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174 – 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 or marine. It includes, but is not limited to, employer’s liability insurance, workmen’s compensation insurance, public liability insurance, motor vehicle liability insurance, personal accident and health insurance as written by non-life insurance companies, and other substantially similar kinds of insurance. Casualty insurance includes all forms of insurance against loss or liability arising from accident or mishap excluding certain types of loss or liability which are not within the scope of other types of insurance, namely: fire, marine, suretyship and life. 2 General divisions of casualty insurance: 1) Insurance against specified perils which may affect the person and/or property of the insured such as personal accident, robbery, or theft, damage to or loss of motor vehicle, insolvency of debtors, defalcation or employees 2) Insurance against specified perils which may give rise to liability on the part of the insured for claims for injuries to others or for damage to their property, such as workmen’s compensation, motor vehicle liability, professional liability, products liability. Liability insurance – a contract of indemnity for the benefit of the insured and those in privity with him, or those to whom the law upon the grounds of public policy extends the indemnity against liability. Liability insurable 1) Liability for quasi-delict or non-fulfillment of contract 2) Liability for criminal negligence – liabilities arising out of acts of negligence which are also criminal are also insurance on the ground that such acts are accidental. Thus, a motor vehicle insurance policy covering the insured’s liability for accidental injury caused by his negligence, even though gross and attended by criminal consequences such as homicide through reckless imprudence, will not be void as against public policy. But liability consequences of deliberate criminal acts are not insurable. Thus, it was held that a motorist guilty of deliberate crime resulting in payment of damages to an injured third party is not entitled to recover on the policy. Insurable interest in liability insurance In liability insurance, questions of insurable interest are not particularly important. As a general rule, liability insurance, like other forms of insurance, must be supported by an insurable interest in the insured, although there is some authority to the contrary. The insurable interest is to be found in the interest the insured has in the safety of persons who may maintain, or in the freedom from damage of property which may become the basis of suits against him in case of their injury or destruction. The interest does not depend upon whether the insured has a legal or equitable interest in property, but upon whether he may be charged by law with the liability against which insurance is taken out. Thus, liability insurance is always supported by insurable interest. If one were to conclude that an insurable interest is not required in liability insurance, such a rule would have no significant adverse implications. When liability insurance in policy payable In a third party liability insurance contract, the insurer assumes the obligation of paying the injured third parties to whom the insured is liable. From the moment that the insured becomes liable to the third person, the insured acquires an interest in the insurance contract which may be garnished like any other credit. In general, the class into which particular policy falls depends on the intention of the parties as evidenced by the phraseology of the agreement in such respect in the policy. Right of the injured person to sue insurer of party at fault The right of the person injured to sue the insurer of the party at fault depends on whether the contract of insurance is intended to benefit the third person also or only the insured. Test: 1) Indemnity against third party liability – where the contract provides for indemnity against liability to third persons, then third persons to whom the insured is liable, can sue directly the insurer upon the occurrence of the injury or event upon which the liability depends. The purpose is to protect the injured person against the insolvency of the insured who causes the injury. It is as if such person were specially named in the policy. Where the contract is one of indemnity against liability, it becomes operative as soon as the liability of the person indemnified arises irrespective of whether or not he has suffered actual loss. Indemnity against actual loss or payment – where the contract is for indemnity against actual loss or payment, then third persons cannot proceed against the insurer, the contract being solely to reimburse the insured for liability actually discharged by him through payment to third persons, said third persons’ recourse being thus limited to the insured alone. Prior payment by the insured is necessary in order that the obligation of the insurer may arise.
Basis and extent of the insurer’s liability
the resulting death is within the protection of policies insuring against death or injury from accident. causing damage to the insured vehicle and injuries to C.The direct liability of the insurer under indemnity contract against third party liability does not mean that the insurer can be held solidarily liable with the insured and/or the other parties found at fault. the basis of M Co. Where a provision of the policy excludes intentional injury. the insurer is relieved from liability as stipulated. insured. Insured stabbed by escaping robbers – The house of the insured was robbed by a band of robbers. Indeed. where the death or injury is not the natural and probable result of the insured’s voluntary act. such third persons are entitled to sue the insurer. and coming fact to fact with the owner. S is made liable to T pursuant to Article 2184 of the Civil Code. On the other hand. most accidents are caused by negligence. in committing the robbery the robbers rushed towards the door of the second floor. For a claim to be payable under an accident policy. that of the insured is based on tort.’s liability is its insurance contract existing between it and S at the time of the complained vehicular accident. even if unexpectedly. are solidarily liable to T. The insured jeep. Suicide and willful exposure to needless peril Both are in pari matere because they both signify a disregard for one’s life. insurer. In other words. Effect of “no action” clause in policy of liability insurance . the cause and the result are both accidental. causing wounds on the body resulting in his death. would normally be compensable. An accident insurance is thus not to be likened to an ordinary life insurance where the insured’s death. both the cause and the result of the death or injury must be accidental. To make the insurer solidarily liable with the insured’s entire obligation beyond the sum limited in the insurance contract would result in evident breach of the concept of solidary obligations. Answer: Only S and D Co. in accordance with Article 1217 of the Civil Code which gives to a solidary debtor who has paid the entire obligation the right to be reimbursed by his co-debtor for the share which corresponds to each. a private comprehensive policy for own damage not to exceed P6. The law states that the responsibility of two or more persons who are liable for a quasi-delict is solidary. From the fact that the insured is liable to third persons. The policy is one whereby the insurer agreed to indemnify the insured against all sums…which the insured shall become legally liable to pay in respect of a death of or bodily injury to any person. are the principal tortfeasors who are primarily liable to T. But the mere act of the insured of pointing the gun to his temple. The liability of the insurer to the third party is based on contract. while the basis of liability of D Co. stabbed him repeatedly. unaccompanied by anything unforeseen except the death or injury. Ex. and T. The concept accident is not necessarily synonymous with the concept of no fault. who was riding the ill-fated jeep. Is the policy for indemnity against liability? Yes. M Co. the cause was the heavy work – which was intentional. If the injuries suffered by the insured clearly resulted from the intentional act of a third person.. regardless of the cause thereof. or if something unforeseen occurs in the doing of the act which produces the injury. His injury is covered by the policy. Exception – There is no accident when a deliberate act is performed unless some additional unexpected. recklessness or negligence of third parties. it is the intention of the person inflicting the injury that is controlling.000 and a third party liability in the amount of P20. M Co. Accident – an event that takes place without one’s foresight or expectation – an event that proceeds from an unknown cause or is an unusual effect of a known cause and. The insured was unquestionably negligent but it should not prevent his beneficiary from recovering from the insurance policy he obtained precisely against accident where there is nothing in the policy that relieves the insurer of the responsibility to pay the indemnity agreed upon if the insured is shown to have contributed to his own accident. is Article 2180. It thus appears that S and D Co. if D slips and falls while lifting the heavy objects.. independent and unforeseen happening occurs which produces or brings about the result of injury or death. believing that the gun was not loaded and the gun fired when he pulled the trigger resulting in his death. It may be utilized simply to distinguish intentional or malicious acts from negligent or careless acts of man. Here. is not covered by the policy. consciousness. the burden then shifts to the insurer to show any excepted peril that may have been stipulated by the parties. The terms of an accident insurance do not. Under the circumstances.000 shall be subrogated to whatever rights S has against D Co. was held as an accident. Once that fact is established. Ex. and volition. therefore is not expected. issued in favor of S. Burden of proof – In accident insurance. Rule as to death or injury resulting from accidental or accidental means General rule – death or injury does not result from accident or accidental means within the terms of an accident policy if it is the natural result of the insured’s voluntary act. collided with a passenger bus belonging to P Co. the insured’s beneficiary has the burden of proof in demonstrating that the cause of death is due to the covered peril. The injury therefore. while being driven by C. upon paying T the amount of P20. D (insured) lifted heavy objects all day as a result of which he suffered injury to his back. an employee of D Co. it is contrary to all reason and logic to say that his injuries were not intentionally inflicted.000. exclude events resulting in damage or loss due to the fault. On the other hand. Meaning of “intentional” as used in accident policy Intentional – implies the exercise of the reasoning faculties. Ex. without qualification.
the policy requires that a suit and final judgment be first obtained against the insured. 6) The first requires the acceptance of the oblige before it becomes valid and enforceable. Its basis is the principal contract which it secures. no such service fee. stipulations bonds. The Act provides that such recognizances be approved by the head of Department. 176 – The liability of the surety or sureties shall be joint and several with the obligor and shall be limited to the amount of the bond. such as failure to perform a contract or certain duties. for the debt. Sec. or filed with the oblige. Sec 5 of Rule 2 on joinder of causes of action and Sec 6 of Rule 3 on permissive joinder of causes of parties cannot be superseded. Rules in payment of premiums: . 3) The first is more of a credit accommodation with the surety assuming primary liability.In Guingon v. 175 – A contract of suretyship is an agreement whereby a party called the surety guarantees the performance by another party called the principal or obligor of an obligation or undertaking in favor of a third party called the oblige. a bond can only be cancelled by or with the consent of the oblige or by the Commissioner or by a court of competent jurisdiction. Nature of liability of surety: 1) Solidary 2) Limited or fixed – it is limited to the amount of the bond 3) Contractual – it is determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obligor and the obligee. No. default or miscarriage of another. Provided however. Provided. except where the oblige has accepted the bond. judge. as the case may be. A surety is merely a collateral contract. there are only two parties. in favor or a third party. the principal debtor and the creditor. in which case the bond becomes valid and enforceable irrespective of whether or not the premium has been paid by the obligor to the surety. the third party against whom the insurer may proceed is not a party to a contract. at least with respect to third persons not a party to the contract by “no action” clause on the contract of insurance. negligence and the like. while the second does not need the acceptance of any third party 7) The first is a risk-shifting device. 536. the insurer and the insured. that if the non-acceptance of the bond be due to the fault of the surety. SURETYSHIP Sec. while a contract of insurance may be cancelled unilaterally either by the insured or by the insurer on grounds provided by law. It was held that “no action” clause in the policy cannot prevail over the Rules of Court provisions aimed at avoiding multiplicity of suits. In the case of a continuing bond. officer. board or body required to approve or accept the same. Surety – It is an agreement whereby one undertakes to answer. It is determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obligor and the obligee. while the second is generally a contract of indemnity 4) In the first. however. stamps or taxes shall be collected. Sec. not exceeding fifty per centum of the premium due thereon as service fee plus the cost of stamps or other taxes imposed for the issuance of the contract or bond. Del Monte. the premium paid being considered a ratable contribution to a common fund. court. that if the contract of suretyship or bond is not accepted by. under specified terms and conditions. The contract of a surety is evidenced by a writing called surety bond which is essentially a promise to guarantee the debt or obligation of the obligor. that only thereafter can the person injured recover on the policy. 177 – The surety is entitled to payment of the premium as soon as the contract of suretyship or bond is perfected and delivered to the obligor. while in the second. The query is which procedure to follow – that of the insurance policy or the Rules of Court. there are always three parties: the surety. the premium being in the nature of a service fee. No contract of suretyship or bonding shall be valid and binding unless and until the premium therefore has been paid. it expressly disallows suing the insurer as a co-defendant of the insured in a suit to determine the latter’s liability to the third person. or undertakings issued by any company by virtue and under provisions of Act. while the second is a risk-distributing device. It includes official recognizances. Distinctions between suretyship and property insurance: 1) Suretyship is an accessory contract. the obligor shall pay the subsequent annual premium as it falls due until the contract of suretyship is cancelled by the oblige or by the Commissioner or by a court of competent jurisdiction. the surety is entitled to reimbursement from the principal and his guarantors for the loss it may suffer under the contract. 5) Generally. while in the second. or for breach of trust. In case of subrogation. there is no right of recovery for the loss the insurer may sustain except when the insurer is entitled to subrogation. the surety shall collect only a reasonable amount. while a contract of insurance is a principal contract 2) In the first.
may exercise. or filed with the oblige. who is an insured or beneficiary under a contract of life. on the other hand. where the interest of the minor in the particular act involved does not except 20. It carries the lowest rate of premium. For the purpose of underwriting. LIFE INSURANCE Sec. or any minor. It is like ordinary life policies in that it is payable only at the death of the insured. This policy is for the whole duration of life. it permits the insured to borrow against the value without surrender of the policy. any right under the policy. The ordinary surety bond. Thus. or if he dies within such period. Industrial bond – one required by private employers to cover loss through dishonesty of employees b. the contract terminates. men and subcontractors. such as two. Performance bond – one covering the faithful performance of the contract b. it shall be valid and enforceable notwithstanding that the premium has not been paid If the contract of suretyship or bond is NOT accepted by. Note that in the case of fidelity bond. Types of surety bonds: 1) Contractual bonds – these bonds are connected with construction and supply contracts. or taxes imposed shall be collected by the surety In the case of a continuing bond (for a longer term than one year or with no fixed expiration date). replevin bonds and appeal bonds.1) 2) 3) 4) 5) 6) The premium becomes a debt as soon as the contract for suretyship or bond is perfected and delivered to the obligor The contract of suretyship or bonding shall not be valid and binding unless and until the premium therefore has been paid Where the oblige has accepted the bond. the insurance is fully paid for. can come about by the inclusion of an investment feature through the payment of the “cash surrender value” of the policy in case it is cancelled by the owner or it lapses through nonpayment of premiums. without necessity of court authority or the giving of a bond. In the absence of a judicial guardian. It is an insurance for a fixed or specified term. If the insured dies within the period specified. in behalf of said minor. or on his surviving a specified period. They are for the protection of the owner against possible default by the contractor to comply with his contract or his possible failure top pay material. the surety shall collect only a reasonable amount If the non-acceptance of the bond be due to the fault or negligence of the surety. obligates the surety to hold himself responsible for the performance of an express obligation of the principal 3) Judicial bonds – they are those which are required in connection with judicial proceedings. 180 – An insurance upon life may be made payable on the death of the person. attachment bonds. An alternative form of payment. 2) Limited payment life policy – one under the terms of which the premiums are payable only during limited period of years usually ten to twenty. but shall not be limited to obtaining a policy loan. the obligation of the employee to be honest with his employer is implied rather than contractual. his beneficiary is entitled to all the proceeds of the policy without any liability for the unpaid premiums. the obligor shall pay the subsequent annual premium as it falls due until the contract is cancelled. 3) Term insurance policy – one which provides coverage only if the insured dies during a limited period. or otherwise contingently on the continuance or cessation of life. 179 – Life insurance is insurance on human lives and insurance appertaining thereto or connected therewith. receiving the proceeds of the policy. Every contract or pledge for the payment of endowments or annuities shall be considered a life insurance contract for purposes of this Code. a. Kinds of life insurance policies: 1) Ordinary life policy – one under the terms of which the insured is required to pay a certain fixed premium annually or at more frequent intervals throughout life and the beneficiary is entitled to receive payment under the policy only after the death of the insured. This is also called temporary insurance. Payment bond – one covering the payment of laborers and material men 2) Fidelity bonds – they pay an employer for loss growing out of a dishonest act of his employee. or in the latter’s absence or incapacity. five or ten years. 4) Endowment policy – one under the terms of which the insurer binds himself to pay a fixed sum to the insured if he survives for a specified period. surrendering the policy. Sometimes. stamp. Some of the most common kinds are injunction bonds. Sec. The position of a surety is to answer for a failure of the principal to perform in accordance with the terms and specifications of the contract. Public official bond – one required of public officers for the faithful performance of their duties and as a condition of entering upon the duties of their offices. to some other person . the father. When the specified number of premiums have been made. If he survives the period. the ultimate payment of the insurance proceeds is as certain as death itself. This is also called whole life. If the insured should die within the specified period. they are classified as: a. Such right may include.000 pesos. the policy is paid to the beneficiary. This kind of policy is also called limited premium insurance policy. regular life or straight life policy. no service fee. and giving the minor’s consent to any transaction on the policy. health or accident insurance. the mother.
Contract of life annuity – the debtor binds himself to pay an annual pension or income during the life of one or more determinate persons in consideration of a capital consisting of money or other property. the lump sum is paid to the insurer immediately and the annuitant receives the annuity payments as long as he lives. 182 – Notice to an insurer of a transfer or bequest thereof is not necessary to preserve the validity of a policy of insurance upon life or health. Whether or not the policy expressly requires that notice of an assignment or transfer must be given to the insurer. 181 – A policy of insurance upon life or health may pass by transfer. Later. the measure of the indemnity under a policy of insurance upon life or health is the sum fixed in the policy. a novation. Provided. Ex. X died without notifying the insurer of the transfer. whether he has an insurable interest or not. that suicide committed in the state of insanity shall be compensable regardless of the date of commission. insures against economic problems resulting from a long life rather than an early death 2) From the insurer’s point of view. the insurer may legally pay the beneficiary which shall become the trustee of the amount received in favor of Y. if a policy provides for a 3 year period and the suicide is committed within said period but after two years. Sec. will or succession to any person. such notice is not essential to the validity of the assignment. endowment contracts shall be considered life insurance policies. the insurer may waive the requirement as to notice and pay Y. If the policy does not expressly require the insured to give notice of an assignment or transfer of the policy to the insurer. For the purpose of the Insurance Code. May Y collect from the insurer? In view of Sec. A clause in the policy expressly provides that no assignment shall be effective until the insurer has been notified in writing. The usual evidence of this scheme is the fact that the assignment occurred almost immediately after the policy was issued. the insurer starts paying upon death of the insured. the insurer is liable. the assignment with the consent of the insurer creates. . When the right to change the beneficiary is waived by the insured. naming his estate as his beneficiary. Annuity distinguished from ordinary life policies: 1) An annuity contract. the insurer stops paying upon death of the insured. and such person may recover upon it whatever the insured might have recovered. however. This is so because life insurance is not a contract of indemnity. Note that the policy cannot provide for a period longer than 2 years. A provision in a contract of life insurance denying the insured his right to assign without the consent of the insurer will be void. Where such notice is not required by the policy. Thus.indicated. Under the usual form of annuity. Thus. in effect. to transiency 3) Under the ordinary life insurance policy. Sec. The courts will not. All life insurance policies are declared by law to be assignable regardless of whether the assignee has an insurable interest in the life of the insured. under a life insurance contract. insurance looks to longevity. however. An assignment is to be distinguished from a change in the designated beneficiary (see Sec 11). whereas the purpose of an annuity is the scientific liquidation of an estate. However. the purchaser of an annuity expects his insurer to pay him a periodic income as long as he lives. unless thereby expressly required. 182. permit the process of assignment to be used as a cloak to hide an illegal intent to make contracts on human life. unless the policy provides for a shorter period. which may or may not turn out to be profitable while life insurance has a characteristic akin to indemnity. 4) An annuity appears more like an investment instead of an insurance. death may be: a) Actual death – “casket death” b) Living death – permanent disability c) Retirement death – living beyond the period of earning capacity. Annuity has been called the “upside-down application of life insurance principle” because it is based on the notion that the purpose of life insurance is the scientific creation of an estate. while annuity. For his premium. whose ownership is transferred to him at once with the burden of the income. the insurer is under the obligation to pay Y after acquiring knowledge of the assignment. 180-A – The insurer in a life insurance contract shall be liable in case of suicide only when it is committed after the policy has been in force for a period of two years from the date of its issue or of its last reinstatement. X insured his life. whereas under an annuity contract. Sec. This type of policy is thus useful in retirement planning. The assignee takes the newly formed contract free of defenses available to the insurer against the insured under the old contract. the beneficiary has acquired a vested right and the insured cannot assign such policy without the consent of the beneficiary. unlike life insurance contract. he assigned the policy to Y who has no insurable interest in his life. Sec. the insured pays to the insurer an annuity and his beneficiary receives at the insured’s death the lump sum payment. 183 – Unless the interest of a person insured is susceptible of exact pecuniary measurement. Scope of life insurance From the economic standpoint.
241 – (1) No insurance company doing business in the Philippines shall refuse . shall constitute unfair claim settlement practice: a) knowingly misrepresenting to claimants pertinent facts of policy provisions relating to coverages at issue. than an insurance company has violated this section. the interest of the creditor in the life of the debtor is susceptible of exact pecuniary measurement or estimation. The proceeds of the policy maturing by the death of the insured payable to the beneficiary shall include the discounted value of all premiums paid in advance of their due dates. if R acted honestly under the circumstances. a person can purchase life insurance for any amount as long as he can pay the premium. (3) If it is found. . Is R also liable for the P5. Ex. the proceeds are immediately payable to the insured. but are not due and payable at maturity. unless such proceeds are made payable in installments or as an annuity. Time for payment of claims in life policies: 1) In policies maturing upon the expiration of the term set forth therein. R (insurer) refused the offer and elected to go with the trial of the case. In the suit for personal injuries filed by T against D (insured). and the Commissioner’s complaint experience with other insurance companies writing similar lines of insurance shall be admissible in evidence in an administrative or judicial proceeding brought under this section. No. D offered to settle for a sum that was within the policy limits of P10. In this case. in which case. the proceeds are payable to the beneficiaries within 60 days after presentation of the claim and filing of proof of death. Refusal or failure to pay the claim within the time prescribed herein will entitle the beneficiary to collect interest on the proceeds of the policy for the duration of the delay at the rate twice the ceiling prescribed by the Monetary Board. that in the case of policy maturing by the death of the insured. The claimant may be the insured. without just cause. the amount in excess of the policy limits? It depends. Sec. unless they are made payable in installments or as annuity. if committed without just cause and performed with such frequency as to indicate a general business practice. Any of the ff acts by an insurance company. the proceeds thereof shall be paid within 60 days. unless such failure or refusal to pay is based on the ground that the claim is fraudulent. to determine the exact amount to be paid and the interest thereon to which the beneficiaries may be entitled to collect in case of unwarranted refusal of the company to pay. 60 day period is procedural in nature The 60 day period fixed by law within which to pay the proceeds after presentation of proof of death is merely procedural in nature. and also to enable the insurer to verify or check on the fact of death which it may even validly waive. 242 – The proceeds of a life insurance policy shall be paid immediately upon maturity of the policy. Yes. The exception is when a person insures the life of another. there could be no exact pecuniary measurement of a person’s interest in his life or the life of another. the installments or annuities shall be paid as they become due 2) In policies maturing at the death of the insured occurring prior to the expiration of the term stipulated. evidently. b) failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies c) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under its policies d) not attempting in good faith to effectuate prompt.000. Where a policy gives the insurer control of the decision to settle claim or litigate it. the insurer nevertheless is required to observe a certain measure of consideration for the interest of the insured. The insurer has the right to refuse an offer of settlement which it believes to be unreasonably excessive. each instance of non-compliance with paragraph (1) may be treated as a separate violation of this section and shall be considered sufficient cause for the suspension or revocation of the company’s certificate of authority. or reinsured. Provided.Strictly speaking. presentation of the claim and filing of the proof of death of the insured. as where a creditor insures the life of his debtor. Hence.000. Claims settlement – is the indemnification of the loss suffered by the insured. or a third party who has a claim against the insured. to pay or settle claims arising under coverages provided by its policies. nor shall any such company engage in unfair claim settlement practices.000. if the verdict resulted from R’s negligence or bad faith. fair and equitable settlement of claims submitted in which liability has become reasonably clear e) compelling policyholders to institute suits to recover amounts due under its policies by offering without justifiable reason substantially less than the amounts ultimately recovered in suits brought against them (2) Evidence as to numbers and types of valid and justifiable complaints to the Commissioner against an insurance company. after notice and an opportunity to be heard. in which case the installments or annuities shall be paid as they become due. T obtained a verdict for P15. however. CLAIMS SETTLEMENT Sec. the insurer who is entitled to subrogation.
The insurer’s liability may arise on a presumption of death. 243 – The amount of any loss or damage for which an insurer may be liable. as a condition precedent to bringing an action on the policy by the insured. Substantial compliance with the proof of loss requirement will always be deemed sufficient. most of them were destroyed by water. a serious discrepancy between the actual loss and that claimed in the proof of loss. One point in respect to property damage liability claims must first be differentiated from direct loss insurance claims. where the insurer completely denies any liability. The death of the insured may be sufficiently established by the death certificate issued by the Civil Registrar of the place where the insured died. But if in the course of the settlement of the loss. An insured who fails to protect his property adequately from further loss after the fire. Numerical precision should not be expected.e. which contains a provision to the effect that all benefits under the policy shall be forfeited if the claim for loss be in any respect fraudulent. shall avoid it as when the claim exceeds the true value of property lost by 50%. The same is true of a claim for loss of articles and goods not existing at the time of the fire. are however. and the inclusion in the proofs of property not destroyed or not insured. The measure of loss is the difference in value between the property undamaged and the property in its damaged condition.It is the happening of the suspensive condition of death that renders the life policy matured and NOT the filing of proof of death. as to indicate that the false statements were made willfully and intentionally. under any policy other than life insurance policy. the latter should first submit to an arbitration. it will be deemed to have waived the condition precedent with reference to arbitration. Sec. there is no legal obligation to restore a property in its original condition if the cost for repair exceeds the value of the property before the damage. a misstatement regarding the details of an accident or in reference to the cause of the loss. Refusal or failure to pay the loss or damage within the time prescribed herein will entitle the assured to collect interest on the proceeds of the policy for the duration of the delay at the rate of twice the calling prescribed by the Monetary Board. Effect where claim is fraudulent Under policies. Reference to arbitration 1) Where arbitration not required should insurer deny liability – A stipulation in a fire insurance policy that in the event of a loss unless the company should deny liability. particularly against fire. but if such ascertainment is not had or made within 60 days after such receipt by the insurer of the proof of loss. the company should in any case refuse to pay. Obligations of the insured: File notice of loss and file proof of loss. is one valid at law and unless it be first complied with. There may be honest mistake in valuation without fraud being involved. the insured us required to do everything reasonable to prevent further damage to the property insured. Effect of false statement innocently made The rights of the insured. While the cost of repair may serve as a measure of damage. or if any false declaration be made by the insured or his agent to obtain any benefit under the policy. usually includes only payment for the direct damage to the property unless additional coverage is purchased to provide for the indirect results of the loss of use of the property. The insured’s inventory of stocks is NOT binding on the insurer where it was prepared without the latter’s intervention. no action can be brought. For example. an old automobile virtually demolished. . in fact. cannot collect for the additional loss thus occasioned. This rule has been applied to the overvaluation of the property insured. when. 2) Where arbitration limited to amount of insurer’s liability – If any dispute shall arise as to the amount of the company’s liability under the policy…was held to apply only as to disputes regarding the amount of the insurer’s liability but not as to any dispute as to the existence or non-existence of liability i. a misstatement regarding the insured’s title or ownership of the insured property. for example. as for example. shall be paid within 30 days after proof of loss is received by the insurer and ascertained of the loss or damage is made either by agreement between the insured and the insurer or by arbitration. then the loss or damage shall be paid within 90 days after such receipt. a statement that goods were destroyed by fire. and suit upon the policy will lie. is worth a claim for the value of the car before the accident less its salvage value. in no way prejudiced by false statements inadvertently and innocently made in his proofs of loss despite a clause in the policy providing for its forfeiture in the event of any false swearing and although the false statements are as to a material matter to the insurer’s liability. such as loss of profits or rents. Also. unless such failure or refusal to pay is based on the ground that the claim is fraudulent. A fire claim. The burden of proving fraud is on the insurer. the insured can recover for his loss.
378 – Any claim for death or injury to any passenger or third party pursuant to the provisions of this Chapter shall be paid without the necessity of proving fault or negligence of any kind. Medical report and evidence of medical or hospital disbursement in respect of which funds were claimed 3) Claim may be made against one motor vehicle only. 244 – In case of any litigation for the enforcement f any policy or contract of insurance. claim shall lie against the insurer of the directly offending vehicle. In any other case. subrogated to the rights of the insured who is not divested of his right file the suit. Provided. where the insured commenced an action to recover an insurance policy and then voluntarily agrees to an arbitration and submits his proofs to the arbitrator. Death certificate and evidence sufficient to establish the proper payee c. and in the affirmative case. that the failure to pay any such claim within the time prescribed in said sections shall be considered prima facie evidence of unreasonable delay in payment. the insurance company shall be adjudged to pay damages which shall consist of attorney’s fees and other expenses incurred by the insured person by reason of such unreasonable denial or withholding of payment plus interest twice the ceiling prescribed by the Monetary Board of the amount of the claim due to the insured. The principle of subrogation does not apply to life and accident policies as they are not contracts of indemnity.Where arbitration required only when there is dispute – Where there is an agreement to arbitrate and one party puts up a claim which the other disputes. when submitted under oath. Furthermore. Where delay in payment was due to the investigation the insurer conducted to ascertain the truth of the information it received that the insured was not insurable at the time of his application. it is not far-fetched that they be different in these two tribunals. mounting or dismounting from. entertain a difference of opinion as to its liability. in order to save the right to their assureds and to promptly place them in funds. therefore. the insurer is not. Accordingly. claim shall lie against the insurer of the vehicle in which the occupant is riding. as the case may be. the delay was held justifiable. as the case may be. is estopped and bound by the award. would avoid unnecessary delay and multiplicity f suits in the attainment of the same result. or made any reference to arbitration during the negotiations preceding the institution of the action against the insurer. from the date following the time prescribed in section 242 or in section 243. at any time during said negotiations. as a condition precedent to a right of action or suit upon the policy. to make a finding as to whether the payment of the claim of the insured has been reasonably denied or withheld. and in fact. Provided. Consequently. subject to his obligation to the insurer. as provided in said clause. the enforcement of the undisputed liability on the part of one of the parties. namely. recovery should not be denied merely because the insured received such loan from the insurer. 4) Where settlement by arbitration not invoked – A clause in a policy concerning reference of dispute to an arbitrator. so that their business might continue without embarrassment. 5) Where insured voluntarily submitted to arbitration – On the other hand. in good faith and honesty. the statutory penalty for vexatious refusal of an insurer to pay a claim should not be imposed unless the evidence and the circumstances show that the refusal was willful and without reasonable cause as the facts appear to a reasonable and prudent man. the need to arbitrate is imperative.000 pesos 2) The following proofs of loss. The finding or conclusion of one would not necessarily be binding on the other. Such losses are not payment of insurance. Loan repayable from collection and deemed payment of insurance It is customary for insurers. was deemed waived where none of the parties to the contract invoked the same. It is generally agreed that an insurer may. that for purposes of this section: 1) The total indemnity in respect of any one person shall not exceed 5. in a suit by the insured against the party indisputably liable for the loss. Damage recoverable: 1) Attorney’s fees 2) Other expenses incurred by the insured person by reason of such unreasonable denial or withholding of payment 3) Interest at twice the ceiling prescribed by the Monetary Board of the amount of claim due the insured 4) The amount of the claim COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE Sec. in the absence of fraud or mistake. it shall be the duty of the Commissioner or the Court. In all 3) . shall be sufficient evidence to substantiate the claim: a. to lend to their assureds the amount of the loss payable only out of money collected on account of the loss. until the claim is fully satisfied. Police report of the accident b. counsel for the both parties stipulated in the trial court that none of them had. In the case of an occupant of a vehicle. As the advancement does not constitute payment of loss. to permit the insured to recover. Sec. Conflicting resolutions of trial court and the Commission Due to the difference in the quantum of evidence required to base a decision. even suggested the settlement of the issue between them by arbitration.
the insurance company concerned shall pay any claim for death or bodily injuries sustained by a passenger or third party without the necessity of proving fault or negligence of any kind subject to certain conditions. Action or suit for recovery for damage due to loss or injury must be brought. the victim is not an occupant of a vehicle). 2) Land transportation operator or one who is the owner of a motor vehicle or vehicles being used for conveying passengers for compensation including school buses. In case a private motor vehicle is being used to transport passengers for compensation.000 and there is controversy in respect thereto. such coverage shall. This no-fault claim does not apply to property damage. 3) Claim against insurer of vehicle responsible for accident – In any other case (i. The insurer may extend additional other risks at its option. The first 5. the claim shall be deemed waived. In case of excess over the minimum limit of coverage. or dismounting from.000 should be paid without regard to fault.cases. The fundamental purpose of no-fault provision is to guarantee compensation or indemnity to persons suffering loss in motor vehicle accidents 1) Claim subject to certain conditions – Under Sec 378. Scope of coverage required: 1) For owners of private motor vehicles. in addition include passenger liability. * the term “occupant” includes both passenger and a third party so long as they are riding in or mounting or dismounting from a motor vehicle. Substitutes for CMVLI: 1) Post a surety bond with the Insurance Commissioner who shall be made the obligee or creditor in the bond in such amount required as limits of indemnity to answer for the same losses sought to be covered by the CMVLI policy. the claimant’s right of action shall prescribe. To allow therefore. The injured or the heirs of the injured may directly sue the insurer of the vehicle. the finding of fault may be availed of by the insurer only as to the excess. the right of the party paying the claim to recover against the owner of the vehicle responsible for the accident shall be maintained. in proper cases with the Commissioner or the Courts within 1 year from denial of the claim. 2) For operators of land transportation. If total indemnity claim exceeds 5. Persons subject to CMVLI: 1) Motor vehicle owner or one who is the actual legal owner of a motor vehicle in whose name such vehicle is registered with the LTO. otherwise. No fault indemnity claim – connotes that the victim of a tort can recover for his loss from his insurer without regard to his own contributory fault or the fault of the tortfeasor. otherwise. Sec. 384 – Any person having any claim upon the policy issued pursuant to this Chapter shall. mounting. such excess should be deemed as to have been taken on voluntary basis and not compulsory. and does not depend on the recovery of judgment by the injured party against the insured. extent and duration of the injuries sustained as certified by a duly licensed physician. 2) Make a cash deposit with the Insurance Commission in such amount required as limits of indemnity also or the same purpose. Notice of claim must be filed within 6 months from the date of the accident. without any unnecessary delay. present to the insurance company concerned a written notice of claim setting forth the nature. the coverage must also be comprehensive against both passenger and third party liabilities for death and bodily injuries. the coverage must be comprehensive against third party liability for death or bodily injuries. immediate financial assistance or indemnity regardless of the financial capacity of the motor vehicle owners or operators responsible. even if such vehicle is not the one at fault. the claim shall lie against the insurer of the directly offending vehicle. especially when they are poor. The claimant is not free top choose from which insurer e will claim the no-fault indemnity as the law makes it mandatory that the claim be made against the insurer of such vehicle.e. 2) Claim against insurer of vehicle in which victim is an occupant – Sec 378 (3) is very clear that the claim shall lie against the insurer of the vehicle in which the occupant is riding. The insurer’s liability is primary and accrues immediately upon the occurrence of the injury or event upon which the liability depends. the insurer to escape liability by interposing the defense that the owner of the insured motor vehicle has violated the contract would be to defeat the very purpose of the law. Spirit behind or need for compulsory third party liability insurance The overriding consideration in compelling motor vehicle owners or operators to have TPL insurance or surety bond is to assure victims of motor vehicle accidents. Effect of insured’s violation of policy condition on insurer’s liability to third party claimant The insurer’s liability to any party attaches during the effectivity of the policy in the absence of any showing that the same has been cancelled with proper notice to all parties concerned. .
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