Tenedero, Caryl Joy L.

3C Insurance Final Exam

January 06, 2021

I
Yes, the insurance claim by Jess will prosper. Even though Jess gave the possession
of the sedan to a certain Silat, the latter’s possession is limited only to adding accessories
and improvements to the subject car, nothing more. Silat’s authority to take possession of
the sedan was limited only to three days, any time beyond that constitutes deprivation of
Jess’s possession of his own car. The Theft Clause is applicable in this case, thus Jack
Insurance must reimburse Jess of the value of the lost sedan.

II
If I were the judge, I will hold CGM Inc. liable for the loss of the cargo. Its defense
that it is not a privy to the contract between FCL Corp. and ELP Insurance. CGM Inc. was in
possession of the cargo during its loss, thus it is deemed to have been grossly negligent.
Since FCL Corp. was already reimbursed for the lost cargo, ELP Insurance is
subrogated to the place of the former with respect to its lawful claim against the
wrongdoer. As subrogee, ELP insurance has the right to seek reimbursement from CGM Inc.

III
(a) No, the insurer cannot deny the claim of the beneficiaries due to Delia’s failure to
disclose that she had cancer. Under the incontestability clause, an insurer cannot use
concealment as defense if the insurance has been in force for at least two years during the
lifetime of the insured. In this case, the policy was already in force for 25 months or 2 years
and 1 month. The continuous acceptance of premiums by the insurer precludes it from
denying an insured’s claim based on concealment.

(b) Yes, the beneficiaries are entitled to receive the proceeds of the policy even though
the cause of death not be the risk insured against. Since the policy was already in force for
more than two years, the insurer is liable when Delia committed suicide, more so because it
was due to her psychotic tendencies.

(c) Since there was no maturity date specified, the policy matured upon the death of
Delia. The proceeds should be paid and settled within 60 days after filing of the claim and
presentment of proof of the insured’s death.

IV
(a) The requisites for a valid rescission of the policy are:
1) A written notice of cancellation must be given to the insured;
2) Such notice must be based on any of the grounds for cancellation under
Section 64 of the Insurance Code; and
3) When the insured so requests, the insurer must furnish the basis of the
cancellation
(b) Yes, Insular Life can rightfully deny the claim. Under Section 64, one of the grounds
of cancellation is fraud or material misrepresentation. By stating that his birth year was
1942 and not 1952, Alvarez committed material representation. He misrepresented his
birth year in order to qualify himself to the policy.

V
(a) True. The judgment creditor’s interest is only up to the extent which the debtor
owes.
(b) False. The insurers’ liability is bound only to the actual loss or damage and must be
in the same proportion. The insured cannot recover more than the loss or damage suffered.
(c) False. In reinsurance, the consent of the insured in the first contract is not necessary
because the interest in the second insurance is aimed to protect the first insurer.
(d) False. Perils of the ship pertain to the losses resulting from ordinary course of
events such as inevitable action of the sea and ordinary wear and tear of the ship.
(e) False. The suit must be directed against the insurer of the vehicle at fault. It is the
insurer that can claim against the vehicle at fault.

VI
Only Two Insurance Co. is liable since it is the life of Marvin that was insured. The
claims under the property insurance with One Insurance Co. cannot be claimed because
Marvin did not own the villa at the moment he applied for insurance. He has no insurable
interest yet. In the absence of a valid will of Joe, there is no factual basis for Marvin’s
application.

VII
(a) Yes, Mario may claim from the insurer because of the all-risk provision. Under such
provision, all losses connected with the voyage may be covered regardless if it arose from
marine peril. In this case, the loss was due to the sinking of the vessel, a marine peril.
Mario may also declare actual total loss of the cargoes. Under the Code, one of the
situations that can be considered as an actual total loss is when the thing insured is
damaged to the extent that it becomes valueless. Even though the sacks of rice were saved,
it lost its value because of the molds that appeared. Thus, there is actual total loss.

(b) Under marine insurance, there is constructive total loss when:

1) The actual loss exceeds ¾ of the value of the cargo
2) The damage reduced the value of the cargo by more than ¾
3) The expense of the shipment exceeds ¾ of the value of the cargo

VIII
(a) No, May Insurance Company is not liable to pay ABS Co. Under fire insurance, the
insurer has the right to rescind the policy when the insured alters the use and condition of
the thing insured other than what was specified. In this case, under the policy, the
machineries and equipment were said to be located in Sangco Building but ABS Co.
transferred them into a nearby factory without the insurer’s consent, thereby altering their
condition. ABS Co. also used them for production of plastic cylinders and silicone sealant
which was different from what was provided in the policy.
Such alterations were done within the control of the insured and increased the risk
of loss. Therefore, May Insurance Company can rightfully deny the claim of ABS Co.

(b) No, because there were still alterations made.

IX
No, ABC Insurance is incorrect. Although the law prohibits a person without a
license or with an expired license from driving a motor vehicle, the insured owner is nor
barred from recovering proceeds of the insurance policy. It is not necessary for Mary to
prove that she has a valid driver’s license at that time since she was the driver. However,
she is deemed an unauthorized driver and may be subject to penal sanctions.