Insurance 8
Part 1 – until 22:00
Casualty or Accident Insurance
Sec. 176. Casualty insurance is insurance covering loss or
liability arising from accident or mishap, excluding certain types
of loss which by law or custom are considered as falling
exclusively within the scope of other types of insurance such as
fire and marine. It includes, but is not limited to, employer’s
liability insurance, motor vehicle liability insurance, plate glass
insurance, burglary and theft insurance, personal accident and
health insurance as written by non-life insurance companies, and
other substantially similar kinds of insurance.
This is more like of a fall back provision. One of the risks that you
can insure is the accident that might happen, and when it comes
to accidents, there are various types of accident that could
happen. Basically, the law states that whatever accident that
might happen may it be pertinent to life or property insurance
then you have this provision.
Take note that when it comes to this particular type of insurance,
the governing law are the General provisions of the Insurance
Code (IC), because the IC does not discuss the specific accident
that might happen.
When it comes to casualty insurance this usually includes
burglary or theft insurance. It may also include motor vehicle
liability insurance but for the latter it is specifically provided under
the IC.
GR: The insurer is not solidarily liable with the insured, rather the
insurer’s liability is based on contract which is usually either
valued or open policy
If we say valued policy it means that there is a specific amount, if
open policy then you base it on the actual value of the loss.
Furthermore, the insurer’s liability is limited by the amount of the
insurance coverage.
2 classifications of casualty insurance:
1. Insurance against specified peril which may affect the
person and the property of the insured.
Example: vehicle accident or health insurance.
2. Insurance against specified peril which may give rise to
liability on the part of the insured for claims for injury to or
damage to property of others
The distinction between the 2 classifications if that the first
classification pertains to damage either on the person of the
insured or the property owned by the insured. The second type of
classification pertains to damages or injuries to another person
but the one at fault is the insured.
A common example of the first type of classification wherein it is
the insured that is damaged or his property is damaged are the
burglary and theft insurance, motor vehicle insurance and also
the plate glass insurance.
Plate glass insurance – an insurance over plate glass or glass
like those on buildings.
The 2nd casualty is that that happens on the 3 rd person caused
by the insured, so usually the 2nd type of insurance is taken by
professionals in case there are damages or injuries to their
clients.
Example: medical malpractice insurance, legal
malpractice insurance or pharmacist’s liability insurance
Casualty insurance includes the following:
1. Burglary and theft insurance
2. Personal accident and health insurance as written by non-
life insurance companies
3. Plate glass insurance
4. Employer’s liability insurance
5. Motor vehicle liability insurance
6. Other substantially similar kinds of insurance
The insurance interest in so far as this casualty or accident
insurance is concerned is based on the interest of the insured
in the safety of persons and property who may maintain an
action against him in case of an injury or destruction
respectively, this is if it is a third party liability insurance.
In a case declared by the SC that a third party liability
insurance (TPL), the insurer assumes the obligation by paying
the injured party to whom the insured is liable. Prior payment
by the insured to the 3rd person is not necessary in order that
the obligation may arise and the moment the insured
becomes liable to 3rd person, the insured acquires an interest
in the insurance contract which may be garnished like any
other credit. (This applies if the TPL is not in a reimbursement
basis)
This third party liability insurance contract (TPL) this is
basically the 2nd classification of accident or casualty
insurance. So what happens under a TPL is that if the insured
damages the property of the 3 rd party, then that 3rd party can
go after your insurer. However, it is not under all
circumstances that the 3rd party can go after the insurer,
because there are insurance contract that the insurer and
insured is on a reimbursement basis.
A reimbursement basis means that the insured should pay
first the 3rd party and whatever amount paid to the 3 rd will be
reimbursed by the insurer.
The right of a 3 rd party injured to sue the insurer is when the
3rd party may sue the insurer for indemnity against the injury.
However, indemnity for actual loss or reimbursement after
actual payment by the insurer, a 3rd party has no cause of
action against the insurer. Again, if reimbursement basis, the
3rd party has no cause of action to go directly against the
insurer.
In a case decided by the SC, in burglary, robbery and theft
insurance the opportunity to defraud the insurer the moral
hazard is so grave that the insurer had found it necessary to
fill up the policies with many restrictions designed to reduce
the hazard. This is common in accident and casualty
insurance.
Persons frequently excluded are those in the insured service
and employment. The purpose of such is to guard against
liability should theft be committed by one having unrestricted
access to the property, under theft and burglary insurance.
There are many exceptions, like in plate glass insurance the
exception is when the breakage of the glass is caused by the
employee of the building or the negligence of the employee of
the developer.
Another important thing to remember in casualty or accident
insurance is the distinction between the word intentional and
accidental as used in the insurance policy.
It is given that when it is intentional it is not covered by the
casualty or accident insurance. In short, the insurer will not be
held liable, what is covered is the accidental.
In one case SC defined intentional as that which implies the
exercise reasonal faculties, consciousness and volition. In
short, it is common sense. Otherwise, if you did not use your
common sense then it can be considered intentional.
Where a condition of the policy excludes intentional injury, it is
the intention of the person inflicting the injury that is
controlling. If the injury suffered by the insured clearly resulted
from the intentional act of the 3 rd person, the insurer is
relieved from liability as stipulated. If there is this exclusion of
intentional injury, this avoids the insurer from being liable.
Accident on the other hand that which happens by chance or
fortuitously without intention or design is unexpected, unusual
and unforeseen.
“Intentional” – Implies the exercise of the reasoning
faculties, consciousness and volition. Where a
provision of the policy excludes intentional injury, it is
the intention of the person inflicting the injury that is
controlling. If the injuries suffered by the insured
clearly resulted from the intentional act of the third
person, the insurer is relieve from liability as
stipulated. (Biagtan v. The Insular Life Assurance Co.
Ltd., 44 SCRA 58, 1972)
“Accidental” – That which happens by chance or
fortuitously, without intention or design, which is
unexpected, unusual and unforeseen.
When it comes to casualty or accident insurance there might
be inclusions of No action clause.
No action clause – a requirement of policy in a liability
insurance which provides that suits and final judgment must
first be obtained against the insured that only thereafter can
the person insured recover the policy.
- A requirement in a policy of liability insurance
which provides that suit and final judgment be
first obtained against the insured; that only
thereafter can the person injured recover on the
policy.
(Guingon vs. Del Monte, 20 SCRA 1043)
Is this clause valid?
It depends. The policy that the 3rd party can sue directly the
insurer is basically for the benefit of the 3rd party. The other
one is the accidental or casualty policy which is on a
reimbursement basis. This does not directly benefit the 3rd
party.
Under the Insurance Code (IC), the no action clause cannot
be provided if the direct liability to 3 rd party is provided in the
policy. This will create multiplicity of suit if you will require first
the 3rd party to file a suit against the insured before the 3 rd
party can go after the insurer. Hence, if it is not a
reimbursement basis, the 3rd party can go directly to the
insurer. Therefore, there is no need in requiring the 3 rd party
from filing a suit and getting a final judgment against the
insured.
The no action clause can be used if the insurance policy is on
a reimbursement basis. It follows that if the insured will not
pay the 3rd party, then the 3rd party can sue first the insurer
before compelling the insurer from paying.
Generic term, third party liability insurance, the only type of
TPL that is expressly provided is the compulsory motor
vehicle liability insurance (CMVLI)
Compulsory Motor Vehicle Liability Insurance (CMVLI) – is
the motor vehicle owned by the insured causes damage or
injury to 3rd parties.
This is 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 or
operation of motor vehicle of its owner. This is mandated or
required under the IC such that before you can register your
motor vehicle you need to get this CMVLI.
Does it have to be in insurance form?
No. There are 3 methods:
a. Insurance coverage
- this is required under Sec. 390, IC
- most common
b. Surety bond
- There will be a surety company that will insure
the motor vehicle and you will just pay the
premium
c. Cash deposit before the Insurance Commission
Purpose:
To give immediate financial assistance to victims of
motor vehicle accidents and/or their dependents,
especially if they are poor regardless of the financial
capability of motor vehicle owners or operators
responsible for the accident sustained (Shafer v.
Judge, RTC, 167 SCRA 386). It may either be the
passenger or the 3rd party, meaning not the passenger of the
motor vehicle.
Difference:
Passenger – this refers to any fair paying person they
transported and conveyed in by a motor vehicle for
transportation of passengers for compensation, including
persons expressly authorized by law or by the vehicle’s
operators or agents to ride without fair. (Sec. 373[b])

If you say fair paying person meaning you are expected to

pay fair, but it is not required that you have already paid for
you to claim under the CMVLI.

As compared to the compulsory third party liability (CTPL),

CTPL is more generic, because it need not pertain to motor
vehicle. But with regard to CMVLI, this is more specific.

Under CTPL, you can require the person to acquire a CTPL

for example between a lessor and a lessee. As to CMVLI, this
is expressly provided under the IC. CMVLI covers private
vehicle and PUVs. Naturally, if it is a private vehicle there is
usually a limit.

Third party – any person other than the passenger, excluding

a member of the household or a member of the family within
the 2nd degree of consanguinity or affinity of a motor vehicle
owner or a land transportation operator or his employee in
respect of death or bodily injury arising out of or in the course
of employment (Sec.373[c]) Thus you can claim under the
CMVLI.

No fault clause – this is a clause that allows the victim injured,

person or heirs of the deceased to an option to file a claim for
the death or injury without the necessity of proving fault or
negligence of any kind.