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14. Distinguish suretyship from property insurance.


Accessory contract Principal contract
3 parties: surety, obligor, oblige 2 parties: insurer, insured
Credit accommmodation Contract of indemnity
Surety can recover from the principal Insurer has no such right; only right of
Bond can be cancelled only with the May be cancelled unilaterally either by
consent of the oblige, commissioner, or insured or insurer on the grounds
court provided by law
Requires acceptance of oblige to be valid No need of acceptance by any third
Risk-shifting device; premium paid being Risk-distributing device; premium paid
in the nature of a service fee as a ratable contribution to a common

15. Discuss in details the rule on insurance claims when the insured
commits suicide.
Insurer is liable in the following cases:
1. If committed after two years from the date of the policy issue or
its last reinstatement;
2. If committed in state of insanity regardless of the date of
commission unless suicide is an excepted peril (Sec. 180-A); and
3. If committed after a shorter period provided in the policy.
NOTE: Any stipulation extending the two-year period is null and void.
16. Distinguish Double Insurance from Over Insurance.


In double insurance, there may be no There is over-insurance when the
over-insurance as when the sum total amount of the insurance is beyond
of the amounts of the policies issued the value of the insureds insurable
does not exceed the insurable interest
interest of the insured.
There are always several insurers There may be only one insurer
THEREFORE, double insurance and over-insurance may exist at the same
time or neither may exist at all.

17. Discuss in details the rule on insurance claims when the insured
dies at the hands of the law.
*EXAMPLE: legal execution*
It is one of the risks assumed by the insurer under a life insurance
policy in the absence of a valid policy exception.
18. Discuss in details the rule on insurance claims when the insured
is killed by the beneficiary.
General Rule: The interest of the beneficiary in a life insurance policy
shall be forfeited when the beneficiary is the principal accomplice or
accessory in willfully bringing about the death of the insured, in which
event, the nearest relative of the insured shall receive the proceeds of
said insurance if not otherwise disqualified (Section 12).
1. Accidental killing;
2. Self-defense;
3. Insanity of the beneficiary at the time he killed the insured.
NOTE: if the premiums paid came from conjugal funds, the proceeds
are considered conjugal. If the beneficiary is other than the insureds
estate, the source of premiums would not be relevant.
NOTE: The measure of indemnity on life or health insurance policy is
the sum dixed in the policy except when a creditor insures the life of
his debtor.

19. What is Cash Surrender Value?

It is the amount the insured in case of default, after the payment of at
least 3 full annual premiums, is entitled to receive if he surrenders the policy
and releases his claims upon it.

20. What is Authorized Driver Clause?

A clause which aims to indemnify the insured owner against loss or
damage to the car but limits the use of the insured vehicle to the
insured himself or any person who drives on his order or with his
permission. (Villacorta v. Insurance Commissioner)

21. Enumerate the compulsory insurance coverage under the

insurance code and related laws
Compulsory Motor Vehicle Liability Insurance (Note: it is the only compulsory
insurance coverage under the insurance code)
- A species of compulsory insurance that provides for protection coverage
that will answer for legal liability for losses and damages for bodily injuries
or property damage that may be sustained by another arising from the
use and operation of motor vehicle by its owner.
Method of coverage
1. Insurance Policy
2. Surety Bond
3. Cash Deposit

22. Define Seaworthiness in Marine Insurance

A relative term depending upon the nature of the ship, voyage, service and
goods, denoting in general a ships fitness to perform the service and to
encounter the ordinary perils of the voyage, contemplated by the parties to
the policy. (Sec. 114)

23. What are the implied warranties in Marine Insurance?

1. Seaworthiness of the ship at the inception of the insurance (sec.113);

2. Against improper deviation (sec. 123, 124, 125);
3. Against illegal venture;
4. Warranty of neutrality: the ship will carry the requisite documents of
nationality or neutrality of the ship or cargo where such nationality or
neutrality is expressly warranted; (sec. 120)
5. Presence of insurable interest.

24. What are the matters embraced by the term doing an insurance
Doing an insurance business or transacting an insurance business shall
include (RISO)
a) Doing any kind of business including a Reinsurance business,
specifically recognized as constituting the doing of an insurance
business within the meaning of this code;
b) making or proposing to make as an insurer, any Insurance
c) making or proposing to make as a surety any contract of
Suretyship as a vocation and not as merely incidental to any
other legitimate business of the surety;
d) Others doing or proposing to do any business in substance
equivalent to any of the forgoing in a manner designed to evade
any of the provisions of this code.
25. Distinguish insurable interest in life insurance from insurable
interest in property as to definition, coverage, limitation or extent,
as to the time it must exist and as to rules with regard to


COVERAGE Unlimited except in Limited to actual value
life insurance of interest in property
effected by the insured
creditor on life of the
EXISTENCE Must exist onlyt at Must exist at the time
the time the policy the policy takes effect
takes effect and and when the loss
need not exist at the occurs
time of loss
RULES AS TO The An expectation
BENEFICIARY expectation of of the benefit to
benefit to be be derived from
derived from the continued
the continued existence of the
existence of property insured
life need not must have a
have any legal legal basis.
basis whatever. The beneficiary
A reasonable must have an
probability is insurable
sufficient interest over the
without more. thing insured.
The beneficiary
need not have
an insurable
interest over
the life of the
insured if the
insured himself
secured the
However if the
life insured
was obtained
by the
beneficiary, the
latter must
have insurable
interest over
the life of the