Insurance; Cash & Carry Basis (2003)

What is meant by "cash and carry" in the business of insurance?

“Cash and carry” in the business of insurance refers to the general rule that no insurance policy
issued is valid and binding until there is actual payment of the premium. This rule is explicitly
stated in Section 77 of the Insurance Code.

Insurance; Perfection of Insurance Contracts (2003)

Josie Gatbonton obtained from Warranty Insurance Corporation a comprehensive motor vehicle
insurance to cover her brand new automobile. She paid, and the insurer accepted payment in
check. Before the check could be encashed, Josie was involved in a motor vehicle accident
where her car became a total wreck. She sought payment from the insurer. Could the insurer be
made liable under the insurance coverage? (6%)

SUGGESTED ANSWER:
(per Dondee) Yes, because there was a perfected contract of insurance the moment there is a
meeting of the minds with respect to the object and the cause of payment. The payment of
check is a valid payment unless upon encashment the check bounced.

Insurer; Authorized Driver Clause (2003)

Rick de la Cruz insured his passenger jeepney with Asiatic Insurers, Inc. The policy provided
that the authorized driver of the vehicle should have a valid and existing driver‘s license. The
passenger jeepney of Rick de la Cruz which was at the time driven by Jay Cruz, figured in an
accident resulting in the death of a passenger. At the time of the accident, Jay Cruz was
licensed to drive but it was confiscated by an LTO agent who issued him a Traffic Violation
Report (TVR) just minutes before the accident. Could Asiatic Insurers, Inc., be made liable
under its policy? Why? (6%)

SUGGESTED ANSWER:
Asiatic Insurers, Inc., should be made liable under the policy. The fact that the driver was merely
holding a TVR does not violate the condition that the driver should have a valid and existing
driver‘s license. Besides, such a condition should be disregarded because what is involved is a
passenger jeepney, and what is involved here is not own damage insurance but third party
liability where the injured party is a third party not privy to the contract of insurance.