Face value 2m Agreed valuation 1m Value at lossLoss = 1.5m 100% = 2.5m 100% = ILLUSTRATION: Face value 3m Agreed valuation 2m Value at lossLoss 1.5m 100% 2.5m 100% 1.5m 50% 2.5m 50%
Amt recoverable from insurer 1m 1m
= = = = =
Amt recoverable from insurer 2m 2m 1m 1m
ILLUSTRATION: Face value 3m Agreed valuation 3.5m Value at lossLoss = Amt recoverable from insurer 1.5m 100% = 3m (limit:face value) 2.5m 100% = 3m 1.5m 50% = 1.5m? 2.5m 50% = 1.5m !!! asked later on oct 1, 2010 1.5 is 1.75 Let’s compare it with an open policy: ILLUSTRATION: Face value 2m Agreed valuation none Value at of loss- Loss = 1.5m 100% = 1.5m 50% = 2.5m 100% =
Amt recoverable 1.5m 7.5k ( ½ of value at loss) 2m (limit:face value)
*If there is a co-insurance clause that is when we apply the proration. Meaning the insurer assumed to be liable fro Kwin Transcripts Page 50
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We will discuss this later. so the insurer is discharged from liability. it will depend if it is marine insurance or fire insurance.5m Sec 63 talk about prescriptive period for the insured to file an action. Under the law it is valid for the parties of the insurance contract to stipulate as to the period in which the insured must commence action. In an open policy. etc. destruction has not yet disappeared. But this will not apply because insurance contract is a written contract. it means filing of case before the court or insurance commissioner or POEA. he is considered a co-insurer for the difference. ILLUSTRATION: Face value 3m Agreed valuation none Value at of loss. So if the action is not filed on time. If the insured did not file his claim within the period. Whereas in the open policy. Let’s say that the value of the property is 500k and you took insurance for 400k. If it’s a written contract. 3. So if the parties provide for 15 years. If it’s an oral contract.Insurance Kwin between the face value of the policy and the actual value of the property and the actual value of the property. limiting the time for commencing an action thereunder to a period of less than one year from the time when the cause of action accrues. 20 years. 1 years from when? From the time the cause of action accrues or from the time of rejection of the claim.5m 100% = 2. DOLE. Lainlain ilang valuation. there is no reason for the insured to file a case in court. that will govern the general limitations provided under the civil code. It’s difficult to determine the value of the property because in every month it will fluctuate. But in fire insurance it depends if there is what we call a coinsurance clause. automatic that you are considered a co-insurer for the difference between the amount insured and the value of the property. What is the reason for the period? Why must the insurer comply with that period? While the evidence surrounding the loss. stipulation. 5 years. if you underinsure.docudesk. So the reason why they will obtain a running policy is to prevent over insurance or underinsurance at a particular time. that period should be followed. Kw Kwin Transcripts Page 51 PDF Created with deskPDF TS PDF Writer . Meaning you are liable for 100k. Kay og langaylangayon nimo. And if that period stipulated is valid. it’s difficult to determine what is the cause of the loss.com . 10 years. or agreement in any policy of insurance. In marine insurance. Before rejection or denial. stocks in grocery store and merchandise. then the effect is that the insurer will be relieved from liability. I don’t care kung pila na ang value at the time of the loss. So in running policy.5m 2. Amt recoverable 1.. that period will prevail over the limitation provided under the civil code. the liability of the insurer is determined at the time of loss (value of the property at the time of loss) but in no case will that amount exceed the face value. * normally if you underinsure. So if the policy provides 5 years from the time of the denial of the claim. I modify ang subject matter of the policy. the amount that I will be liable if based on the agreed valuation. is void. For so long as the period is not less than 1 year. When must the insurer commence an action in court? At the time of rejection of claim. RUNNING POLICY Ex.DEMO :: http://www.5m 100% = SEC 63 A condition. 6 years. So it’s for prompt settlement of the insurance claim. When you say ‘commencement of action’. Co-insurance clause simply means that if the insured underinsured the property. But in no case also that the amount that I can recover will exceed he face value. We always refer to the agreed valuation. We will discuss more about this later. So meaning the period is a condition precedent to the insurer’s liability. If the parties state that this is a value then it’s clear that it’s a valued policy. you are considered a co-insurer for the 100k.Loss = 1.
But the policy was assigned to U.com . 8/20/83 – filed a claim against the insurer 2/29/84 – denied 4/3/84 – motion for reconsideration 10/11/85 – denied reconsideration 11/20/85 – filed an action Policy – file within 12 months from rejection Was the action filed on time? No. We have this rule of exhaustion of administrative remedies. 1948 – filed an action in court WON the action was brought within the period provided by law or policy. So the rule is that. Can I opt for recon and in trying to preserve my 1 year also file an action? Yes. South sea says that it should be the prescriptive period of COGSA that will apply. What is the basis of U’s right to file a claim against the insurer? Was he the owner of the policy? No. Kanus a man nareject iyang claim? 4-22-48. Case: Ang v fortune 12/30/54 – filing of claim against the insurer 4/19/56 – receipt of denial of claim 5/5/58 – action was filed Policy states – within 12 months after rejection Is policy valid? Yes Was the action filed on time? No. if the period provided is not valid or if there is no period provided in the policy. Goods were insured by eagle star (insurer). it will be a scheme of the insured to waste time. Case: Accfa This is in connection with COGSA. The court said that the one year should be counted from the first denial of claim. what is the effect? What is now the period of prescription? Then you have 10 years. your cause of action will prescribe. This does not apply because if you don’t file. What is the stipulation in the contract on when should the action be filed? 1 year from happening of loss. What is the reason for that? Because you should file the action 1 year from the time the cause of action accrued.DEMO :: http://www. Also if we allow period to count 1 year from the time of the denial of reconsideration.Insurance Kwin Case: Eagle star Atkin (shipper) was the shipper and the owner to the policy. U was the consignee. So what this filed on time? Yes. So since this stipulation is not valid. Case: Mayer Mayer (insured) South sea (insurer) Goods shipped were damaged. When was the claim filed? How many years after? Two years. Case: Sun insurance Issue: Filed a reconsideration Claim was already rejected and yet he still asked for reconsideration from the insurer. not against the shipper. Cause of action accrued at the time of the denial. Not from the happening of loss. Under COGSA. He shipped the goods to SSD (carrier). The time when the cause of action accrues is the time there is denial of claim. In effect. you shorten the period. so he has now a right to file a claim against the insurer. and not 1 year from the denial of the reconsideration. It refers to filing if action in the proper court or quasi judicial body.docudesk. Meyer filed a claim against the insurer 2 years from the unloading/ delivery of the goods. U filed a claim against the carrier and filed the claim against insurer. being contrary to law. Is this valid? No. So this is what is provided in policy. Prescribed Filing a case against the agent is not filing of cliam. Mayer tried to recover from south sea. So take note here. Mayer filed a claim against the insurer. what should apply is the 10 year prescriptive period. Is the provision valid? No Therefore. It’s even less than 1 year. Some goods were lost. You go back to the provisions of the civil code. More than 2 years after: Nov 4. any claims against the shipper should be filed within 1 year from the time the delivery or when it should Kwin Transcripts Page 52 Kw PDF Created with deskPDF TS PDF Writer . then the period of limitation is 10 years. Policy states that it should be filed within 1 year from the time of claim of the loss. Why? The law clearly states from the law cause of action accrues.
So when Filipino merchant was exercising his right of subrogation. So in effect. SEC 65 All notices of cancellation mentioned in the preceding section shall be in writing. he merely stepped into the shoe of the shipper. Ground/s are indicated in notice of cancellation What are these grounds? 1. 3rd party complaint was filed against the carrier. 2. Because the basis of meyer’s claim against south sea is under the contract of insurance. (e) physical changes in the property insured which result in the property becoming uninsurable. that since you filed a claim against me. discovery of willful/reckless acts/omissions increasing hazard -ex. it should be 1 year. and no notice of cancellation shall be effective unless it is based on the occurrence. with the insurer exercising the right of subrogation. Whereas in COGSA. not the initial premium. more than 1 year na as required by COGSA. Therefore we apply insurance law. Question in meyer: Diba mayer filed a claim against the insurer in 2 years. the insurer will furnish the facts on which the cancellation is based. it is under the contract of carriage. upon written request of the named insured. discovery of fraud or material misrepresentation 4. (d) discovery of willful or reckless acts or omissions increasing the hazard insured against. Let’s distinguish this case from the case of Filipino merchants.DEMO :: http://www. of a crime would warrant cancellation of property insurance: arson 3. what? What are the requirements in order for the cancellation to happen? 1. Remember when we discussed right of subrogation? If the insured commits any act which defeats the right of the insurer. and shall state (a) which of the grounds set forth in section sixty-four is relied upon and (b) that. of one or more of the following: (a) non-payment of premium. This defense was used by the insurer in refusing the claims of Mayer.com . or (f) a determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code. 2 years had already passed. BTW is there a stipulation on when the claims should be filed? No. Because applying COGSA. If I’m south sea.docudesk. if you did not pay the initial premium. no more. But it could have been.53 9-11-10 SEC 64 No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured. mailed or delivered to the named insured at the address shown in the policy. from residential to industrial 5. 3rd party complaint was filed more than 1 year from the delivery of goods. As we will discuss later on. 1. determination of commissioner of violation of insurance code Kw Kwin Transcripts Page 53 PDF Created with deskPDF TS PDF Writer . (b) conviction of a crime arising out of acts increasing the hazard insured against. any claims against the carrier should be filed within 1 year. Notice must be in writing 2. in effect you defeat my right to subrogation. How is it different from the mayer case? In mayer case. there is no contract of insurance to speak of. the court also said that COGSA applies not only to claims by shipper against the carrier but also insurer against the carrier. When Filipino merchants filed a case against the carrier. Case: Filipino merchants Filipino merchants (insurer) Shipper (owner of the policy) Shipper filed a claim against the insurance company.Insurance Kwin have been delivered. So the action of the shipper against the carrier is not based on the contract of insurance but base don the contract of carriage. physical changes in property making it uninsurable -ex. then he was held liable. Basis for cancellation is based on the grounds enumerated in sec 64 3. it was mentioned that south sea was held liable because he was not able to raise that defense But since wala man. can I not raise the defense. diba the insurer can raise that as defense in denying liability? But in this case. (c) discovery of fraud or material misrepresentation. filed a case against the carrier. The insurer can cancel the policy provided that. storing of flammable materials 5. it’s on the basis of the contract of carriage. conviction of crime increasing hazard -ex. Because by virtue of the right of subrogation. Sec 64-65 Talks about cancellation.29. after the effective date of the policy. the court said. What’s is the effect? Apply civil code on contracts – 10 years This defense does not apply because it applies only when the claim is filed against the shipper and not against the insured. non payment of the premium -take note that nonpayment of premiums here refers to nonpayment of subsequent premium. South sea could have raised that defense. South sea says that under COGSA. the claim was filed against the insurer.
the mortgagor does not cease to be a party of the contract. implied 1. the future. and is found in the policy itself. Kinds of warranty: Under sec 67 1. Whether you like it or not. and you don’t want to renew it anymore. the court sided with the insured by saying that the legal presumption that if it is mailed.docudesk. it is understood that the policy is renewed. affirmative 2. then it is understood to be one year. it is agreed upon. a warranty becomes such because the statements and stipulations are written in the policy itself or is incorporated in the policy by proper reference. conditions or circumstances surrounding the thing insured. Unless if you are the insurer. etc. Purpose of notice of cancellation is to afford opportunity to the insured to secure or obtain other insurance. Inherent na siya in this kind of insurance. There was a notice of cancellation but the notice was given only to the mortgagee. But the insured denied receiving notice of cancellation. Expressly or clearly incorporated in the policy. What is a warranty? These are stipulations or agreements concerning the insured. it’s not necessarily agreed upon but it is presumed to exist. But take note that implied warranty applies only to marine insurance. it is understood to be delivered will not apply. Like in the contract of sale. There was a notice of cancellation.com . promissory What is an express warranty? It is contained in the policy itself. even if it is not written. There’s now an issue. Which would prevail? The denial of the insure that he did not receive notice? Or the contention of the insurer that he sent it through mail? Does the legal presumption of regularity and due performance of duty. So the issue is WON the notice given to PNB was binding to mortgagor.DEMO :: http://www. SEC 68 A warranty may relate to the past. if you mailed it. it is inherent. What is an implied warranty? These are stipulations or agreement that are not contained in the policy but its existence is admitted by the mere fact that you entered into the contract of insurance. And that prevailed over the presumption of regularity of performance of duties. the facts. What is an affirmative warranty? Kw Kwin Transcripts Page 54 PDF Created with deskPDF TS PDF Writer . meaning. the fact that you entered into the contract. the present. there are implied warranties. Because sec 64 requires that the written notice must be given and must be received by the insured. express 2. So 45 days before expiration. It is presumed to exist. How do you count the 45 days? If the policy is less than 1 year. Not binding. it is understood that it is already received? In this case. Notice should be given to mortgagor. Whereas in implied. As a rule.Insurance Kwin Case: saura import There was a loss payable mortgage clause. when you entered to it. So the difference between express and implied is that in express . the risk insured. It’s only in marine insurance that the law provides for implied warranty of seaworthiness. you inform the insured of your intention not to renew or you condition you conditional your renewal upon payment of higher premium. WARRANTY SEC 67 A warranty is either expressed or implied. Under the loss payable mortgage clause. If you did not give notice of renewal. or to any or all of these. So even if it is not incorporated in the policy or even if the insured did not warrant that the vessel is seaworthy. But as opposed to representations where you also make statements or assertions. Like warranty against hidden defects or warranty against eviction. After break. the insured has the right to automatic renewal of the policy. Case: Malayan insurance Insurance was obtained and was cancelled. what would you want to do? At least 45 days prior to the expiration of the policy.
he enumerated these fire fighting appliances. In case of doubt. Subsequent change in the use or subsequent change in the condition does not affect your affirmative warranty. made at or before the execution of a policy. It is required to be true at the time it is made. it must be signed by the insured and referred to in the policy. Because if it is found in the policy itself. W: if turns out to false or if not fulfilled. What is a rider again? These are additional or modifications in the policy. there is one case where the court said that warranties should also be reasonably interpreted. So there was an issue whther there is a breacg of warranty. warranties are presumed to be only affirmative warranties. Without prejudice to section fifty-one. These are just answers in the application form. In this particular case. it is not a continuing guaranty. It does not require the insured to maintain all the items listed therein. the warranty states that the insured must provide an efficient working condition. These are just collateral inducements.DEMO :: http://www. Like when you say there are fire extinguishers or fire hydrants or when you say that the building is used for residential purposes. it must be signed or incorporated by proper reference in the policy. It is true at the time it is made. R: Misrepresentation and concealment entitles the injured party to rescind the contract because there is fraud. Distinguish between representation and warranty. fire fighting appliances. In that case. It’s not necessary for you to use “warranty” for it to constitute warranty” Or just because you use “warranty” does not mean that it is warranty. it entitles the injured party to rescind the contract on the basis of breach of contract or breach of warranty. particularly on the rider. it need not have signature. And since the insured was able to comply three of the four.docudesk. then it’s a valid affirmative warranty. R: Not found in the policy. What is a promissory warranty? It relates to a statement or fact or condition which is to happen or something to be done in the future. Can t be contained in another instrument? Yes. Provided that for it to be binding as a warranty. the express warranty must be contained in the policy. But same as an affirmative representation as we have discussed before. or in another instrument signed by the insured and referred to in the policy as making a part of it. the court said that the warranty should be interpreted to simply require the insured to maintain in good working condition fire fighting appliances. Affirmative raman siya. The only difference is that this becomes a warranty because it is incorporated to the policy. etc. What governs is the intention of the parties. the insured was able to comply only three.com . W: Incorporated in the policy How do you construe warranty? While the law requires strict compliance. Basically this is the same as representation. Of the 4. ‘such as but not limited to’. Kwin Transcripts Page 55 Kw PDF Created with deskPDF TS PDF Writer . SEC 70 SEC 69 No particular form of words is necessary to create a warranty. security.Insurance Kwin You assert the existence of a particular fact or a condition at the time of the effectivity of the policy. And in the warranty. But it’s not a continuing guaranty that the house will continuously be used as a residential house or the fire extinguishers or fire sprinklers will be kept in good condition. And these are contained in a separate instrument. Therefore SC said that the listing is not inclusive. the court said that it already complied the warranty of maintaining in good working condition effiecient fire fighting equipments. if it is true at the time that it is made. every express warranty. must be contained in the policy itself. So there were fire hydrants. But if it is not found in the policy. R: precede the contract W: made during the signing if the contract R: substantially correct W: strictly and literally performed R: must be shown to be material W: materiality is presumed Where should the express warranty appear? As a rule. It mentions about sec 51.
as a fact. Those contained in the policy. is an express warranty thereof.Insurance Kwin As a general rule. SEC 71 A statement in a policy of matter relating to the person or thing insured. Sec 72 talks about promissory warranties.docudesk. relating to the person insured. the rider must be signed and referred to also. Sec 71 simply defines what is an express warranty. then it must comply with the requirements of the rider. or to the risk. But in order for this rider to have a binding effect there is a requirement. Kw Kwin Transcripts Page 56 PDF Created with deskPDF TS PDF Writer . for it to be binding. SEC 72 A statement in a policy which imparts that it is intended to do or not to do a thing which materially affects the risk. it must be signed. provided the signature is necessary. It is part of the policy at the same extent.com . The reason why we are talking about rider is because if the warranty is contained in a rider. is a warranty that such act or omission shall take place.DEMO :: http://www. a rider has the same effect as if it is incorporated in the policy. Because if it was proposed by the insured even if it was made after the original policy. The descriptive title of the rider must be referred to in the policy. because warranties are factual statements. These are not opinions and judgments. And you state is as a fact. clearly incorporated in the policy. This is the definition of the promissory warranty – a fact or condition to exist after or subsequent to the effectivity of the warranty. it does not need signature. When is the signature necessary? If the rider was made after the policy was done and it is proposed by the insurer. Second.
What is the subject of fire insurance? Building and furniture. Unless the policy expressly states that the act of the insurer in obtaining other insurance violates the policy.docudesk. There is an express warranty against storing of inflammable goods. 2010 I AM LATE. Because there is no breach of warranty because it is necessary. The subject of insurance was warehouse. There’s still a breach of warranty because says that it is not necessary that the violation contributed to the cause of the loss. It’s a question of fact. there are also cases that discuss that the warranty regarding storing of hazardous goods is not violated if the storing is incidental to the business or if it only on small amounts intended for daily use. Another case: The insured was a drug store. By way of exception.DEMO :: http://www. SEC 75. Case: Barrack v British American insurance The nature of the business is furniture for sale. These are all hazardous and flammable goods. Kw Kwin Transcripts Page 57 PDF Created with deskPDF TS PDF Writer . Alcohol is mixed with varnish and varnish is required to preserve the furniture.Insurance Kwin September 17. if you obtained a building for residential purposes. the effect is that it increases the risk. Like normally. The storing was incidental to the business Ex. The motor vehicles were used as delivery truck. The fact that you breached the warranty. So there is now an issue whether there is a breach of warranty. it entitles the insurer to rescind the contract. So in effect sec 75 converts an immaterial provision to a material provision. And in your kitchen you have LPG tank. the insurer did assume for that kind of risk or had the insurer known that you have stored the fireworks. And the warehouse was used for the storage of copra and hemp. when you say. And that risk. or where it is broken in its inception.com . otherwise the breach of an immaterial provision does not avoid the policy. And there is an express warranty against storing if hazardous and flammable goods. In small quantity for daily use. because in breach of warranty fraud is not the basis for liability. prevents the policy from attaching to the risk. A policy may declare that a violation of specified provisions thereof shall avoid it. So that’s still considered as breach of warranty. it depends if the coverage is only incidental and you did represent to the insurer that you are into shellane business. No because the gasoline was incidental to the business. The issue is whether the insured committed breach of warranty. But otherwise. Is there a breach now of warranty? Such that if there is fire. SEC 76 A breach of warranty without fraud merely exonerates an insurer from the time that it occurs. paint and alcohol. Must fraud be established? Do you need to prove fraud? No. There is no breach of warranty because varnish and alcohol are incidental to the business. In the drug store. he would have rescinded the contract or charged a higher premium. GET THE RECORDING FROM GBANG. there re naptaline balls – that are flammable. other insurance. the fact that you stored fire works. States that as a general rule a breach of an immaterial provision does not avoid the policy. So the issue again was WON the insured committed a breach of warranty on the storing of inflammable materials. Unless it is expressly stipulated that breach of the specific provision whether material or immaterial avoids the policy. But if nag sideline nakag shellane. it is just considered an immaterial provision. gasoline. Found in the premises varnish. There’s another case mentioned in your book. There was express warranty against storing of hazardous goods. Inside the warehouse the insured stored gasoline sufficient for 2 days use of vehicle. Case: qua che gua v law union This case the insured was engaged in copra and hemp. SC said that they are considered pharmaceutical product therefore incidental t he business. Inside the ware house were motor vehicles. Magic word is incidental to the business. What is the effect of breach of warranty? If the insured commits breach of warranty. There is an express warranty against storing of inflammable goods and hazardous materials. you are not entitled to recover? No.
It is for the protection of the policy holders and for the prompt settlement of claims. because the fulfillment will be after the effectivity of the policy. what is the effect? Not void ab initio. what is the effect? It depends upon the time when the breach is committed. Or you made an affirmative warranty that the house is used as a dwelling. It prevents the policy from attaching to the risk. In order for the affirmative warranty to be valid. So even if the policy provides that this policy shall be valid and binding even if no payment is paid. Example: If you make an express affirmative warranty that you were not confined in the hospital for any serious illness. All of the premium.DEMO :: http://www. kung sa taxation pa. it’s the lifeblood of the insurance contract. But it turned out that prior to the effectivity of the policy. except in the case of a life or an industrial life policy whenever the grace period provision applies. Such that if the loss happened after the breach is committed.Cash and carry rule. If you do not pay premiums then the policy is not valid and binding. notwithstanding any agreement to the contrary. Notwithstanding any agreement to the contrary. The reason for that is because the time of payment of premium is the essence of the insurance contract. what is the effect? What happens to the policy? Void ab initio. then there’s is no policy.Insurance Kwin But instead. That is what is meant by law. unlike the old provision is a very strict rule on the payment of premiums. Let’s proceed now to premiums. is the insured liable? No. the loss has already occurred. 1. He did not assume any risk. normally this will apply to promissory warranty. that fact must be true. no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid. there’s already a breach. what is the basis of liability? Falsity of the warranty or the nonfulfilment of the promissory warranty. It’s just fair because the insured never incurred liability.docudesk. But it only exonerates the insurer from liability from the time of breach. after effectivity – no longer liable from time of breach So if the breach was committed at the effectivity of the policy. Example: If the policy was for a period of 1 year and there is an express warranty that the insured shall not store hazardous or inflammable goods. That’s an affirmative warranty. Such that if no premium is paid. Provided it is without fraud. The prompt payment of premium is necessary for the maintenance of the legal reserve fund. It is not void ab initio. what is the effect? It makes the policy void ab inito. that stipulation is null and void. So if the premium here was 10k.com . so at the time the policy took effect. as a general rule. Under sec 77. So the plicy is void ab initio. If it’s found in the policy. . But if it’s false. Is the insured entitled to the premiums? No. because the policy never became valid and binding But if the breach was committed after the effectivity of warranty. then it’s an express affirmative warranty. That is the general rule. So from 6 months onwards the insurer is no longer liable. Meaning if the loss occurred. How about if breach was after effectivity? Is the insured entitled to premium? Yes. Sec 77. is the insurer still liable? Yes. SEC 77 An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. What is the effect on premium? Is the insured entitled to return of premium if breach was committed at effectivity? Yes. you have been confined in the hospital for a serious ailment. for how much is the insured entitled to the premium? 5k corresponding to the remaining period But if the breach was committed with fraud. Now if the breach is committed and it is without fraud. the law provides payment of premium is a condition precedent or essential for the validity of the insurance policy. What if 6 months after the effectivity. So the policy is void ab anitio. then there’s already breach at effectivity. the insurer is no longer liable But before the breach. at effectivity – void ab initio 2. as if the policy never became effective.notwithstanding any agreement Kwin Transcripts Page 58 Kw PDF Created with deskPDF TS PDF Writer . the insured stored flammable goods.
no payment of premium was made. but the policy was never. in the first place. But going back to acme case. And from that moment on. still it is more than 90 days. then it renewed its policy for 1963 to 1964.17. but paid on Jan 8. 1964. 7 months after the effectivity of the policy did the insurer receive the payment of the premium. therefore not valid and binding What if the loss occurred within 90 days? It depends because that will now fall under the exception in the Makati case. the insurer is entitled to the payment of premium. just basing it in sec 77. Such that if no premium is paid the policy is not valid and binding. The basis is sec 77. The moment the vessel departs from manila. Then it was renewed again for another year for 1964-1965. the loss occurred beyond the 90 days credit term.2010 Case: Arse v capital insurance At the time of the loss. But in this case.31 9. But without touching on the credit agreement. Is the insurer entitled to recover the unpaid premium? No Why not? Because the nonpayment of the premium did not merely suspend the policy. At the time of the loss. Loss/fire occurred in Oct 13. Going back. But here there was a credit agreement in the policy which provides that the insured will pay the premium within 90 days after the policy was issued. The issue is WON the insured can recover. He applied for insurance policy but did not pay any premium. But nevertheless the insurer still accepted the payment of the premium. the insurer is not liable. you ought to pay the premium at the time you had the renewal. And there’s no payment of premium. So the insurer is not entitled to recover premium because it never became valid binding. this does not refer to other agreements. There was no mention of credit agreement or extension. Meaning if for example A insured his vessel for a voyage from Manila to Cebu. And so long as the payment is within 90 days. And if the vessel is lost at sea. do you think the insured can recover? No because at the time of the loss. Assuming that the credit agreement is valid. Case: Acme shoe rubber Since 1946. the policy was still considered valid and binding. 34. no premium was paid right away. And at the time of the loss. Case: Makati There was a pronouncement there that if there is an agreement to grant credit extension and the loss occurred before the expiration of credit term. So simply at the time the policy was issued. This is strange because it is the insurer who is filing the claim against the insured. no premium was paid. Therefore. Woodworks notified the insurer that the policy was already cancelled. Since he is not liable. the premium for the renewal of the policy was unpaid. therefore impliedly you grant me credit extension’ But here. As we will discuss later on. do you think he will be entitled? No.DEMO :: http://www. Normally if you renew the policy. In this case it was the insurer who filed a case against the insured because the insurer wanted to recover the unpaid premium.docudesk. under sec77. even if there’s no policy made. the premium is unpaid. then there’s no basis for him for demanding payment on the unpaid premium. So is the insured entitled to recover? No. in no way can the insured recover. Kw Kwin Transcripts Page 59 PDF Created with deskPDF TS PDF Writer . there’s no payment of premium. Also. it is considered valid and binding. became valid and binding. But he was issued a policy. I had late payments. Case: Philippine phoenix The insured here is woodworks who obtained a fire insurance policy. If we turn the tables around and have woodwork file for recovery. labaw na. the insurer never assumed liability such that if the loss occurred the insurer would also not be liable.Insurance Kwin ‘Agreement’ here refers to an agreement where you stipulate that the policy is valid and binding even if no premium is paid. the loss occurred on the credit term but there was still no payment of premium yet.com . 1864. if you look at this from May 1964 to Oct 13 (time of loss). so that’s just fair. the thing is already exposed to the peril insured against. So it’s based on the general rule provided in sec 77. The contention of insured was that ‘before. clearly it was more than 90 days. Sec 77 states that: An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against.
notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid. Then there’s no basis for the insurer to file a case against unpaid premiums.’ But in the new provision. The provision even now says – notwithstanding any agreement to the contrary.com . STATUTORY EXCEPTIONS (provided by law) 1. Case: American home assurance In American Insurance.docudesk. SEC 77 – LIFE INSURANCE If we talk about life insurance. so far as to make the policy binding. the law creates a legal fiction of payment. Case: Velasco v Valenzuela Loss occurred before payment of premium. And that falls provided under the exception provided in sec78. this phrase is deleted. SEC 78 – ACKNOWLEDGEMENT SEC 78 An acknowledgment in a policy or contract of insurance or the receipt of premium is conclusive evidence of its payment. there was none. Same as in the first case of Philippine phoenix. (to be discussed later) But again. But even if the check was dishonored. GR: NO PREMIUM.PAYMENT IN INSTALLMENTS – Makati tuscani 4. That is why in capitol insurance. The checks were not encashed and when they were presented for payment. Or there is what we call automatic loan. Gideny lang niya ang pagdawat. after the payment of the initial premium. it would not be valid and binding. But take note that this case is no longer applicable under the new provision of the insurance code. But only for the purpose of making the policy valid and binding Kwin Transcripts Page 60 Kw PDF Created with deskPDF TS PDF Writer . If you cannot pay for the premium. Diba we have the provision in the civil code. And since no premium was paid at the time the policy was issued. So the effect of the acknowledgment in the policy is a waiver for purposes of making the policy valid and binding. We have what we called CASH SURRENDER VALUE. Let’s go now to the exception to the general rule Actually there are 5 exceptions. It’s the amount that the insurer is entitled to receive. normally the premium id deducted from the cash surrender value. the payment of the premium was also by way of check. But the court said. Meaning. since the insurer accepted the payment of checks. But the policy/renewal certificate contains an acknowledgment as to the receipt of premium. ESTOPPEL – UCPB A. JURISPRUDENCE 3. it’s the insurance company who sought payment of unpaid premiums.DEMO :: http://www. pautangon ka sa insurer. So never mind the check. But it is conclusive only insofar as to making the policy valid and binding. But in this case. So if this case is to be decided now. If you cannot pay. So meaning by virtue of sec 78. the policy would not be valid and binding. the insured is still entitled to recover. 2. So the acknowledgment in the policy is conclusive evidence as to the payment of the premium. Wherein there’s still that provision – ‘unless there is credit agreement. it was not dishonored.CREDIT EXTENSION/TERM – Makati tuscani 5. if it were to be decided now. SEC 77 – LIFE INSURANCE 2. without payment of premium. Basta lang he died within the grace period. the policy would still be valid and binding because the policy CONTAINS AN ACKNOWEDGMENT FOR THE RECEIPT OF PREMIUM. Notwithstanding any stipulation that the policy shall not be valid if o premium is paid. So you cannot forfeit the policy so long as he died within the grace period. even if it is dishonored the policy is still valid and binding. payment of check and promissory note will not make the policy valid or binding. STATUTORY EXCEPTIONS (provided by law) 1. they were dishonored due to insufficient funds. the amount to be deducted from the policy. So it is as if there is no payment even if in reality. before the payment of premium of 1 month. Also in life insurance. if the insured dies. the insured is entitled to a grace period of 1 month or 30 days within which to pay premium. when will the check or promissory note or negotiable instrument produce the effect of payment? Only when it is encashed. Because this case was decided under the old provision of the insurance code. NO POLICY SEC 77 EXPT A. the court said that the policy has elapsed. there are devices in life insurance which prevent the forfeiture of the policy due to the non payment of premium.Insurance Kwin Case: capitol insurance v surety The case involves payment of premium by way of promissory notes and checks. So again the policy is not valid and binding. SEC 78 – ACKNOWLEDGEMENT B. even if it would be dishonored.
it is only a prima facie presumption. unless you fall in the exception of Makati tuscani. Difference: In Philippine phoenix. What if it is still first year. Also the general rule of premium is that it is INDIVISIBLE. Makati refused to pay premiums. since for tree years the insurer continued to accept premium on installments. JURISPRUDENCE 3. there was payment but in installments. Like credit terms or ageemnet as to the payment on installments. the payment was made in check but the re was an acknowledgment in the policy as to the payment of premiums. Why is it like that? That if there is acknowledgment. makarecover sad ang insurer for the unpaid premium. it is not an established practice. acknowledgment is conclusive evidence of payment. Because in sec 77. Because the ratio also of the court is that it is unfair also on the part of the insurer if we are to rule otherwise. what if is it a different story now? Meaning it’s not the insurer this time who’s filing a case on recovery? What if the loss has occurred before the insured has paid the full amount? Do you think that the insured is entitled to recover? Yes. So both ways. then it was entitled to the remaining balance. good customs and public policy. So since the policy is valid and binding. Therefore. B. in effect the insured granted credit term or credit extension or allowed the insured to pay the premium on installments. That is why SC said that the policy never became valid and binding. Because if we were to rule otherwise. The GR is that you should pay the premium in full. Therefore. You cannot pay on installments.1984 In these three years. In Makati tuscani.com . But this does not prohibit the parties from entering into other agreements. the insurer is entitled to recover the remaining balance. you are not entitled to recover. makarecover ang insured. In Makati Tuscani. So again. it is clear that there is an agreement between the parties to allow payment in installments. What is prohibited here is that the agreement that states that the policy is still valid even if no premium was paid. In that case the insured is still entitled to recover and in the policy is still valid and binding. So the court said. GR: no premium. But if the facts were different.DEMO :: http://www. So the insurer can still recover payment Like as I’ve mentioned in American insurance. what is the exception sated in Makati tuscani? When there is an agreement allowing the insured to pay premium on installments and partial payment has been made at the time of loss. PAYMENT IN SURANCE Case: Makati Tusacni condominium v CA Insured is Makati tuscani. Because the court said the insurer cannot escape liability by saying that he has not paid the premium but before the loss has occurred it has been collecting installments. and insurer is American home insurance. in effect waived the condition that there should be payment first before the policy becomes valid and binding. As far as the payment itself. morals. it did not make the policy lapse. This is exception to sec 77.docudesk. So to make the policy valid and binding. The insured cannot say that it is already conclusive evidence of payment. it is already conclusive evidence of payment? The insurer by issuing an acknowledgment receipt. no policy. Made and renewed in: 1982. Your acceptance of premium in installments speaks of the intention to honor the policy. only partial payment is made? You think the insured is entitled to recover? It depends again if they fallunder another exception – if Kwin Transcripts Page 61 Kw PDF Created with deskPDF TS PDF Writer . Meaning the insurer has intention to honor the policy even if the payment was made in installments. That is the general rule. Here although the premium was made in installments. the premium was paid in installments. there was no premium paid at all. If you pay in partial and a loss has occurred.1983. Unless you fall under the exception in the case o Makati Tuscani. the insurer accepted payments in installments. since the policy is valid and binding. the insured can recover. as a rule. But there is an issue: isn’t this contrary to he provision of sec77 where it states – notwithstanding any agreement to the contrary? How did the court reconcile that one? Is there inconsistency? No. Therefore the insurer had no right to recover. The partial payment of premium does not prevent the forfeiture of the policy. The court says that that kind of agreement is not contrary to law. It speaks loudly of the insurer’s intention to honor the policy. Because for three years.Insurance Kwin But can the insurer still recover the payments later on? Yes. And the insured has been paying the premium on installments for 3 years. Since the policy was valid.
he lost the car before the policy took effect -so it was not exposed to the peril exposed against.CREDIT EXTENSION/TERM – Makati tuscani Another exception provided in Makati tuscani is that if there is a clear agreement between the parties to grant payment of premium and the loss occurred before the expiration of the credit term. He is entitled to a return of whole of the premium. d. But the insured filed a case for the recovery of unpaid premium. 5. The court said no. sec 79 a – NOT EXPOSED TO PERIL INSURED AGAINST (a) To the whole premium if no part of his interest in the thing insured be exposed to any of the perils insured against. as follows: (a) To the whole premium if no part of his interest in the thing insured be exposed to any of the perils insured against.com . what happened is that the loss occurred before the payment of the premium but within the credit term. Now. to such portion of the premium as corresponds with the unexpired time. you withdrew your application before it was accepted. Let’s discuss now return of premium. ESTOPPEL Case: UCPB For several years. But the court said that that is different because there. When is the insured entitled to a return of premiums? 1. sec 79 b – POLICY FOR A DEFINITE TERM 3. Because the effect in short is that the policy is valid and binding. b. Ex. There was partial payment but the policy also expressly states that the policy shall not be valid and binding until there is full payment. sec 81 – CONTRACT IS VOIDABLE ON GROUNDS UNKOWN TO INSURED W/O HIS FAULT 5. he already paid the premium but the application was rejected or denied. What are the exceptions? Excuses for non payment of premiums? 1. the insurer consistently granted the insured a credit term for 60-90 days. Case:Angtibay There was also payment on installment. the insured went to the office of insurer wanting to pay the premium. 1. c.OVERINSURANCE SEC 79 Sec. So that’s the fourth exception. So the issue here is whether or not the insurer is liable Is the insurer liable? Yes for reasons of estoppel. you insured a vessel for voyage from Cebu to HK but the voyage never commenced. a. It makes the policy valid and binding. Provided. therewas a clear agreement that the payment of the premium is in installments. Provided that the loss occurred before the expiration of the credit extension. (b) Where the insurance is made for a definite period of time and the insured surrenders his policy. So the insured is entitled to return of the whole of the premium. sec 79 a – NOT EXPOSED TO PERIL INSURED AGAINST 2. sec 81 – INSURED NEVER INCURRED LIABILITY 6. 4. insurer refused to accept payment There was an old case. it speaks of the intention of the insurer to honor the policy. Angtibay raised as a defense the case of Makiti tuscani because they allowed the validity of the policy even if only premium was paid. So the issue there was whether the insured was entitled to recover. at a pro rata rate. no. The insurer will not accept because it is war time. If there’s an agreement as to credit extension. And here. as a rule. Can the insurer collect the unpaid premium? Yes. In fact. is sickness or incapacity a valid excuse for non payment of premium? No. so what’s the effect? Is the insured entitles to recover? Yes. So in effect.DEMO :: http://www. after deducting from the whole premium any claim for loss or damage under the policy which has previously accrued. the insured became a public enemy e. nd And in the 2 phoenix case. Kwin Transcripts Page 62 Kw PDF Created with deskPDF TS PDF Writer . there is war and the insured became a public enemy 2. unless a short period rate has been agreed upon and appears on the face of the policy. sec 81 – CONTRACT IS VOIDABLE FOR FRAUD/REPRESENTATION ON PART OF INSURER 4. Sec 82 .docudesk. Here the loss occurred before the payment became full. I think he renewed the policy for 5 years.Insurance Kwin there’s an agreement allowing the insured a credit extension or a credit term. That no holder of a life insurance policy may avail himself of the privileges of this paragraph without sufficient cause as otherwise provided by law. 79. there was partial payment of premium. A person insured is entitled to a return of premium. In effect you granted a credit term or credit extension.
same insurable interest. For how much? Corresponding to the unexpired term. on account of fraud or misrepresentation of the insurer. it will be pro rata. Or you insured you vessel for a voyage from HK to Cebu but the vessel was still under repair and repairs were not finished. In that case. We said that you will be entitled to a return of premium prorata. 1. to such portion of the premium as corresponds with the unexpired time. We will discuss that later. different insurer. proportioned to the amount by which the aggregate sum insured in all the policies exceeds the insurable value of the thing at risk. sec 79 b – POLICY FOR A DEFINITE TERM (b) Where the insurance is made for a definite period of time and the insured surrenders his policy. The insured is still entitled to return of premiums. the vessel is already lost. the insured surrendered the policy. what will be returned to him is 5k. sec 81 – CONTRACT IS VOIDABLE FOR FRAUD/REPRESENTATION ON PART OF INSURER SEC 81 A person insured is entitled to return of the premium when the contract is voidable. As we will discuss later on. when by any default of the insured other than actual fraud. Provided. Or in short. after deducting from the whole premium any claim for loss or damage under the policy which has previously accrued. the existence of which the insured was ignorant without his fault. or of his agent. So the insurer never incurred liability. 6. So let’s say that the term is for 1 year. 4. What if before he surrendered the policy. on account of facts. Again take note. Here the law talks about over insurance by reason of double insurance. If there is fraud on the part of the insurer.docudesk. he is entitled to the whole of the premiums 5. you surrendered the policy. part of the house was insured by fire and you suffered a loss of 2k. Here it talks about a policy for a definite term. Sec 82 . he will be entitled to return of premium.2k =8k. it will not apply if the risk is indivisible or it does not apply in case of life insurance. the insurer was liable for 2k.Insurance Kwin 2. this applies only to a policy with a definite term. Example of fraud or misrepresentation of the insurer. He is entitled to the return of premiums provided that the policy does not state – whether lost or not lost. insured will say that the heirs will be happy or he misrepresented that after 5 years you will have the cash surrender value or you may obtain loan. the insurer never incurred any liability under the policy. And before the expiration of the period.com . That no holder of a life insurance policy may avail himself of the privileges of this paragraph without sufficient cause as otherwise provided by law. Exception: if short period rates will apply. What is short period rate? In a policy . or 2. a loss has already occurred? You insured your house for 1 year. he paid 10k. 3. there’s a table there of rates. So again. When is there double insurance? When you insure the same insurable risk. thing was never exposed to the peril insured against. or 3. you insured a car and the car got lost before the policy took effect. Kwin Transcripts Page 63 Kw PDF Created with deskPDF TS PDF Writer . sec 81 – CONTRACT IS VOIDABLE ON GROUNDS UNKOWN TO INSURED W/O HIS FAULT Example: he insured his vessel but unknown to him. But what if there is a loss prior to cancellation? How would you compute the return of the premium? How would you compute now the return of the premium? (Premium paid less return of policy) X unexpired term= return of premium --10k . the following rates will apply. let’s say 6 months. then it will have equivalent rates also.OVERINSURANCE SEC 82 In case of an over-insurance by several insurers. --8k X (6/12) =4k Take note: fraud or misrepresentation on the part of the insurer. at a pro rata rate. is the insured entitled to the return of the premium? Yes. the insured is entitled to a ratable return of the premium. After 6 months. Let’s say for 1 year. sec 81 – INSURED NEVER INCURRED LIABILITY So same example as before. Before six months. unless a short period rate has been agreed upon and appears on the face of the policy. As a general rule. Unless the policy expressly stipulate that in case the policy states that in case of stipulation. that is the policy is effective only of let’s say 1 month or 2 months.DEMO :: http://www.
This is assuming that it is a valued policy. What is the effect? It depends. So the insured is entitled to return of premiums of 10k. 20k. B and C respectively. the value of my insurable interest. you would be liable. but in now case again that it will be more than the face value. they are entitled to reimbursements. How much? Proportion to the amount by which the policy exceed the insurable interest.2m 120k So in this case there is over insurance to the extent of the difference between the total face value of the insurance policy and the total insurable interest (value of the house). So if I recover from C 600k he can go after A for 100k and B for 200k. What if I recover only from C. 400k and 600k from A.docudesk. you must insure the Kwin Transcripts Page 64 X insurable interest X600k X600k X600k =liability =100k =200k =300k Kw PDF Created with deskPDF TS PDF Writer . You simply change 600k to 500k. Value of house: 500k Insured (face): 400k Under insured: 100k So if you insure your property for less than its value. Therefore. If I opt to recover from A 200k. I can recover 200k. Over insurance = 600k = 1. By how much? It depends on their liability. you are considered as a co-insurer for the difference. the insurers.2) B (400k/1. How can you determine their respective liabilities? Simple. I cannot recover more than 600k. If I go after B for 400k. After recovering from C. B and C respectively. If you insure you vessel for less than its value.2m Premium A 20k X50% B 40k X50% X50% C 60k 120k Return of premiums =10k =20k =30k 60k So if the insured opt to recover from C 600k.com . C is entitled to get reimbursement from A and B. So meaning as a co-insurer. Proportion = 0ver insurance / total face value 50% =600k/1. For how much? 400k. and 30k from A. B and C? As a rule. and the 600k is the agreed valuation. Assuming that there is loss. can he do that? Yes. can I go after A and B? No. can I still go after C? Yes. Because the face value is 600k.Insurance Kwin So for example. Liability: (face val/total face val) A (200k/1.2) I’d like to discuss with you in relation to over insurance.2m – 600k = 50% = 600k/1. what happens to A and B? are they relieved from liability? No. Like if the face of the policy is less than the value of the property or less than the amount if your insurable interest. because in no case can my recovery exceed 600k. Because the law requires that in marine insurance. and at the time of the loss it was determined that the value of the house was 500k. house valued at 600k is insured with the following insurance companies: Face Value Premium A 200k 20k B 400k 40k C 600k 60k 1. for how much or against whom can the insured recover? Or how much is the respective liabilities of A. automatic na siya.2m The law says that the insurer is entitled to return of premiums. Bottomline. There is co-insurer if there is underinsurance.DEMO :: http://www. CO–INSUANCE. can I still go after B? Yes. But between them. we have to determine how much is the respective liability of A B and C.2) C (600k/1. For how much? 200k. In MARINE INSURANCE. you are considered automatically as a co-insurer for the difference. What if it states that it is an open policy.
The co-insurer is the insured. GR there is no co insurance. What is the effect? It would have an effect now in your recovery. Exception is when you have what we called a co-insurance clause. if there is no co insurance clause. you are entitled to recover. And in most fire insurance policy. 300k 80%X300 =240k 2. What is now the effect? Back to marine insurance Vale 1m insurer Face 800k 200k insured What if the property is damaged. In co-insurance clause. 100% 2. So if the insured insured it for less than its value. 300k 300k 2. it provides that if the insured insures the property for less than its value. 400k 80% X 1m 80% X 400k =800k =320k Example: Value Face 800 600 200 GR: Damage/loss: 1. 50% 75% X(800k X 50%) 75% X 400k =300k 2. And the insured knows that. For the 200k. But in total loss. I need not multiply with 80% because the amount insured is Kw Kwin Transcripts Page 65 PDF Created with deskPDF TS PDF Writer . the insurer would provide for co-insurance clause. I am only entitled to recover 80% of the value of loss. 100% 3.com . then as a penalty. the insured is entitled to recover whatever is stated in the policy. So instead of insuring the full amount. In fire insurance. Why does the fire insurance provide for a co-insurance clause? In fire insurance. Meaning kung pila and face value of the policy. 100% 400k EXPT: if there is co-insurance clause Damage is: Insured only 80% (400k/500k): Amt recoverable: 1. premium. 50% 3. 100% 75% X 800k =600k 2. EXAMPLE: Value Face 80%.DEMO :: http://www. you will be considered a co insurer for the difference. 800k is the liability of the insurer. Example: Value 500k Face 400k 100k For how much am I entitled to recover? GR: Damage/loss: Amount recoverable: 1. 50% 80% X (1m X 50%) 80% X 500k =400k 2. 500k 75% X 500k =325k Coverage: policy warranty. you are liable. so as a penalty you would be considered as a co-insurer for the difference. 100% 80%X500 =400k 1m 800k 200k insurer insured If you insured a vessel valued at 1m for 800k. Or in case of partial loss.docudesk. for how much is the insured entitled to recover? Damage is: Insured only 80% (800k/1m): Amt recoverable: 1. gamay ra ang iyang i-insure to have less premium. In FIRE INSURANCE. You are a co-insurer of the insurer.Insurance Kwin property up to its value. 500k Amount recoverable: 600k – apply limit even if value is 800k 400k – based on value (800 X 50%) 500k – not exceed limit EXPT: if there is co-insurance clause Damage is: Insured only 75% (600k/800k): Amt recoverable: 1. whether you are underinsured or not. loss The principle is that… pila raman ka percent of the value ang akong gi insure? 80%. it will not result to total destruction.
So you have to determine first by how much are you over insured. Meaning you co-insure your property. you don’t need to multiply it by 75% because 750k is already 75%. but you insured it only for 750k. For how much? In proportion to the over insurance. Meaning if you underinsured your property. the insured is entitled to return of premiums. the value of your vessel is 1m. Meaning you are entitled to recover to the extent of the face value of the policy. Value of vessel Face value Underinsurance 1m 750k 250k Meaning you insured your property only to the extent of 75%. 500k 75% X 500k =375k 2. Assuming we have the same example but using the fire insurance. the liability of each insurer is solidary. The law states that if you are over insured. you are considered as co-insurer for the difference between the value of the property as against the face value of the policy. GR: Value of property Face value Underinsurance GR: Damage/loss: 1. Each of the insurers’ liability is not joint as far as the insured is concerned. 100% 75% X 1m =750k Kw Kwin Transcripts Page 66 PDF Created with deskPDF TS PDF Writer . The exception is when the policy itself provides for what we call. How do you do that? You simply compare the value of the house or the property insured as against the total face value of the policy. CO INSURANCE CLAUSE. Meaning you are liable. You are already co – insuring to the amount of 250k. the same risk and you insured it with several insurers. In under insurance. 500k 2. Under the law you are a co-insurer for the difference. There is over insurance here as a result of double insurance. You are entitled to reimbursement because there is over insurance.docudesk. the value of the house is 1m. you have to distinguish between marine insurance and fire insurance. 500k 75% X 500k =375k 2. The over insurance is 200k. If there is co-insurance clause then the same rule will apply in marine insurance.Insurance Kwin September 24. I can recover as much as the value of the house but in no case will it be more than the face value of the policy. Amount recoverable: 500k – apply limit even if value is 750k 750k – not exceed limit EXPT: if there is co-insurance clause Damage is: Insured only 75% (750k/1m): Amt recoverable: 1. 100% 1m 750k 250k What if there is under insurance? The total face value of the policy is less than the insurable interest or the value of the property. So meaning. if I am the insured. In over insurance. There is double insurance when you insured the same interest. Here. as a general rule.com . there is no coinsurance. Because in marine insurance. you are only entitled to 750k.DEMO :: http://www. 2010 One of he instances where the insured is entitled to return of premium is: When the thing insured is not exposed to the peril exposed against When the contract is voidable but it is through the fault of the insurer When he contract is voidable on account of facts which the insured was ignorant When there is over insurance. You are under insured by 250k.2m. But in fire insurance. and the face value is 1. What if the property is damaged. for how much is the insured entitled to recover? Damage is: Insured only 75% (750k/1m): Amt recoverable: 1. *** lecture is wrong *** deleted from transcriptions*** the lecture was about over insurance *** refer to transcripts from previous class*** So for example in marine insurance. Because the insured is only accountable to the extent of 750k. That’s your fault because you under insured your property. If you lost the entire vessel valued at 1m. 100% 57% X 1m =75k If there is 75% damage. Joint lang ang ilang liability among themselves. it is automatic hat there is coinsurance.
4. because the risk assumed by the insured is not equal each day. SEC 83 An agreement not to transfer the claim of the insured against the insurer after the loss has happened. are you entitled to the return of premium? No more. this is void because it’s against public policy. Because it is divisible. If the contract is illegal or void and the parties are in pari delicto If you are not in pari delicto. what is the effect? The rights and the liabilities of the parties are already fixed. When is the insured not entitled to return of premium? 1. you are not entitled to return of premium. you can recover only to the extent of the face value of the policy. When it is a life insurance If you preterminate your life insurance policy. when you transfer the claim.com . Second. So the two losses here could be partial loss or total loss. If there is underinsurance then is no more return of premium. so before we commence the voyage from port B to port C. And also. Example when the policy is void or illegal is when there is lack of insurable interest. 3. That one is different because the transfer is the policy itself. is void if made before the loss except as otherwise provided in the case of life insurance. And these arise from the happening of the peril insured against. it is void. it is null and void. can the insured say that he is entitled to return of premium? Yes. You cannot say that 100k is good for 10 days. You cannot apportion. But for purposes of liability. there is difference only when there is partial damage. So any stipulation in the policy prohibiting the insured from transferring his right to claim the insurance or from transferring his money. Why is it void? Take note. When there is fraud or misrepresentation on the part of the insured 2. The moment the voyage already started. But here you are not transferring the policy but only the money claim. then of course you are entitled to return of premium. And one of attributes of property ownership is free disposal or the right to transfer. Why not? Because the loss has already occurred. Because the thing insured is already exposed to peril insured against. So this stipulation is void because it hinders transmission of property. we have to compute. Is it valid to agree or stipulate that the insured cannot transfer his insurance claim after the loss has occurred? No.docudesk. We’re talking here about insurance which is not for a definite term but an insurance which is indivisible. You already paid premium of 100k. Different man tong when the insured is entitled to the return of premium prorata because in that case. he will say he will cancel the policy. How is loss defined as far as insurance is concerned? There is injury. Why is it null and void? Why is it not allowed? Because money claim is already property. there is damage on the thing insured or it will create a liability. But if there is 100% damage. Let’s go now to loss. the contract of insurance was for a definite term. Ex. Assuming within the 5th day.Insurance Kwin Actually. you decided to cancel the policy. But it is different if he obtained several insurance for separate destination like from port A to Port B. And the nature of insurance contract is that it is indivisible. What is being transferred here is the money claim or the right of action or the right to go after the insured. And the voyage would normally take 10 days. So that’s premium. what is being transferred here? Is it the policy? No. Does the transfer of money claim affect the insurer’s liability? Does it affect the risk assumed by the insurer? No more. If you insure your vessel for a trip from Cebu to HK. How do you differentiate that with sec 20? There’s a provision on sec 20 about transferring of interest which suspends the insurance. Upon the occurrence of the loss. the insurer already assumed risk.DEMO :: http://www. If the thing insured is already exposed to a peril insured against no matter how brief. Do you remember one of the exception in sec 20 regarding transfer of interest in the policy? If the transfer was made after loss… same as sec 83. you are no longer Kw Kwin Transcripts Page 67 PDF Created with deskPDF TS PDF Writer .
Is the insurer liable? Yes. what is important is to determine the proximate cause. If the proximate cause of the loss is the peril insured against then the insurer is liable. the structure of the building was weakened. but he is not liable for a loss which the peril insured against was only a remote cause. The immediate cause? Explosion Immediate cause means the cause which is nearest in time of the happening of the loss. The rule on prohibiting transfer of interest applies because the insurance contract is a personal contract. SEC 84 Unless otherwise provided by the policy. Why is it allowed in life insurance policy? Because life insurance is not a contract of indemnity. without which the damage would not have occurred. So in short. an insurer is liable for a loss of which a peril insured against was the proximate cause. What is the immediate cause? Falling of the building. Provided that the proximate cause is not an excepted Kwin Transcripts Page 68 Kw PDF Created with deskPDF TS PDF Writer . the structure is defective. they determine proximate cause for the purposes of determining liability. fire started. Assuming there was an explosion and the explosion was caused by fire. Example. your house was not on fire. Example. So if the proximate cause was fire and the immediate cause is the explosion. If you insured your house against fire and the cause of the house is fire. Example. But in torts. although it may not be the cause which is nearest in time as far as the happening of loss is concerned. In insurance. Is the insurer liable? Yes. how is it defined? It is the natural and continuous sequence unbroken by any sufficient and intervening cause which produces the injury or damage. The proximate cause is fire. So the insurer is liable if the proximate cause is the peril insured against. What do you understand by proximate cause? In torts. There was a strong wind and it collapsed in you house. But of course an exception is the case of life insurance because in life insurance you can assign the policy. Take note. the insurer is liable. Na damage lang siya kay nay fire wall. The insurer is not liable under sec 84 but is liable under sec 86. So the house is destroyed by fire. although a peril not contemplated by the contract may have been a remote cause of the loss. As a result the building collapsed.com . it’s more of determining how the loss occurred or what brought about the loss. now.docudesk. If you insure your house against fire. Example. even if the remote cause is not the peril insured against.DEMO :: http://www. What is required land is that you have insurable interest. If you insured your house against fire. The house of your neighbor.Insurance Kwin talking about the insurance contract. He insurer is not liable if the proximate cause is the not the peril insured against even if the remote cause was the peril insured against. So it sets others in motion. If it is the peril insured against. What is the proximate cause? Fire. Is the insurer liable? Yes. and take note that the explosion is an excepted peril… the insurer is still liable because the proximate cause is fire. As a result of the collapse. Is the insurer liable? Yes Why? What is the proximate cause? Fire. the house was damaged. it’s no longer an insurance contract but a money claim. then the insurer is liable. So any stipulation prohibiting the insured to transfer his money claim after the loss has occurred is null and void. Even if a peril not contemplated in the policy was the remote cause of the loss. You insured your vessel against fire and the policy provides that any loss arising from explosion is not covered in the policy (excepted peril:explosion). Because of the fire. Because of the collapse. Rule 1 on sec 84: if the proximate cause of the loss is the peril insured against. The fire started in the house of your neighbor.
Is the insurer liable? Yes. What is the effect on the insurer? The insurer is not liable. the thing is exposed to a peril not insured against. Or it was lost during the effort in the process of saving it from the peril insured against. Sec 85 on the other hand actually is an extension of the principle of proximate cause. or where a loss is caused by efforts to rescue the thing insured from a peril insured against. It cannot stand the heat from the fire. Never mind the remote cause or the immediate cause. It collapsed. but if it was lost in the course of the rescuing it from the peril insured against. it was lost. If you insure your property against fire.so di tana na mahitabo ang loss kung walay peril.com . So what do we have so far? Under sec 84. The building insured was defective and weak. Meaning kani na peril is the proximate cause. even if the immediate cause is not an excepted peril (meaning it is a peril insured against). which would not have occurred but for such peril’ What kind of peril? It refers to a proximate cause. But if the proximate cause is not an excepted peril and the immediate cause is peril insured. Therefore the insurer is not liable. Normally you would take out your furniture and appliances. is thereby excepted although the immediate cause of the loss was a peril which was not excepted. The policy was for fire. Example. What is the immediate cause? Fire. in whole or in part. which would not have occurred but for such peril. Simply said. the insurer is not liable. What is the proximate cause? Collapse What is the immediate cause? Fire. if the proximate cause is an excepted peril. the proximate cause is an excepted peril.Insurance Kwin peril. he is liable. Kw Kwin Transcripts Page 69 PDF Created with deskPDF TS PDF Writer . SEC 86 Where a peril is especially excepted in a contract of insurance. So in relation to sec 84. The neighbor’s house was on fire. which permanently deprives the insured of its possession. a loss. Meaning. Because it states there is that it is excepted although the immediate cause of the loss was a peril not excepted. Sec 85 says that if the thing is rescued or saved from the peril insured against and in the course lf the rescue. it was exposed to another peril which is not covered in the policy. the insurer is still liable. the fire stated and totally destroyed the boat. the insurer is not liable. For example the policy was fire and because of the fire you brought out your furniture outside to safety. Is the insurer liable? No Proximate cause: collapse Remote cause: fire The fire is not a proximate cause nor an immediate cause. if. the insurer is liable if the approximate cause is the peril insured against. Example.DEMO :: http://www. ‘a loss. is the insurer liable? Yes. and a fire occurred in your house. Why is the insurer not liable? Because the proximate cause was an excepted risk. What is the proximate cause of the loss? Fire. Such that even if it was exposed to another peril not insured against. SEC 85 An insurer is liable where the thing insured is rescued from a peril insured against that would otherwise have caused a loss. Because the immediate cause is fire. in the course of such rescue. Excepted was explosion. It did not collapse because of the fire but because of the defective structure. The properties were stolen. And as a result. The proximate cause is an specially excepted in the contract. What is the proximate cause? Explosion. The proximate cause of the loss was the peril insured against. The insurer is still liable because being exposed on the peril insured against is still considered a proximate cause. Classic example is fire. Is the insurer liable? No.docudesk. let’s discuss sec 86. Also under sec 86 if the proximate cause is an excepted peril even if the immediate cause is not an excepted peril. There was an explosion and because of the explosion. But if the policy did not except explosion. If you insured your boat against fire.
during the effort to rescue So the insurer is liable. So long as the proximate cause is not an excepted peril. The operation was unsuccessful and he died. As a result the insured committed suicide. There was a case it’s about life and accident insurance The insured suffered an accidental shock which caused a wound. The accident was still the proximate cause. 53. What is the proximate cause? Bomb. Fire. What is the immediate cause? Fire. or of the insurance agents or others. As a result. Example. So if it is lost through theft but it was still in the course of the rescue. (enlargement of the male organ) As a result he submitted himself to operation. unbroken by any efficient intervening cause. The wound got him tetanus causing hi great pain and delirium and intense agony.DEMO :: http://www. The court says that the proximate cause was the peril insured against and therefore the insurer is still liable. is the insurer liable? Yes. Unless if the proximate cause is an excepted peril. But mere ordinary negligence does not exempt the insurer from liability.06 9. Is the insurer liable? Yes. What is friendly fire? It is friendly when it is burning in the place where it is supposed to be or should be. So the issue now is WON the insurer is liable under life and accident insurance. The court says that the proximate cause was the accident Example. SEC 87 An insurer is not liable for a loss caused by the willful act or through the connivance of the insured. Is the insurer liable? Yes. He met an accident and it caused him hernia. that will already be equivalent to willful act.Insurance Kwin What is the immediate cause? Theft.10 Example. and the fire resulted from the faulty wiring and because of the faulty wiring there’s fire. the insurer would not be liable. Take note that it should happen/ must be lost 1. Why? Because that’s the very reason why you obtained the insurance in the first place.docudesk.24. As distinguished from friendly fire. But if theft was specifically excepted in the policy. They are not entitiled to anything if it is discovered that it is through willful act.com . In that case the court says that the accident was still the proximate cause. Is the insurer liable? Yes. We have read so many stories of businesses going down… no names please… their last resort was to destroy the building intentionally for purposes of recovering insurance. What is the proximate cause? Overheating. Kw Kwin Transcripts Page 70 PDF Created with deskPDF TS PDF Writer . Let’s say there is a bomb thrown in you house. What if you insure your house against fire. Willful act. What is the immediate cause? Fire. Like fire in the lamp. niexplode and there’s fire. Is the insurer still liable? Yes. What if nag overheat imong electric fan. to protect yourself from your own negligence. The proximate cause is the cause which started everything in motion. but he is not exonerated by the negligence of the insured. Provided that the negligence does not amount to gross negligence. And the insurer is not liable for the willful act of the insured and his connivance with the agent. stove… Hostile fire is when it is burning in the place other than where it should be. But fire has to be hostile fire. in the course of the rescue 2. Exception however if in this case theft was specifically excepted. Pwede sad what started out as a friendly fire then it turned into a hostile fire. Because if it’s already gross negligence. Is the insurer liable for negligence/ loss arising from the negligence of the insured? Yes.
what must he provide t the insurer? Provide a notice of loss. He was drunk. Example. that was still considered accident. He was playing with the handgun. There was one case where the court said that there is already gross negligence therefore the insurer is not liable. 1.docudesk. oral or written. it’s a case to case basis. Is suicide covered ? It depends. Sec 84. But if the policy itself expressly provides a period within which to provide a notice of loss. What is reasonable time? It’s a question of fact. what are the instances where the insurer is liable? 1. but only preponderance of evidence.DEMO :: http://www. According to the case of sun insurance office. Unless the policy itself expressly provides that it must be written/sworn statement/notorized/ etc. For the insurer to investigate whether it’s a covered peril 3. The insurer is still liable. But again the negligence must not be gross. then clearly it is a willful act of the insured.Insurance Kwin Example. then that period should be complied with. Example. So to recap. What if there is a defect in the notice of loss or proof of loss. The court said that in that case. Is the insurer still liable? Yes. If you fail to provide a notice of loss within the period then the insurer is relieved from liability. So it’s not necessary that it could stand trial in court. The insurer will not be liable unless the policy provides that he can recover whether he is sane or insane. Again. Can it be waived by the insurer? Yes. it does not exonerate the insurer. what else? You also need to submit proof of loss What do you mean by proof of loss? What kind of proof of loss? Does it have top be something that stands in the trial court? Not necessarily. As a rule. To take necessary step to prevent further damage or to protect his interest. Although there was negligence. there was already negligence. then that requirement must be complied.15 NOTICEOF LOSS AND PROOF OF LOSS. What is the purpose of notice of loss? 1. There was already an advice that there was an incoming storm and there will be big waves. It involves about insurance on boat or tugboat which was docked in the port. What about you were cooking but nabiyaan nimo? Or namalantsa ka and you forgot to pull out? Or you smoked and you left the cigarette butt in the carpet? Its negligence but not gross.07. the notice of loss cold be in any form. the tugboat was destroyed. Although there is negligence.com . the insurer is still liable. After the loss has occurred. He drank the wood alcohol which he thought was whisky. So there was this case. police reports. If it is caused by efforts to rescue the thing insured from the peril insured against 3. Is there a particular form for the notice of loss? No. Aside from the notice of loss. Time within which the notice of loss is given? When? It should be given without unnecessary delay or within reasonable time. As a result. He died. Example. provided the proximate cause is not an excepted peril 4. If the loss in caused by the negligence of the insured Kw Kwin Transcripts Page 71 PDF Created with deskPDF TS PDF Writer . To inform the insurer that the loss has occurred 2. And yet the crew did not bring boat to safety despite the advisory/warning. death and medical certificates. So what proof of loss may consist of? Pictures. if the cause of the loss is the peril insured against 2. To determine the extent of the damage or liability 4. for the insured to be entitled to recover. If the immediate cause was the peril insured against. If he committed the act while he was sane. You have to make sure if the insured committed suicide while he was insane or sane. You are only required to give the best evidence that you have within your power at that time. He removed the magazine and pointed the gun to his head and pulled the trigger. It is still covered as accident.
docudesk. the delay according to the court is excused. And also you must prove that the reason why that doctor refused to certify is because he does not believe that that’s not the cause of death but some other reason. is it an excuse by the fact that the insured died or is incapacitated? Yes. is that detrimental to your claim? No. provided you proved to exercise due diligence to procure it but to no avail. Example.DEMO :: http://www. the policy requires a certificate or testimony of a particular person like in life insurance.Insurance Kwin When can it be waived be the insurer? Such as when the insurer fails to raise objections on the proof and notice of loss. Like when you ask the doctor – can you testify that the cause of death is like this? So that I can claim from the insurance company? What if the doctor refused to issue the certificate? It’s ok. Is that excusable? Yes.com . it needs a doctor’s certificate as to the cause of the death or testimony to a particular person as to the cause of the death… What if you were not able to obtain the testimony or certificate. Like – I was not paid my professional fee. As long as you can prove that you have exercised due diligence in obtaining that. or conflict of interest. The insured died and the beneficiary was not aware of the existence of the policy. So they were delayed in giving notice of loss. Or when he denies recovery but on some other grounds. you must furnish evidence that the reason why you were not able to obtain the testimony or the reason why that person did not give you the certificate is not because he does not believe on the facts to be testified or the facts to be certified but on some other reason. Or incapacitated ang insured such that he was nota able to give the notice of loss in time. Kw Kwin Transcripts Page 72 PDF Created with deskPDF TS PDF Writer . not on the grounds that there was no notice or the proof of loss was defective but the contract was null and void. Regarding delay in the giving of notice of loss. And also. Or when he accepts it and insurer makes partial payment. What about if the preliminary proof of loss.
Same interest 4. their liability is joint. Is over insurance the same as double insurance? Can you say that if there is over insurance.5. Is there over insurance? No. Same insured 2. there is double insurance? And if there is double insurance. Why? Each of the insurer’s liability as far as the insured is concerned is solidary. Assuming if there is no prorate clause. If the mortgagor and mortgagee insured the same property. C. can C go after B? Yes.com . EXAMPLE: The value of the house is 1m and insured it with X co for 1. Is there over insurance? Yes.DEMO :: http://www. Same risk So if A obtains a fire insurance policy for his house from A co. there is over insurance? No. Kw Kwin Transcripts Page 73 PDF Created with deskPDF TS PDF Writer . What do you mean by respective liability? The prorate contribution.Insurance Kwin October 1. but in no case exceeding the face value of the policy. But if he insured his house by A against fire. Same subject matter 4. So going back to the general rule. 2010 Elements of double insurance: 1. Unless the policy expressly provides for a PRORATA CLAUSE or CONTRIBUTION CLAUSE. meaning the insured ca only recover from ABC to the extent of their respective liability. B against earthquake and C against tornado. For how much? 400k Can he still go after A? No more. Double insurance does not always mean over insurance. SITUATION: Value 1m A B C 200k 400k 600k The value of the house is 1m and you insured it with A. And it’s a valued policy. there is no double insurance because there is different insurable interest. But among themselves. Several insurers 3. Is there double insurance? No. there is double insurance. A insured the property with X co for 300k. the insured X can go back to any of A B or C to the extent of the value of the interest. So we have here double insurance and over insurance. there is no double insurance because there are different risks. B co and C co. What’s the rule? Against whom can the insured X recover? Under art 94. Y co for 200k and Z co for 500k. But if the policy provides for a prorate clause. And vice versa. So if the policy is silent the rule is X can go after A B and C. he can claim from ABC up to the extent of value of insurable interest. what is the rule? If X goes after C. How are they different? D: always several insurers O: not necessary that there are several insurers D: total value of the policy may not always exceed the value of the interest O: total value of the policy always exceeds value of the interest What if there is double insurance and over insurance? What is the effect? Against whom can the insured recover? We have discussed this when we discussed return of premiums. B.docudesk.
But if there is no prorate clause then you have to determine how much really is their liability. The law provides that the contract of reinsurance is a contract against indemnity of liability and not just a contract against loss and damage. then to B for 200k and C for 600k. he must communicate all the representations of the original insured. even if B has not yet made payment to A. So you have to determine the value of the property at the time of loss.Insurance Kwin If it’s an open policy. except under automatic reinsurance treaties. What is reinsurance? There is reinsurance when? It’s a contract where the insurer obtains a third party to insure himself against loss or liability arising from the original contract of insurance EXAMPLE: A___orig contract____B_____reinsurance______C Insured | insurer reinsurer | reinsured | loss B is the original insurer of contract of insurance.docudesk. which are material to the risk. he cannot anymore pay A. Normally it’s a certain percentage of the assets of the insurance company. To what extent is the liability of C to B? The extent of liability of B to A. What does it mean? When does the obligation of the reinsurer to the reinsured arise? The moment the reinsured becomes liable to insured. the liability of B to C does not also arise. Assuming B is insolvent. So meaning. So general rule double insurance is not contrary to law. If the value of the property at the time of the loss was 1. At that point B becomes liable. and also all the knowledge and information he possesses. DOUBLE INSURANCE.DEMO :: http://www. If the reinsured or the original insurer obtains insurance. Those information are necessary for the reinsured to make decision on whether or not he will accept the risk of reinsurance. There is the rule that when you reach a certain percent then it is mandatory to obtain reinsurance. what extent of premium that he is going to charge. whether previously or subsequently acquired. Exception is when the policy otherwise provides.2m. In no case can the liability of C to B exceed B’s liability to A. same rule. The reinsured has the obligation to disclose to the reinsurer all information concerning the original insured or any facts coming to his knowledge which has something to do with the original contract of insurance. Kw Kwin Transcripts Page 74 PDF Created with deskPDF TS PDF Writer . reinsurance is insurance of insurance. REINSURANCE. The moment that B incurs liability. B the original insurer obtains another contract wherein the third person called the reinsurer undertakes to indemnify the reinsured against the loss or liability arising from the original contract of insurance. In reinsurance. So up to that point land. But if B does not incur any liability to A. entitles B to go after C. Because reinsurance is a contract of indemnity against liability.2m. – means the limit wherein the insurer can assume risk. What is the purpose? There is what we call that RETENTION LIMIT. because the total amount that he recovered does not exceed yet 1. It simply means that the obligation of reinsurer as against the reinsured arises from the moment B incurred a liability towards A.com . the liability of C also arises. Second purpose is to distribute risks among several insurers. So instead of saying no to clients and avoid the complications of retention limit. Or C cannot raise as a defense to prevent recovery from B to C by saying. And if he would accept it. Then we have the computation. EXAMPLE: Assuming this a contract of fire insurance. What’s the purpose? Same principle as original contract of insurance. what is his obligation with respect to the reinsurer as far as the information? Disclose material facts. pay first A. SEC 96 Where an insurer obtains reinsurance. you obtain reinsurance so that you can still issue and assume risk even if it already exceeds the retention limit. can B go after C even if not B has not yet paid A? Yes. You can go after any of A B or C. Is it prohibited? Is it null and void because? Is it contrary to law? No. He can go after A for 200k. The fact that he is already liable to A. The subject of fire insurance was razed by fire.
This is the limit wherein you are allowed by law to assume risk.Insurance Kwin Nor can C assume risk different from the risk assumed by B towards A. he lets somebody else assume the risk among persons who are similarly situated. Kwin Transcripts Page 75 Kw PDF Created with deskPDF TS PDF Writer . A is not a privy to the contract between B and C. Whereas in the reinsurance policy. C cannot assume risk other than fire insurance. That’s why if it’s a reinsurance treaty.com . And besides. But as a general rule. what happens to the contract of reinsurance? No more. That’s arising from the contract of insurance. it would depend if the reinsurer would be willing to assume the risk. is C entitled to rights of subrogation? Yes. So if what is assumed is by B is fire insurance lang. Because the contract of reinsurance is a distinct and separate contract from the original contract of insurance such that A cannot go after C and vise versa. The only recourse of A is go after B. If the original contract of insurance is preterminated. Then B filed a claim against C. There a provision in the contract that his liability subsists until the end of the term. It’s automatic. assuming A knows that there is a contract of reinsurance. Case: phil am life insurance Insured A Insurer / reinsured Phil am Reinsurer AIRC The original contract of insurance was life insurance. So even if the reinsurer already sent notice of cancellation.DEMO :: http://www. The moment that the insurer accepts risks arising from the original contract of insurance. In reinsurance it spreads the risk of the reinsurer. So it’s more on the remittance of the premium. Case: The happening of the fire occurred within the period. Even if there are defect and insurer was able to pay because insurer was not able to raise a defense against the insured. Instead of just B assuming the risk. why would he intervene? It’s only between the insured and the insurer/reinsured. There is a difference between reinsurance treaty and reinsurance policy. The only exception when A can go against C is when the contract of reinsurance itself provides that the policy benefits the original policy owner or that the contract of reinsurance is payable to the original policy owner. EXAMPLE: There is fraud or misrepresentation or the original contract of insurance is illegal or null and void. **The retention limit that’s the time when you obtain reinsurance. ** C cannot just unilaterally rescind (preterminate) the contract except if the policy provides that any party may terminate the contract upon written notice. The reinsurer can the raise the same which the reinsured himself may raise against the original insured. Reinsurer intervened to prevent the insured from recovering from original insurer. In reinsurance treaty the obligation is self executing. his liability towards the reinsured would still be until the duration of the policy because the insured already incurred liability towards the original insured. But C can raise defense against B which defense B himself may raise against A. Because it’s a distinct and different contract from the original contract of insurance. The reinsurance has nothing to do with the original contract of insurance. the obligation to disclose information no longer applies because it’s no longer material on the part of the reinsurer in making a decision whether to accept or not because the moment there is reinsurance. Judge denied the intervention. Case: Malayan A______B_____C Term reinsurance The original insured sued the original insurer. no. that would not preclude or estop the insurer from refusing the claim of the insurer by raising defense that there are defects in the original contract of insurance. Meaning the reinsured already incurred liability towards the original insured. these risks are automatically transferred to the reinsurer. So if C already indemnified B.docudesk. The intervention is not operative. Against whom? Against the wrongdoer. C can claim the same defense against A. go after C? No. That’s why the information concerning the original insured is necessary. What is the effect if B becomes insolvent. It would depend now on the nature of the risk assumed. the risk assumed is automatically ceded or transferred to the reinsurer.
craft or instrumentality in use of ocean or inland waterways. and other aids to navigation and transportation. in respect to. Insurance against loss or damage to aircraft -so if you insure your aircraft. (b) Person or property in connection with or appertaining to a marine. -the only exception of loss or damage or bodily injury in land transportation. or construction of any vessel. freights. aircraft. including war risks. bottomry. PVDD only for shipment -so the determining factor is if it is being packed for shipment -Before it should be in course of navigation/while goods are being boarded on the vessel. So sec 99 provides us for the coverage or what is covered in marine insurance policy. transhipment. moneys. packed. maintenance. 2010 We’ll discuss the important provisions. piers. repair. whether in course of transportation or otherwise. and respondentia interests and all other kinds of property and interests therein. crated or assembled. jewels. use. including liability for loss of or damage arising out of or in connection with the construction. or while being assembled. (c) Precious stones. it can be covered in marine insurance so long as it is for shipment 3. illness or death or for loss of or damage to the property of another person. craft. (d) Bridges." meaning insurance against. or against legal liability of the insured for loss. Previously in the old law. inland marine. including dry docks and marine railways. goods. precious metals. jewelry. evidences of debts. docks and slips. repair. it expanded the coverage of marine insurance to include those risks which would have been properly covered by other forms of insurance. Now. or expense incident to ownership. tunnels and other instrumentalities of transportation and communication (excluding buildings. So if you look at it. disbursements.com . valuable papers. Because that is covered by Kw Kwin Transcripts Page 76 PDF Created with deskPDF TS PDF Writer . and all personal property floater risks. it will now be subject to marine insurance 2. storage. Now even if it is not yet in the vessel.Insurance Kwin If there had been no provision and there was already cancelation before he incurred liability then the reinsurer is already liable. So MARINE INSURANCE SEC 99 Marine Insurance includes: (1) Insurance against loss of or damage to: (a) Vessels. or reshipment incident thereto. dams and appurtenant facilities for the control of waterways. merchandise. wharves. maintenance or use of the subject matter of such insurance (but not including life insurance or surety bonds nor insurance against loss by reason of bodily injury to any person arising out of ownership. or use of automobiles). damage. (2) "Marine protection and indemnity insurance. or during any delays. marine builder's risks.DEMO :: http://www. crated. including liability of the insured for personal injury. baled. marine insurance is limited only to risks that apply only in marine navigation. there are things no longer elated like: 1. transit or transportation insurance. effects. Loss or injury to persons in connection with marine transit -so the operator can now insure its passengers. profits. fixed contents and supplies held in storage). transit or transportation. maintenance. vehicles. compressed or similarly prepared for shipment or while awaiting shipment. choses in action. operation. chartering. cargoes. operation. securities. Loss or damage to goods or merchandize while being packed. October 8. appertaining to or in connection with any and all risks or perils of navigation. their furniture and furnishings.docudesk.
As a result the barge sunk Peril of the ship. builder’s risk 3. it now expanded the meaning of marine insurance. Case: Cargo consisting of logs loaded inside the barge. That will no longer be covered -but he can recover under some other form or risk BUILDER’S RISK These are the risks arising from the launching of the ship as well as the damage of the ship. In the course of the voyage the perishable cargo started to rot. PERILS OF THE SEA What are considered as perils of the sea as opposed to perils of the ship? So any loss or damage arising from what strong or extraordinary or violent action of wind or waves. But it does not include aggravation or increase in maritime risk because of war. ex.Insurance Kwin compulsory vehicle third party liability 4. Ex. As opposed to the perils of the ship. – not liable Take note. Why is it important to distinguish? Because as a rule marine insurance covers only perils of the sea. the peril of the sea must be the proximate cause of the loss. During the voyage. the steel pipes rusted. they rusted. The reason was a defective drain pipe. – liable. the peril of the sea must be the proximate cause of the loss. What are the risk covered under marine insurance? 1. One of the hatches was left open. As a result the crew decided its necessary to jettison. Is that peril of the sea or peril of the ship? Peril of the sea. not to the cargo Case: A cargo consisting of sacks of rice. – not liable Because it’s no longer because of the extraordinary acts of the wind and the wave. The issue is WON the insured is entitled to recover. Carrier failed to provide cover over the logs. the vessel is being blown up during war the vessel rammed against an enemy submarine the vessel exploded because it hit a drifting mine But not covered: If collide with ship already sunk after war If the vessel received destination that the port of destination has war and he returned top the port of origin and encountered risk. perils of the sea WAR RISK What are considered as war risk? Perils directly due to hostile action or military maneuver or operational war. 5. And during the voyage. Not perils of the ship. Loss or damage to bridges or tunnels or other instrumentalities of transportation or communication Meaning under sec 99. war risk 2. for the insured to recover. The ordinary splashes of seawater entered the barge. To recover.docudesk. its already a peril of the ship. Steel pipes were loaded in the cargo vessel. Loss or damage of precious stones/jewels/jewelry -this seems to be a misplaced provision because the law says whether in the course of transportation or not. The wear and tear refers to the ship. Marine insurance on the cargo. Its’ because of the failure of the ship owner to keep its vessel in a seaworthy condition. sank during the storm. Case: Cathay insurance co. What are the perils of the ship? Includes the: Natural wear and tear of the ship Defective machinery and equipment Failure or the owner to provide the proper equipment to carry cargo Natural and inevitable action of the sea. Is this a peril of the sea or peril of the ship? In that case. same as any other type of insurance. Something which could not be foreseen or not attributable to the fault of anybody Example: What he insured as a risk is the perils of the sea. Kw Kwin Transcripts Page 77 PDF Created with deskPDF TS PDF Writer . It would have been ok if the jewelry was in the vessel while in sea.com . the water entered into the compartment where the sacks of rice were stored.DEMO :: http://www. Why? During the voyage.
If the value of the vessel is 5m. it went inside the perishable cargo. We also have what we call an ALL RISK MARINE INSURANCE POLICY. and the vessel is chartered. Is this covered in the insurance policy? Yes. So if the policy is an al risk marine policy. Under this. So if the insured was able to recover 1m from the charterer. So the burden of the insured is to prove loss or damage but after that the burden is shifted to the insurer to prove that the reason for the loss is an excepted risk. the insurable interest is not affected by the fact that it is chartered. Is it still covered by peril of the sea? The peril insured against is peril of the sea. There’s no need for the insured to prove that the loss or damage was due to a particular risk because that will defeat the purpose of an all risk insurance policy. it has nothing to do with the perils of the sea. whether related to marine peril or not.5m.5m. For how much? Still 5m. What is the proximate cause? Peril of the sea. Meaning he can only recover from the insurer 4m.DEMO :: http://www. Because of the condition of the wind and the sea. Kw Kwin Transcripts Page 78 PDF Created with deskPDF TS PDF Writer . And it was burned by the natives. -EVALUATIONSo the peril of the sea must be the proximate cause of the loss Case: A vessel was insured against the peril of the sea. And under the charter agreement. Can the owner of the vessel still insure the vessel? Yes. Does he have insurable interest? Yes. the insurable interest of the owner is not affected by the fact that it is chartered. going inside the cargo What is the immediate cause? Throwing because of rotting.docudesk.Insurance Kwin What is the proximate cause? Sea. the burden of the insured is only to prove thatthere was a loss and damage. Is it still covered under peril of the sea? Yes. Meaning he still retains insurable interest even if in the charter contract provides that the charterer is liable in case of loss and paythe owner a certain amount. What if he cannot recover? What is the vessel is lost? To what extent will he be indemnified? To the extent of 5m. if it is not all risk. then he can recover only 2. it covers all types of risk. It was shipwrecked due to a storm and led to a barbarous coast. the charterer is liable to pay the owner of the vessel 2.5 from the charterer. Some of the items were missing because they were stolen. However if he can recover from the charterer. Ordinarily. Why 5m? Because it’s not sure that he can recover 2.com . Cargo is insured in all risk policy. What is peculiar in marine insurance is if the vessel is chartered (rent a vessel-for entire boat or a particular voyage) Under the law. Why did it rot? Because of the peril of the sea. But as to what extent? Still 5m. as the name suggests. because the extemt of his insurable interest is 5m. Is it covered? Yes. INSURABLE INTEREST. All other risk related to marine peril or nopt is covered in an all risk policy. that amount will be deducted from the amount that he can recover from the insurer. If he recovers 2. And the burden now is shifted to the insurer that the loss arised from the excepted risk. Example. Because it would create liability. Immediate cause? Burning. Example. FRAUDULENT ACT OF THE INSURED or those SPECIFICALLY INCLUDED IN THE POLICY.5m in case something happens to the vessel. is it covered under perils of the sea? No. What are excepted in an all risk marine policy are the WILLFUL. What about the charterer? Can he insure the vessel? Yes.
even information coming from third person or expectation or belief of a third person which are material to the risk. If you don’t there is no concealment. What is peculiar in marine insurance regading concealment? In marine insurance as compared to other types of insurance…you recall that in other types of insurance are you required to disclose information coming from a third person? Or expectation or belief of the third person? No. Why 5m? Because if something happens to the vessel. (c) The liability to seizure from breach of foreign laws of trade. whether or not it is the cause of the loss. does not vitiate the entire contract. For how much? 5m. So if the value is 15m and the debt is 10. Another difference regarding concealment. you are required to disclose. in ordinary insurance. refer to sec 110 SEC 110 A concealment in a marine insurance. the loan is extinguished. there is concealment. the total is 10m What about the lender? Can he insure the vessel or the cargo? Yes. the condition is that it is payable only upon the safe arrival of the collateral. but merely exonerates the insurer from a loss resulting from the risk concealed: (a) The national character of the insured. CONCEALMENT. But in marine insurance. you don’t get paid. To the extent of the loan. Kw Kwin Transcripts Page 79 PDF Created with deskPDF TS PDF Writer . So you get to recover only 5m. in respect to any of the following matters. What is the basis of insurable interest? Expectancy founded on an existing right. So in short the insurable interest (owner) to the extent of the difference between the value of the vessel less the loan. (d) The want of necessary documents. Same as the creditor. Normally this is subject to a high interest rate because of the risk assumed by the lender. If you did not disclose that and that is material. the loan is extinguished.5. if you conceal certain information.Insurance Kwin What is the extent of his insurable interest? Under this problem it’s 2.DEMO :: http://www. But in marine insurance. he obtained a loan for 5m. So the owner of the vessel has the right to insure the expected freightage. Under this type of loan. HYPOTHECATED/SUBJECT TO A LOAN ON BOTTOMRY/RESPONDENTIA Now. (e) The use of false and simulated papers. But the lender only to the extent of the loan. GR in marine insurance. so long as you conceal the fact that is material. You will not be liable for concealment. Same later on that the owner of the cargo has also the right to insure the expected profits other than the cargo. Because that is the amount that he will be damnified. (b) The liability of the thing insured to capture and detention. Because if something happens to the vessel or to the cargo then the loan will be extinguished. Assuming it is lost. if you concealed these facts (above). EXPECTED FREIGHTAGE. Respondentia if the collateral is cargo. The value of the vessel is 10m. What is the basis of insurable interest on the freightage? Future earnings on the basis of expectancy arising from an existing interest. Meaning you have benefited already from the loan of 5m. The owner of the vessel has insurable interest on the expected freightage. you are required to disclose. It’s not necessary that the fact concealed be the cause of the loss.com . So same principle as in the case of respondentia. for how much can you insure it? 5m. What about if the vessel is hypothecated or subject to a loan on bottomry or loan on respondenntia? Bottomry if the collateral is vessel. So if you have knowledge from 3rd p that that area has many pirates. Such that if the vessel is lost or the cargo is lost. Does he have insurable interest? Yes. So the issue now is what is the extent of the owner of the vessel or the owner of the cargo subject to a loan on bottomry or loan on respondentia? Assuming he obtained a loan. then that is concealment.docudesk. You will only be liable for concealment if the cause of the loss is due to the concealed facts. but you have the option top disclose. loan on bottomry. there is no concealment. For how much can the owner of the vessel insure it? 10 or 5? Only for 5.
Seaworthy is define in sec 114 and 116 SEC 114 A ship is seaworthy when reasonably fit to perform the service and to encounter the ordinary perils of the voyage contemplated by the parties to the policy. But is what is contemplated is coverage for international voyage. Is the insurer liable? No because the fact concealed was the cause of the loss.. So that is still covered by the implied warranty of sea worthiness. It must have the necessary navigational equipment… etc It must have the necessary supplies.DEMO :: http://www. fuel and lights. Because the fact concealed was not the cause of the loss. There is concealment because it is the cause of the loss. the vessel would undertake 12 voyages. the insured is cargo. food. If you insured the vessel for a voyage from Cebu to manila. Meaning if the policy contemplates or assumes the risk. Seaworthiness is not limited only to the structure of the vessel. Example. it was captured by an enemy and upon investigation it was discovered that the nationality was American. And in the 1 year. GR on seaworthiness: the implied warranty is complied if the ship is seaworthy at the commencement of the voyage/risk. that vessel is no longer considered sea worthy. but requires that it be properly laden.com . Unless if the fact concealed is the cause of the loss. (b) When the insurance is upon the cargo which. It required that the cargo be transshipped. You represented that the vessel is British in nationality. If the vessel is seaworthy at the time it commences voyage from Cebu. water. by the terms of the policy. WARRATIES What are the implied warranties of marine insurance? We have the popular seaworthiness. Prior or subsequent unseaworthiness does not affect the implied warranty of seaworthiness. a sufficient number of competent officers and seamen. it sank because of the storm. In summary. and provided with a competent master. Example. Kwin Transcripts Page 80 Kw PDF Created with deskPDF TS PDF Writer . description of the voyage. CARGO POLICY Here. In sec 114. To comply with sea warranty of seaworthiness. the implied warranty is not complied with unless the ship be seaworthy at the commencement of every voyage it undertakes during that time. cargo policy SEC 116 A warranty of seaworthiness extends not only to the condition of the structure of the ship itself. the insurer is not liable. Is the insurer still liable? Yes. it says reasonably fit to perform or encounter the perils contemplated in policy. regardless if prior to that it was damaged. It resulted to the loss of the vessel. But it includes that the vessel must be manned by a competent crew.Insurance Kwin Why? Because it is presumed that these information are not material. You were caught. be seaworthy at the commencement of each particular voyage. lights… etc. From the moment the voyage commented it is already seaworthy. TIME POLICY The coverage is for 1 year. what is the difference between concealment of marina and ordinary insurance. cordage and sails. or a vessel may be seaworthy for an interisland shipping but it is not seaworthy for international waters. then you already complied with seaworthiness. is to be transhipped at an intermediate port. the implied warranty is not complied with unless each vessel upon which the cargo is shipped. You were bringing smuggled goods and concealed them. But even if you concealed the part that it is not American and in the middle of the pacific ocean. it doesn’t matter so long as it is seaworthy. If the risk that is assumed by the insurer is only interisland shipping. it must be seaworthy at the time of the voyage 1. and the requisite appurtenances and equipment. or established custom of the trade. It only becomes material if the fact concealed becomes the cause of the loss. or transhipped. In which case. except in the following cases: (a) When the insurance is made for a specified length of time. time policy 2. food. You conceal the fact of the nationality of the insured. fuel. there is no concealment. M: if the fact concealed pertains to sec 110. M: stricter because you are required to disclose information coming from the third person. Assuming during war. Example. Or in the middle of the voyage it was damaged. it is necessary that the vessel must be seaworthy for each of the voyage. such as ballasts. Ibalhin siya from one voyage to another. cables and anchors. GR: Under 115 Exception: SEC 115 An implied warranty of seaworthiness is complied with if the ship be seaworthy at the time of the of commencement of the risk.docudesk. (c) The liability to seizure from breach of foreign laws of trade. Or a vessel would be seaworthy to navigate a river but not a bay nor ocean. then that vessel is seaworthy. and other necessary or proper stores and implements for the voyage.
It was brought to port A but in port A it was not properly repaired within reasonable time. Of you unreasonably delay in pursuing the voyage.com . Or there is unreasonable delay in pursuing the voyage. it is required that the vessel is seaworthy at the commencement of each particular voyage.docudesk. So the issue is WON the insurer is liable. Therefore you only determine whether the vessel is seaworthy at the commencement of the voyage. because the cause of the loss was not the defect. or an unreasonable delay in pursuing the voyage or the commencement of an entirely different voyage. That is deviation. While you don’t have control on the vessel. look at the cause of the loss.sec 118 SEC 118 When the ship becomes unseaworthy during the voyage to which an insurance relates.niadto pa sa red light district. It applies also to the cargo. So if you have a seaworthy vessel upon voyage but in the middle of the voyage the machine was damaged. there is a leak. In deviation.DEMO :: http://www.. Take note that the implied warranty of seaworthiness is not applied only to the owner of the vessel. the vessel sank. It doesn’t mean that there is breach of the entire warranty. Is the insurer liable? Yes. then it also makes the implied warranty that it carries with it the NECESSARY DOCUMENTS. you depart from the course of the voyage insured. the vessel is sea worthy. but you have control over the choice of the vessel to which you load your cargo. So there is transshipment. This is applied only if it makes an express warranty and say – American ko. Another implied warranty is that the vessel would not take IMPROPER DEVIATION. You didn’t repair it. Meaning you still have to comply on the implied warranty on seaworthiness. What if I didn’t repair the defect? Is the insurer exonerated right away? The insurer will be exonerated if the vessel is lost and the cost of the loss is the defect that you didn’t repair. If the voyage is from manila to Iloilo and you are requitred to pass along the Mindoro straight. Although there was a delay in repairing the defective shack. The moment that you obtained a marine insurance for your cargo. Example. You passed linapakan straight instead. And the vessel makes a warranty of its NATIONALITY.. SEC 123 Deviation is a departure from the course of the voyage insured. Back to deviation. it doesn’t matter that latter on in the voyage it becomes unseaworthy. Now I mentioned that you already comply the warranty of seaworthiness so long that at the commencement of the voyage. If subsequently it becomes unworthy look if it was repaired immediately or not. There was a storm causing the vessel to sink. Deviation means departure from the designated course or route of vayage. You stopped in a port for an unreasoble length of time. Another implied warranty is that the vessel would NOT UNDERTAKE ILLEGAL VENTURE. Then from batangas. ngadto na sa zamboanga. The implied warranty of sea vessel is that it is seaworthy from manila to batangas and from batangas to zamboanga. you made an implied warranty that the vessel you loaded your cargo on is seaworthy. an unreasonable delay in repairing the defect exonerates the insurer on ship or shipowner's interest from liability from any loss arising therefrom. then the insurer is not liable. Case: A vessel broke its shack in the middle of the vayage. Kw Kwin Transcripts Page 81 PDF Created with deskPDF TS PDF Writer . You depart from an agreed voyage. Because of the leak. That’s sec 123. If not. The cargo is to be shipped from manila to zamboanga but from manila. Example. The insurer is still liable. muagi sa sa batangas. Or you commence an entirely different voyage. But if from the very beginning it was not seaworthy.Insurance Kwin To comply with the implied sea warranty. But what happens if it becomes unseaworthy? No more obligation for the insured? There is. mentioned in the last two sections. There may be no breach of implied warranty but there is a duty on the part to the insured to undertake the necessary repairs without unreasonable delay. If it makes that express warranty. While it is there. but the cause of the loss was not caused by the defective shack.
Are there exceptions to the improper deviations? Yes. for example out of the 1000 logs. Same as in valued policy. -example. when it is necessary to comply with the warranty or to avoid the peril. During the voyage. Irretrievable loss by sinking or broken out. There is an implied warranty that the vessel must have a captain or a radio operator. SEC 159 In case of a valued policy of marine insurance on freightage or cargo. SEC 158 Where profits are separately insured in a contract of marine insurance. 3. So you need to drop by 1 port to get a new radio operatr. entitles the insurer to rescind the contract. and there is no fraud on his part. when it is caused by circumstances either which neither the master or owner of the ship has no control. You made a deviation.\ 2.docudesk. But the insurer must prove that under insured ang property. it must be made within a reasonable length of time 4. A marine insurer is liable upon a partial loss. LOSS. Kw Kwin Transcripts Page 82 PDF Created with deskPDF TS PDF Writer . except that when a thing has been hypothecated by bottomry or respondentia. when made in good faith for purpose of saving human lives 5. Or in case of goods. And if the deviation is proper. Take shelter in 1 port to let the storm pass 4. 3. 1. he may show the real value. the expenses for transshipment would be ¾ of the value. Going to the destination you received that here are pirates. before its insurance. -example. abandon the goods or the vessel to the insurer. (must be more than 75%)… So what are the requisites for abandonment? 1. Damage rendering the thing valueless. of there’s a valuation in the policy. -example. 2. SEC 156 A valuation in a policy of marine insurance in conclusive between the parties thereto in the adjustment of either a partial or total loss. the insurer will not be liable. SEC 157. that valuation is conclusive between parties. When can he abandon? When the actual damage is more than ¾ of the value of the vessel. you can consider it as a constructive loss. the degree or extent of the damage entitles the insured to exercise the right of abandonment. If something happens during an improper deviation. you can recover only 250. Loss that is total copuld either be actual or contructive. when it is necessary in good faith to avoid a peril. whether or not the peril is insured against.Insurance Kwin What is the effect? If you make an improper deviation. In constructive loss. that is automatic. a proportion of such profits equivalent to the proportion which the value of the property lost bears to the value of the whole. the evaluation applies only in proportion to such part. only for such proportion of the amount insured by him as the loss bears to the value of the whole interest of the insured in the property insured. Or in case of the cargo.com . Or it sank. That is proper. if you don’t want to abandon. if the insured has some interest at risk. What ever is salvaged or recovered belongs to theinsurer. and without the knowledge of the person actually procuring the insurance. Loss of the vessel or the cargo could either be total or partial. But a valuation fraudulent in fact. But take note you can only exercise right of abandonment if there is constructive loss. the insurer is liable provided that the risk is covered.DEMO :: http://www. if a part only of the subject is exposed to the risk. When is there is actual loss? When it is totally destroyed. you actually relinquish your right. -So if you abandon you relinquish all your rights to the vessel or to the cargo. In marine insurance. the insurer is not liable. Or other event which deprives the owner of possession. And recover from insurer as if there is total loss. there is notice 5. If you insure your property for less than its value then co-insurance will apply. So under sec 156. You already know what coinsurance means. If it does not exceed 75%. you can recover partial loss from the insurer and you are entitled to whatever is the salvage. in case of loss. there must be constructive loss and 2. Or if the damage will reduce the value of the vessel to more than ¾ . the radio operator dies. the insured is entitled to recover. A deviation is proper if 1. Sec 157 talks about co insurance. So what if there’s constructive loss? You have two options. when receiving a call that another vessel is in distress. the actual loss is more than ¾ Next is on MEASURE OF INDEMNITY. must specify the particular cause of abandonment -like when you say.
You can recover 5m from insurer and you cannot pay in your loan which is a gain of 5m. Aside from the vessel or cargo you can insure profits. ART 168-170 It talks about the alteration of the use or condition of the thing insured. So you can recover insurance on the cargo. you obtained a loan on bottomry for 5m. you also insure your profits? The law provides that if the cargo is lst out of which the profits arise . How much can you recover on the insurance of the profits? Proportion. unless stipulated. a loss of them is conclusively presumed from a loss of the property out of which they are expected to arise. FIRE INSURANCE Covers only fire arising from hostile fire. out of the cargo of 100k. you lost the cargo. What is the effect if aside from insuring your cargo. which does not increase the risk. Can you also recover the value of the profits? Yes. It could be a marine insurance but it includes risk arising from fire. even though it increases the risk and is the cause of the loss. can you still insure you vessel? Yes. If there is loss. how much can you recover. You can recover insurance on the profits.Insurance Kwin SEC 160 When profits are valued and insured by a contract of marine insurance. It’s still the same principle. which does not violate its provisions. PVDD if specifically covered in insurance policy. by means within the control of the insured. chanrobles virtual law library ART 170 A contract of fire insurance is not affected by any act of the insured subsequent to the execution of the policy. Or it’s just a fire insurance. GR covers only loss arising from fire. Like profits on a cargo. Why do you insure the profits? Do you have insurable interest on the profits? Yes. Assuming that. The rule on co-insurance does automatically applies to marine insurance but not in fire insurance. carries with it the presumption that you have lost the profits too. It’s still an expectancy founded on the existing right. What is existing right? As owner of the cargo. What is the result? It entitles the insurer to rescind the contract. does not affect a contract of fire insurance. Because there are marine policies that are different from fire insurance. Because the extent that you can recover is the extent of your interest. But it could also cover those arising from allied risk. Do you recall when we were discussing insurable interest.DEMO :: http://www. For how much? 5m only. it is still expected. George’s question. 158-160 Talks about insurance on profits. you insure the profits of 10k. Kw Kwin Transcripts Page 83 PDF Created with deskPDF TS PDF Writer .com . tornado or windstorm. You insured your cargo for 1k and you insured the expected profit for10k. ART 169 An alteration in the use or condition of a thing insured from that to which it is limited by the policy. The rule on constructive loss or abandonment applies only to marine insurance. entitles an insurer to rescind a contract of fire insurance.docudesk. It’s very important to determine whether a marine vessel is covered by a marine or fore insurance. Of course you can recover the value the cargo. half of the cargo was damaged or lost. you did not profit anything. upon payment of additional premium. Expectancy founded on an existing right. Example. And proof on the profits is not necessary. Your vessel is 10m. and the valuation fixes their amount. Example. ART 168 An alteration in the use or condition of a thing insured from that to which it is limited by the policy made without the consent of the insurer. What about insurance on the profits? 5k (one half) You can also recover insurance of the cargo for 50k. and increasing the risks. If the cargo is 100k. But what if partial lang and nawa. Like fire arising from lightning. And the alteration increased the risk. It is limited in the policy but you altered the use without the consent of insurer. So whether sold or not sold. Example. It does not apply in fire insurance.
The building was destroyed by fire. is the insurer liable? (parang incontestability clause) It depends. EXPT. But if under 169. you insured inflammable materials.com . Like what if he died in suicide. After the effectivity.docudesk. If the suicide was committed 2 years after the insurance of the policy or after 2 years after its last reinstatement. Is the insurer still liable? Yes. So there is an alteration on the use of the property insured. Except expressly except risk arising from suicide whether sane or insane. Take note that the 2 years can be shortened but it cannot be made longer. If the insured committed suicide while insane. Encourage) This is an exception to the rule that the insurer will not be liable by the willful act of the insured. the use of this house is limited only to residential. (it did not say that any violation will avoid the insurance) So from residential. you made it to commercial. But take note. if the alteration does not increase the risk. The house is insured against fire. And the use is specifically limited in the policy. Is the insurer liable? Yes. like a bookstore. whether sane or insane (not good. But it did not increase the risk Is the insurer liable? Yes. or he was killed by the beneficiary If he committed suicide. There is no prohibition against storing of inflammable materials. So what is important is what is provided in the policy. it is regardless of the period when he committed suicide.Insurance Kwin Example. LIFE INSURANCE Liability of insurer in certain cause of death. Killing of beneficiary. Unless the policy states that any violation will avoid the policy. It entitles the insurer to rescind the contract. Is the insured entitled to recover? Did it increase the risk? Yes. it does not affect the contract of insurance. Breach will entitle the insured to rescind. Because the policy did not contain prohibition. ART 170 The policy is for fire. The alteration increases the risk. It cannot be extended. And you alter the use. GR no co insurance. It is specified in the policy that the house shall be used only for residential. Or it could be less than 2 years if the insurer provides for a shorter period. Kw Kwin Transcripts Page 84 PDF Created with deskPDF TS PDF Writer . Later on you converted the house to a boarding house.DEMO :: http://www. Like when the insured died because of electric chair or gas chamber. this one will apply only if the policy did not expressly state that the violation of the condition would avoid the policy. But the beneficiary is not entitled to recover. when there is co insurance clause. what if he died in the hands of the law. the insurer is liable. In the hands of the law. Where will it go? Nearest relative of the insured. But if in our previous example on breach of warranty… Because the policy contains warranty that you will not store inflammable materials. And we have there the discussion of fire insurance on coinsurance. Example. Like when the policy say.
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