Fire insurance is Insurance against: Annuity - form of investment where insured pays

premiums over a period of time and the insurer

 Fire
creates an immediate estate in the event of his
 Lightning
death.
 Windstorm
 Tornado Suicide Clause - Suicide is normally an excepted
 Earthquake peril. However, if the life insurance policy has been
 Other allied risks which are covered by in force for at least two years, or shorter (if a
extension to fire insurance. shorter period appears in the policy as when a
shorter time has been agreed upon by the insured
Hostile fire - Is an uncontrolled fire; one which
and insurer) the insurer is bound to pay despite the
happens in a place where it is not supposed to be
fact that the named insured intentionally killed
there. This kind of fire is the kind that covered by
himself.
fire insurance.
Accidental Death Benefit- provision for increased
Friendly fire - One which is contained in a proper
or additional benefits if the insured dies by or thru
receptacle or is in a place where fire is supposed to
an accident.
be. Example: fire in a fireplace. This is not covered
by insurance against fire. A life insurance policy may pass by transfer, will or
succession to any person, whether he has Insurable
Alteration or change in the condition of the thing
Interest or not.
insured, which may increase the risk of loss or
damage, entitles the insurer to rescind the Proceeds from life insurance is exempt from
insurance. Example:” A palay warehouse, which execution.
has been converted into a storage place for
Group Life Insurance - taken out by an employer
gasoline in cans.”
on the life of his employees. The employer in
A change in condition of the thing insured that whose name the policy is named after acts as the
does not increase the risk of loss or damage does agent of the employees.
not entitle the insurer to rescind the policy.
Cash Surrender Value - Amount which the insured
Valued policy is one where the value of the thing may recover if he cancels his insurance before
insured is already fixed or agreed upon. There is no reaching agreed term (but after paying a certain
need to establish its value in the event of loss. number or amounts of premiums agreed upon as
the time when there would start the onset of the
Open Policy is one without valuation.
cash surrender value.
 Fire insurance could cover:
Constructive Total loss - it is that state or condition
 Direct loss
of the thing insured being damaged to the point
 Indirect or consequential loss, such as
that it is uneconomically repairable or otherwise
business interruption or lost rent because
could not function or be used/ utilized as intended.
of loss or damage to the thing insured.
Actual total loss - state or condition of the thing
Intentional acts are not covered.
insured where its damage is so extensive as to
LIFE INSURANCE Insurance on human lives. render it a total loss or when it is becomes
irretrievable or unsalvageable.
Remember: Life Insurance is not a contract of
Indemnity. The measure of Indemnity is whatever
has been fixed in the policy.
3 types of Life insurance could be:

 Whole life - whole life protection.

 Term insurance - protection based on a
specified period.
 Endowment- payable to the insured if he
lives to a retain date or if he dies before the
date mentioned in the policy, the benefit
goes to the beneficiary.
Abandonment - act of the insured, by which, after Voyage Deviation- A departure from the course of
a constructive total loss, the insured declares the the voyage insured or an unreasonable delay in
relinquishment of his interest in the thing insured pursuing the voyage or the commencement of an
to the insurer. He will be paid by the insurer on the entirely different voyage. (Sec. 123)
basis of total loss.
Contract of Insurance- An agreement whereby one
Abandonment can neither be partial nor undertakes for a consideration to indemnify
conditional. It must be a total relinquishment or another against loss, damages or liability arising
abandonment. from an unknown or contingent event.
After an abandonment, the insurer becomes the Elements of Insurance Contract
owner of the thing insured.
 Insurable Interest
If all requisites of abandonment are present or  Risk of loss
have been complied with, the insurer has no  A general scheme to distribute actual losses
ground to not accept the abandonment. If the  Rateable contribution (Premium)
insurer refuses to accept, despite its completeness, 
the insured is entitled to claim payment on the Parties to Insurance Contract
basis of total loss of the thing insured.
Insurer- Person who undertake to
Abandonment can only be made if there is
indemnify another.
constructive total loss; otherwise, the insured can
only be entitled to claim partial loss, which is based
Insured- The party to be indemnified upon
on actual damage or loss to him.
the occurrence of the loss. He must have
There is always Co-Insurance in Marine Insurance. the capacity to contract, must possess
This means the vessel or cargo must be insured to insurable interest in the subject in the
its full value. If not, the insured, in the event of loss subject insurance and must not be a public
or damage to the thing insured, must bear the enemy.
portion of the under-value.
Beneficiary- A person designated to receive
Example: A P10m vessel is insured for P8 Million.
proceeds of policy when risk attaches
It was damaged to the tune of P400K. Insured
could claim only P320k (400K/10mx8m=320k)
The insured bears a part of the loss because he is
underinsured. He bears P80k of his P400k loss.
General Averages- all extraordinary or accidental
expenses incurred by the insured to preserve the
insured vessel or cargo related to an insured risk.
Based on the doctrine that “whoever benefits from
an act of sacrifice, shall bear a portion of the
sacrificed loss”. General averages are covered by
the insurer.
Particular Averages- are those simple damages
that have not inured to the benefit of other
insured. Each owner or individual insured bears
his/her own loss.