P O L I C Y
Amount insured (unless open or running);
(120) Sec 49 – the written instrument in which a
contract of insurance is set forth.
“merely an evidnce of the COI”
 FORM – may be in writing or verbal, or
partly both. Usual is writing ofc.
 Form me must be submitted to the INSU
Comm for approval to determine WON it
violates any law or principle of equity sec.
226. “may be in electronic form”
 No approval from IC – not affect validity of
COI, may still be enforced, (unless contrary
to law ofc) defense cannot be used by
insurer.
 INSU by CORRESPONDENCE – if accepted by
insurer and such acceptance was made
known to the applicant, valid contract.
 LANGUAGE – obli that the policy terms
were fully explained to the party lies with
the party seeking the performance of the
contract. 121 Tang vs CA
(122) Sec 50 – policy shall be in printed form which
may contain blank space, words necessary to
complete the contract shall be written on the blank
spaces
RIDER, CLAUSE, OR WARRANTY,
ENDORSEMENT purporting to be part of the COI
and is pasted or attached to the policy, must be
mentioned and written on the blank spaces
provided (or their descriptive title), otherwise not
binding on the insured.
Countersignature of insured/owner
agreement to the contents.
Policy may be electronic. (E-commerce act)
 IF RIDER etc was ISSUED AFTER ORIGINAL
POLICY TOOK EFFECT – rider etc must be
countersigned by owner insurer.
(123) Sec 51 – a policy of insurance must specify:
a. Parties whom the contract is made;
b.
c. Premium;
d. Property or life insure;
e. Interest of the insured in the property, if
not the owner;
f. Risk insured against;
g. Period
 INCORRECT DESIGNATION – not affect
validity unless tainted with fraud on either
parties
 SINGLE RISK LIMIT – must not exceed 20%
of the insurance companies net worth.
(unless life?) 124
(124) Sec 52 – Cover notes “issued to bind
insurance temporarily pending the issuance of
policy”
“60 days after its issue, a policy shall be
issued in lieu thereof”
“may be extended or renewed beynd 60
with WRITTEN APPROVAL of IC.
 Cover notes and binders – written
memorandum of the important terms of a
preliminary COI, purpose is to give
temporary protection pending the
investigation of the risk by insurer. (125)
 Preliminary COI – also called “binders” same
purpose ata.
 As long as may agreement na “IMMEDIATE
PROTECTION” if none, merely an
acknowledgment of receipt of premiums or
a memorandum for a future insurance.
 Agents (126)
=  No separate premiums – because not
separate policies, thus binding kahit walang
paid premium
 WHEN ACCEPTANCE BY INSURER
PRESUMED (128) – when insurer retains
premiums with receipt, for an unreasonable
time without issuance of the policy. Not
returning raises presumption of acceptance.
(128) Sec 53 – insurance proceeds shall be applied
exclusively to the proper interest of the person in
whose name of for whose benefit it is made
 Sec 54 – agent trustee
Sec 55 – term of policy should state that it
is applicable to the common interest to render an
insurance effective and applicable to co-partners/
co-owners.
 Not named, not protected.
 GR: only parties to the insurance may bring
an action against insurer. XPN: when COI
itself provides that 3rd person may claim, or
intended to benefit 3rd person. Or COI
provides for indemnity against third
persons, to whom the insured is liable.
“pour autrui” 130
 TEST is WON the COI id for indemnity
against liablity to 3rd persons. If indemnity
against ACTUAL LOSS OR PAYMENT> 3rd
person cannot.
 NOTS SOLIDARY LIABLE WITH INSURED.
DIRECT LIABILITY OF INSURER LANG
 PARTNER – must be applicable to joint or
common interest. If patner takes a policy in
the part property in his own name, then
only for his sole interest. (principle that COI
is a personal contract)
(133) Sec 56 – description on the policy is so
GENERAL, only he who can show that it was
intended to include him can claim the the
benefits.
Ex: “insured: co-owners of the building”
(134) Sec 57 – policy may be framed to inure to the
benefit of whoever may become the owner of the
interest insured. (xpn to sec 20 to)
(same) Sec 58 – mere transfer of the thing insured
does not transfer the policy, BUT SUSPENDS it
until nabalik ownership.
(same) Sec 59 – Policy may be OPEN, VALUED or
RUNNING.
Sec 60 – “Open policy” value of the thing inusred
not agreed upon.Value shall be ascertained at the
time of the loss. AMOUNT of the INSU MERELY
represents the INSURER’s max liability.
(135) Sec 61 – VALUED POLICY = thing insured is
valued at a specific sum. (on the face of the policy)
 LP is a valued policy.
OPEN v VALUED – open, value not agreed upon.
Valued, stipulated. Open, insured must prove the
value. Valued, proof no longer necessary dahil
agreed upon na.
(136) Sec 62 – RUNNING POLICY, contemplates
successive insurances, provides that object of
policy may be defined form time to time.
Ex “covering inventory” kasi nagiiba lagi, kunwari
TINDA ni supermarket.
 “floating policy”
 when cannot be covered by specific insu
bec of frequent change.
(136) Sec 63 – time of commencing action may be
limited by insurer, but not less than 1 year.
 From the date of insurer’s rejection
 No period agreed upon? CC 10 years
written, 6 years oral
 From first denial, not form reconsideration
 Dati may provision na kapag motor vehicle,
form time of accident. Wala na now.
 COGBSA – pg 143 note ibang basis, COC and
COI, sa COGSBA 1 year form time of delivery
or date of delivery, applies to both the
shipper AND INSURER.
(145) Sec 64 – No insurance policy shall be
cancelled w/o prior NOTICE to the INSURED.
(except LP)
Cancellation is proper when:
1. Nonpayment of premium
2. Conviction
3. Disc of fraud and misrep
4. Willful acts
5. Physical changes in the prop making
the prop uninsurable
6. Disc of other insurance coerage that
makes the total insurance in excess of
the value of the prop insured
 7. As determined by IC
(146) sec 65 – notice= in WRITING, DELIVERD to
the insured at the address shown in the policy or
to authorized to receive, and SHALL STATE:
a. ground of cancellation in 64
b. upon request of insured, facts on which
the cancellation is based.
 Mailed but no received? NOT effective
cancellation
 No legal presumption of performance of
duty.
 NOTICE of cancellation necessary be
personally sent after cancellation of policy.
Even if stipulated sa contract na both
parties are allowed to terminate the
contract. Notice of cancel to MGEE? Not
sufficient.
(148) Sec 66 – 45 days advance notice (end of
policy) that insurer shall no longer renew the
policy, if none, insured is entitled to renewal upon
payment of premium on the specified date of
renewal.
Policy written for a term of less than one
year, deemed written for a term of 1 year.
Longer than 1 year? Or no fixed expiration,
date shall be considered as if written for
successive policy period or term of one year.
PREMIUM
(157) SEC 77
no payment premium = not binding
(160) xpn: 1. If LP or Industrial life (HEALTH) when
grace period applies
2. 90 day credit extension is given
3. There is a written acknowledgement of the
receipt of premium.
4. bond (sec 179)
5. in HP, when insurer failed to send agent to
collect in the residence or place indicated place of
collecting , unless unpaid after the grace period
(3months or 12 weeks)
other xpns in juris. Page: 166
non payment cannot be excused even if sickness,
incapacity, war. Bec payment of premiums is
peculiarly the seence of the contract.khit if insurer
changed address ang reason for non payment. 170
POG –sec 233, HP 577 2
GAISANO CASE (158)
PAYMENT AFTER LOSS OCCURRED – it depends, if
the insurer knew said loss and still accepted, policy
binding. Waiver of forfeiture na un.
Insurer refused the tender w/o reasonable cause:
insurer estopped to forfeit.
Devices to avoid forfeiture of LP; 172
(177) Sec 80 “return of premium”
summary in 178

title 9 - LOSS
(185) Sec. 85 – Agreement not to transfer claim
against the insured after the loss has happened, is
void if made BEFORE the loss.
 Against PUBPOL, since the rights under the
policy are fixed after the loss, and the
assignment is merely a transfer of a chose
of action against the insurer.
(186) Sec 86 – Insurer is liable if:
loss of which the peril insured against was the
Proxcos, although a peril not contemplated may
have been a remote cause of loss.
NOT liable if the peril insured against was only a
remote cause.
Sec 87 – liable where the thing is rescued from a
peril insured against and said rescue caused a loss
or when the thing was exposed to a peril not
insured against because it was being rescued from
a peril insured against. Lol
Sec 88 – a peril excepted in the COI, insurer not
liable.
LOSSES insurer liable:
1. Peril insured against is the prox
2. Loss caused by effort to rescue the thing
insured from a peril insured against
3. Loss caused by a peril not insured against
to which the thing is exposed in the course
of rescuing the same from the peril insured
against
4. Loss, if the immediate cause was the peril
insured against, unless excepted in the COI
5. Loss caused by negligence of the insured.
Sec 89
 PROXI COS: event which in a natural and
continuous sequence, unbroken by any
efficient intervening cause, produces the
injury and without which the injury would
not have occurred.
Ex. boat = insured against fire.
Boat exploded. Liable, even if not insured against
explosion, PROXI is fire.
Fire = caused damage caused by the collapse of the
adjoining building due to the fire.
 LOSS while saving thing 188 in this case
kahit ung damage not direclt from the peril
insured against, STILL the PROXI is still the
peril insured against.
Ex. may fire. However, the damage was caused by
the water used to exting the fire.
Ex of peril not insured against but rescuing was
done bec of a peril insured against happened. FIRE
= rescuing = meanwhile theft. Insurer liable.
Unless expresslt escepted.
 Immediate cause – cause nearest to the
time and place of the occurrence of the
loss. Liable unless, the proxy is excepted.
This case, proxy cause, not peril insured against,
follows an immediate cause which is the peril
insured against. INSURER LIABLE> unless said proxy
cause excepted.
Ex. 189 Proxi cause is explosion. Said explosion
caused fire. Thus, this applies. Insured against the
fire (fire insurance), kahit fire not proxy, only
immediate.
 EXCEPTED RISK PROXI CAUSE MUST BE
PROVEN BY INSURER – otherwise, liable.
 PROOF – clear, credible and convincing.
Cases in 189.
 ACCIDENT – ordinary meaning, “by chance
or fortuitously, unforeseen, inevitable”
“may include negligence or recklessness of
 another person/ third party, stranger” 191
192
Ex. car insurance = peril is “own damage”,
HOWEVER, the damage was caused by another
reckless driver. INSURER liable, “own damage”
does not mean thise damage caused by the insured
himself, but damage to the injured vehicle.
“accident” includes events due to the fault,
recklessness, negligence of third parties.
 Burden of proof – insured has burden to
prove that cause of death IS DUE TO THE
CoVERED PERIL. IN ACCIDENT INSURANCE.
IN TURN, insurer must prove it is one of the
excepted.
 Unlike in LP and PI covering all risks =
regardless of cause, insurer liable.
(193) Sec 89 – NOT liable if willful act or thru
connivance of the INSURED.
BUT not exonerated by the NEGLIGENCE of
the insured, insurance agents or others.
 INSURED NEG - Not relieved by the mere
fact that the loss was caused by the neg of
the insured etc. NOT a defense. UNLESS,
said neg was so GROSS that it amounts to
misconduct, willful or wrongful act. 194
Ex. drunk, playing with his handgun, these negs
cannot relieve insurer form liability.
Ex when not liable: tugboat immediately left a
barge. Causing the loss pf cargoes loaded in the
barge. Gross negligemce.
 FRAUDULENT CLAIM – fraud in the
statement of loss, avoids the policy, benfits
forfeited for such misrep. 196
Ex. formal claim for 190k, attested value of the
goods 50k. difference is so great as to indicate false
statement with intent to deceive.
 Over eval 196
 Not however: FRAud cannot be presumed,
must be proven by clear and convincing
evidence. Thus, an honest over evaluation
not sufficient to avoid policy.
Title X – Notice of LOSS
(198) Sec 90 – No notice of loss = insurer
exonerated.
Sec 91 – preliminary proof of loss is
required by the policy, insured NOT bound to give
such proof as would be necessary in a court of
justice. Sufficient give best evidence.
 Thus, to RECOVER:
1. Give notice of loss without unnecessary
delay in FIRE INSU if OTHER INSU within
the period specified by the IC.
2. Submit proof of loss, when required by
the policy.
 Notice – any form, oral, written. UNLESS
policy itself provides for a specific form.
 Why: aside from informing the insurer of
the fact of the loss, also to give insurer time
for proper investigation and take action to
protect its interest.
“marine insu” – reasonable opp to check
validity of claims while facts are still fresh”
 TIME of notice – fire = without unnecessary
delay/ reasonable time. Depends on the
circ. “2 months? Delay, according sa isang
case”
OTHER INSU = PERIOD GIVEN BY IC.
 IF PERIOD STIPULATED? STIP is valid. Unless
reducing the time to a less than
unreasonable time. Even if there is stip,
SUBSTANTIAL COMPLIANCEE IS SUFFICIENT.
200
NOTE: sec 63.
 Ex. bad order examination – filed within the
stip, instead of a formal claim. Pwede, said
request served the purpose of a claim.
 Excused: insured’s physical incapacity,
insanity, absence, if circs render strict
compliance, unreasonable, impossible.
 PROOF OF LOSS – not bound to give proof s
would necessary in a court of justice, best
evidence is sufficient which he has in his
power at the time. SUFFICIENT: cert of
testimony of a person other than the
insured, if said person refuses, furnish
reasonable evidence to the insurer that
such refusal was not induced by any just
grounds of disbelief in the facts necessary
to be certified. 200 201
 Note, insurer have right to reject proof if
unsatisfactory.
 Propose of proof: “in order for the insurer
to determine the extent of its liability and
the amount.SUBMISSION of proof of loss, is
a condition sine qua non to the right to
maintain an action on the policy.
(201) Sec 92 – defects in the notice, preliminary
proof, which the insurer omits to specify to the
insured without unnecessary delay as grounds of
objection are waived.
“WAIVER OF DEFECT” – when insrr failed to specify
said defect which the insured might remedy
without unnecessary delay.
Ex. requirement of sworn notice, acceptance of
unsworn, waiver.
Or when insurer deinied liability, other than the
ground of defect. Waiver pa din. 202 like may
defect, but denied liability on the ground of “null
and void” , waived.
Or when insurer already made partial payment of
the loss of the property insured.
(202) Sec 93 – waiver of delay.
Notice or proof not given within the time but:
1. Delay caused by act of insurer
2. Failed to object promptly and specifically
using that ground , same same. 203
-- WHAT IF INSURER DENY THE CLAIM,
CONSIDERING THE FACET THAT the insured already
submitted notice and after 3 months dun pa lang
sinabi ni insurer na defective.
(203) Sec 94 – policy requires, by way of
preliminary proof of loss, cert of test. Of a person
other than insured is sufficient, and sufficient if
insured use reasonable dilig to procure it.
In case refusal of said person, furnish reasonable
evidence to the insrurer that refusal was not
induced by any grounds of disbelief in the facts
necessary to be certified or testified.
 When to pay (by insrr) – LP, if survived,
immediately after expiration of terms, I
dead, within 60 days from filing of proof of
death, Prprty? 30 days after proof of loss is
received. 205
See ex. in 206 arbitration within 60 days from
receipt of proof of loss, after arbit and okz na =pay
within 30 days.
If no determination in the arbitration, or di
magkasundo within said 60 days. Then pay within
90 days from proof of loss.
Arbitration – admits na meron liablity pero not
agree as to the amount, cannot invoke or happen
if insurer totally denies liability.
206 207
again again.
1. 60 days from proof of loss (thru
arbitration) dapat mascertain na.
2. 30 days from result of arbitration
3. or 90 days from filing of loss.
 207 SUBROGATION – accrues upon
payment of the claim. Normal in indemnity
contracts (equitable assignment)
 based on principle of natural justice.
Equity.
 No need for deed of assignment, to the
rights of the insured, kasi automatic. By
operation of law. so hindi pwedeng
icondition na magexecute ng deed of
assignment before payment of claim.
 Cannot recover more than what the
insured may recover.
 Incapacity to sue of insured, not affect
subrogee. 211 210
 INSTANCES WHEN CANNOT BE
SUBROGATED: PAGE 211
1. LIP = subrog only in contract of indemnity
 ONLY IN PROP INSU, NOT LP.
 INSURED PREVENTED INSURER FOR
SUBROG. INSRUER RELEASED FORM
LIABLITY 216
 Evidence needed, presentation of the Insu
Policy. COI. But not fatal. Bec accrues
upon payment of the claim and is based on
equity, subrogation receipt sufficient. 218
onwards.
 UNFAIR claims
 WHAT IF:
1. Insured for 500k
2. damage was 300k
3. thus, insurer paid 300k
4. but sa court, 500k was awarded kay
insurer, by virtue of subrogation
5. in this case, kay insurer na lahat.
6. Note: ibang case kapag ung full damage
not covered by the insurance.
DOUBLE INSURANCE
224 95 – When? SAME PERSON is INSURED by
SEVERAL INSURERS separately in respect to the
same subject and interest.
 Req:
1. Same person is insured
2. By several insurers
3. SM insured is the same
4. Interest insured must be the same
5. Risk insured against is the same.
Ex. House. against fire. Two insurers. Same
owner. There is double insurance.
DOES NOT EXIST HERE:
1. Mgee and Mgr insurance on the same
property.
2. Personal property, 1 against fire, 1 against
theft.
 TEST:
If the insured, in the occurrence of the loss, can
recover on both policies.
 Is it PROHIBITED?:
Not prohibited by law. insurer liable up to the
extent of the value of the thing insured but NOT
exceed the amount of the policies issued.
 NOTE: insurer may stipulate that the policy
shall be void if the owner subsequently
procures another, or found that a prior
policy exists.
Ex. INusurer, required insured to give notice of any
other insurance traken upon the same property
insured otherwise, all benefits shall be forefeited.
 If meron nga. But said “Co-insurance – NIL”
Insurer not liable, annotation deemed to be
warranty that the property is not insured in any
other policy. Violation, entitled insurer to rescind.
Absence of NOTICE : Constitutes fraud.
Deception.
Ex. Kahit may isang namiss na ideclare. Pero
dinieclare ung iba. Same effect. Rescind.
 Stocks-in-trade (case in 228) na a part is
covered by another, and the other part is
covered by another insurer. Pwede. OR AS
LONG AS THE INSURANCE DOES NOT COVER
ALL THE STOCKS. So kahit hindi dineclare,
okz lang.
REASON:? Did not cover the SAME interest
kasi. No over insurance.
 WAIVER: if insurer knows.
230 96 – OVER INSURED BY DUB INS (OTHER THAN
LIFE):
1. Insured may claim from insurers in such
order as he may select (unless stip)
2. If valued
3. Unvalued
4. If received excess
5. Each insurer bound to contribute ratable to
the loss in proportion to the amount
OVER insu – “exceeding the value of his insurable
interest”
 OVER Vs. DOUBLE
-2 ins in vouble, in over kahitv1 lang,
-double, kahit di over, in over dapat over.
 Since contract of indemnity – should not
exceed the value of the loss (or the
property)
 NOTE: insured may recover the excess
premium paid corresponding to the EXCESS
values.
Item #1: ex.
A owner = value is 1m
B insurer = for 500k
C insurer = for 1m
D insurer for 1m
“may claim in any order he may choose”
thus, pwede hati. Or FULL amount from C or D
alone. But not to B alone for full.
Item #2:
Ex.
If A collected from B. he must dedecut the amount
collected from valuation in other poilcies.
Item #3: unvalued
Ex.
Same, 5ook must dedecut the collected form the
INSURSBLE VALUE of the property.
Item#4:
Ex.
If A collected full from ALL. ,he must hold in trust
the excess of 1.5m for the insurers. Bound to
return th same to the insurers according to their
right of contribution.
Item#5:
Ex.
Insurers policy/total amount of policy issued x
amount of loss = share of insurer.
B – 500k/2.5M x 1m = 200k
C – 1M/2.5m x 1m = 400k
D – same kay C.
REINSURANCE
235 97 – “reinsurance” one by which an insurer
procures a third person to insure him against loss
or liablity by reason of such original insurance;
 Exists only in property insu
 A insured his house for 5m with B. B insured
its liablity under under the policy issued to
Allison with C. contract between B and C is
reinsurance.
  PURPOSE:
- Distribute risk among several insurers, IF a
single risk is so great that the happening of
the peril insured against would render him
insolvent or at least cripple his efficiency
- Guaranty to reimburse him any for any sum
he may be compelled to pay to the original
insured.
So the insurer must be liable to the original policy
holder. For the reinsured liable.
So as long as liable siya. Kahit di nagpay dahil
insovnet, or di nagsuffer ng loss. Liable pa din ang
reinsurer.

RESTROCESSION – another level. So after first  NOTE: reinsured enitled to payment

reinsurance, meron pa isa.
NOTE: pwedeng PART lang.
REINSURANCE TREATY: “agreement between 2
insurance co. whereby one agrees to cede and the
other to accept reinsurance business pursuant to
the provision specified in the treaty. 236
BEFORE payment to otiginal insured. Ex. so
reinsured may collect from reinsurer, even
before the former paid the orginal insured.
(payment kasi is not pre requiste)
 To the exten of the reinsured’s liability.
SEC 100 page 241 – original INSURE has no interest
in a contract of reinsurance.

WHEN re’ins necessary?
If a risk where the amount payable exceeds 20% of
its Net worth. So kapag life, kasi sa 221, cannot
exceed daw if non-life eh , section 221. So PWEDE
din daw kahit non-life basta may reinsurer
Or when an insurance co. withdraws business from
the PH.
Ex. in 237
Separate and distinct. Kasi, thus no right o action
against the reinsurer.
XPN: 242 if the contract of reinsurance was made
for the benfit of the reinsured’s policy holder. . or if
REINSURER ASSUMES to perform reinsured’s
contract,BUT in this case, ORIGNAL INSURED to
accept the benefit and communicate his
acceptance to the reinsurer.

BORDEREAU* 237 DEFENSES of REINSURER against REINSURED:

RE’INS VS DOUBLE 237 every defense which the reinsured could raise in an
action by the perpson originally insured.

237 98 – insurer obtain re’ins, he must

communicate all the representations of the
original insured, and all the knowledge and info
he possess, prev or subs acquire, material to the
risk,

but note if may agreement in advance;

AUTMOATIC/ self-executing. Thus, need not
communicated.

Faliure to communicate? avoided.

239 99 – Reinsurance presumed to be a contract of

indemnity against LIABILITY, not merely against
damage.