Insurance Law (Personal Reviewer)

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    I.Contract of insurance: (sec 2) - is an agreement whereby one undertakes for aconsideration to indemnify another against loss, damage or liability arising froman unknown or contingent event.

    Elements:1. The insured has an insurable interest;2. The insured is subect to a risk of loss arising from an unknown or

    contingent event;!. The insurer assumes such risk;". The insured #ay$s a #remium, in consideration of the insurer$s #romise;%. &isk distributing device ' such assum#tion of risk is #art of a general

    scheme to distribute actual losses among a large grou# of #ersons being asimilar risk.

    Characteristics:1. onsensual -

    The contract of insurance is #erfected by the agreement of both#arties. owever, #ayment of #remium is mandatory;

    2. *leatory -The obligation of the #arties e+ists u#on the ha##ening of theunknown or contingent event;

    !. ersonal 'The contract is de#endent by the #arties. The insured is to #ay the#remium; while the insurer is to #ay indemnity;

    ". onditional 'The obligation of the insurer is sus#ensive, it will only e+ists u#onthe ha##ening of the unknown or contingent event;

    +ecutory 'The insured already fullled his obligation u#on #ayment of the

    #remium;%. /ndemnication '

    /n non-life insurance, the insured can only insure his #ro#erty u# toits estimated value;

    /nvestment '/n life insurance, the insured can insure his life in any amount he

    likes;0. *dhesion '

    /t is a contract of take-it or leave-it. /t means that only the insurer

    drafted the contract.. tmost good faith '

    3oth #arties should disclose all the necessary information in goodfaith.

    Parties:

    /nsurer

    - The one who will indemnify the insured or the beneciary the ha##ening of the unknown or contingent event.

    /nsured

    - The one who #ay$s the #remium to avail the insurance.

    3eneciary

    - * #erson designated by the insured to receive #roceeds of#olicy of insurance when risk attaches.

    Insurable interest:

    In life insurance:

    4ife5health5accident ' a #erson can insure himself based on life, healtaccident;

    ecuniary interest is enough, as long as the #erson has an insurableinterest over the insured;

    6ou can insure yourself in any amount because it is in the nature ofinvestment;

    /nsurable interest must e+ist only at the time the #olicy takes e7ect 8need not e+ist at the time of loss.

    In non-life insurance:

    The insurable interest can be based on inchoate interest, e+#ectancy

    cou#led w5 e+isting interest, contract or by law;

    9ere #ecuniary interest is not enough, the insured must have e+istin

    interest over the #ro#erty;

    The insured can only insured his #ro#erty u# to the value of the #ro#e

    only;

    The insurable interest must e+ist at the time of the e7ectivity of #olic

    at the time of the loss, although it need not e+ist in the meantime.Other

    Sec 12(new)*ny crime who willful, intentionally, voluntarily as #rinci#al, accom#lice oraccessories, the beneciary will be forfeited and it will go to another benec

    /f no beneciary1. /n the absence of beneciary - the #roceed will go to the co-benecia2. /n the absence of co-beneciary - will go according to the #olicy of th

    insurance;

    !. /n the absence of #olicy ' the #roceeds will go to the estate of the ins

    Exception for insurable interest (sec 22-2")1. /nsuring 2 di7erent #ro#erties in one #olicy

    /f in the meantime, the insured sells one of the #ro#erties and the othremaining unsold #ro#erty is loss, insured can still recover damage o#ro#erty loss.

    2. :uccession

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    eirs of insured may recover on the #olicy although they do not haveinsurable interest at the time of the #erfection of the contract.

    !. o-owner of insured #ro#erty/f one acuired the whole #ro#erty from other co-owners and later the#ro#erty is lost, the buyer full owner may recover the whole amount lost.This is a##licable only where one co-owner sells to another co-owner, ifsell is to a third #erson, e+ce#tion does not a##ly.

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    II.Concealment: (sec 20) ' is a neglect to communicate that which a #arty knowsand ought to communicate.

    Elements:

    * #arty knows a fact within his knowledge and neglect to communicate the

    same to other #arty;

    :uch #arty concealing is duty bound to disclose a material fact to the

    other #arty;

    :uch #arty concealing makes no warranty to the fact concealed;

    The other #arty has no means of ascertaining the fact concealed.

    Representation is a collateral statement in writing, not inserted in the #olicy,which are necessary to be communicated to the underwriters to enable them toform a ust estimate of the risk.

    isrepresentation is a statement of something as a fact which is untrue andmaterial to the risk, and which the insured states, knowing it to be untrue in anattem#t to deceive, or which he states #ositively as true w5o knowing it to betrue, and which has a tendency to deceive.

    !arrant": a risk described in the #olicy which makes #art in the contract. Therecan be no warranty by any collateral re#resentation, only misstatement of factconcerning a warranty can render a #olicy void.

    1. Express #arrant" is one which is s#ecically set out in the #olicy. /tmust be a statement relating to the #erson, thing or risk, which must be afact and not a mere o#inion.

    2. Implie$ #arrant" is one which is not s#ecically stated within the

    #olicy.

    %. &'rmati(e #arrant" is a statement regarding a fact at the time thecontract was made

    ). Promissor" #arrant" is a statement about future facts or about factsthat will continue to be true throughout the term of the #olicy.

    Incontestabilit" clause: (sec "

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    Polic": (sec "?) ' the written instrument in which a contract of insurance is setforth.

    Open polic": (sec 0@) ' is one in which the value of the thing insured is notagreed u#on, but is left to be ascertained in case of loss.(e+. * insured his house for %9, if * house destroy, he can recover u# to theamount the thing destroyed, but not to e+ceed %9).

    ,alue$ polic": (sec 01) ' is one which e+#resses on its face an agreement thatthe thing insured shall be valued at a s#ecic sum.(e+. :ame e+am#le above, the only di7erent is, * can recover %9, even if thevalue of the thing loss is only !9).

    Runnin polic": (sec 02) ' is one which contem#lates successive insurances,and which #rovides that the obect of the #olicy may be from time to timedened, es#ecially as to the subects of insurance, by additional statements orendorsements.(e+. * insured his warehouse, if * warehouse destroy, he can recover the amountof the #ro#ertyloss, but if there is no loss declared he cannot recover).

    Others:Co(er notes: (sec %2) ' issued to bind insurance tem#orarily #ending theissuance of the #olicy. w5n 0@days after the issue of the cover note, a #olicy shallbe issued in lieu thereof, subect to e+tension by the commissioner.

    Prescripti(e perio$: (sec 0!) ' a condition, sti#ulation, or agreement in any#olicy of insurance, limiting the time for commencing an action to a #eriod of lessthan 1 year from the time when the cause of action accrues, is void.

    )$a"s before the expiration of the contract: (sec 00)/R: the insured may renew #olicy by merely #aying #remium, on the e7ectivedate of renewal.Except: unless "%days in advance before the e+#iration of the contract, theinsurer notify by letter the insured, that they had no intention to renew the #olicy,due to broad risk, and the #remium is very low, and they want to increasewarranties.

    0in$ers a mere acknowledgement on behalf of the com#any that its branchoAce had received #remium.

    Ri$er is an amendment to a contract or #olicy. /t is a written form attached toan insurance #olicy$s coverage, terms, or conditions.(e+. *fter buying a diamond bracelet, a #olicyholder may want to add a rider toher homeowner$s insurance #olicy to cover the ewelry.)

    Clauses clauses are sentences and #aragra#hs describing various coverage+clusions, duties of the insured, locations covers, and conditions that sus#eterminate coverage.

    !arrant" is a #romise by the insured #arty that statements a7ecting thevalidity of the contract are true.

    En$orsement is a written document attached to an insurance #olicy thatmodies the #olicy by changing the coverage a7orded under the #olicy. *nendorsement can add coverage for acts or things that are not covered as a #the original #olicy and can be added at the ince#tion of the #olicy or later duthe term of the #olicy.(e+. The owner sells his car, the insurance #olicy can be transferred to the bw5o canceling the #olicy through an endorsement of the same.

    Counter sinature of the insure$:ot necessar"

    when the rider, endorsement, or warranty is attached with the #olicy

    /f the same is issued after the issuance of the #olicy and the insured

    the one who reuested the issuance of the same.ecessar"

    /f the same is issued after the issuance of the #olicy and the insures ione who reuested the issuance of the same.

    Prescripti(e perio$: (sec 0!) ' a condition, sti#ulation, or agreement in an

    #olicy of insurance, limiting the time for commencing an action thereunder t#eriod of less than 1 year from the time when the cause of action accrues, invoid.

    If no areement ci(il co$e appl":(art 11"")1@years based on written contract.

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    I,.Premium: amount #aid to the insurer for the consideration for his assurancthe assumed risk.

    Eect of non-pa"ment:

    !hen entitle$ for return of premium: (sec ?-

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    (e+. 1 mon grade #eriod was granted by the insurer. /f you died before 1mon even if not yet #ay #remium, still can recover. 3ut if you died after 1mon cannot claim).

    2. *n acknowledgment in a #olicy or contract of insurance or the recei#t of#remium is conclusive evidence of its #ayment, so far as the #olicybinding, notwithstanding any sti#ulation therein that it shall be bindinguntil the #remium is actually #aid.

    !. /f the oblige acce#ted the bond(e+. * #urchased goods to 3 w5 as a surety. /f 3 received from theinsurance (surety) a bond, 3 can recover even if * not yet #ay$s the#remium.

    ". +tension agreement B

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    ,.otice of loss: #ur#ose ' to duly notify the insurer of the ha##ening of the#ro+imate cause, if denied cause of action accrues.

    !hen to notif" ' within a reasonable #eriod w5o delay if non-life, if life,de#ending on the udgment of the commissioner.

    - nreasonable delay, 0@ days based on : decision.

    Proximate cause:

    Remote cause:

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    ,I.3ouble insurance: (sec ?!) ' a double insurance e+ists where the same #ersonis insured by several insurers se#arately in res#ect to the same subect andinterest.

    Elements:

    :ame #erson;

    :ame subect matter;

    :ame insurable interest;

    :ame risk insured;

    Cith several insurer.

    /R:not contrary to law

    Except:the #olicy #rohibits

    Reinsurance: (sec ?%) ' a contract of reinsurance is one by which an insure#rocures a third #erson to insure him against loss or liability by reason of sucoriginal insurance.

    O(er insurance: --------------------/R:not #rohibited by lawEect:valid only u# to the value of the #ro#erty, invalid the e+cess.>therwise unust enrichment.Eect:it will nullies the e+cess amount, because the #ur#ose of

    insurance is to indemnify.

    Other3ouble insurance (s. Re-insurance*ormer:

    The insurer remain as such, meaning he remain as the insurer;

    The subect matter is insured against loss;

    /t was insured for the same interest and risk.

    +atter:

    The insurer became the re-insured;

    The subect matter is insured against his liability arising from the orig

    insurance;

    /t is insured for di7erent interest and risk.

    3ouble insurance (s. O(er Insurance*ormer:

    There are two or more insurer;

    =ot necessarily result to over insurance.

    +atter:

    There is only one insurer;

    There could be an over insurance but w5o double insurance.

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    ,II.aritime insurance:

    Perils of the sea embrace all kinds of marine casualties of the shi# or of ccause by violent action of the winds or sea, one that could not been foreseen

    Perils of the ship those loss or damage of the goods or of the shi# resultfrom natural and inevitable action of the sea negligence of the owner, ordinawear and tear of the shi# to #rovide with eui#ment.

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    0arratr" is any willful act or conduct of the master or the crew of someunlawful #ur#ose without the consent of the owners and #reudice of the !rd#arty.(mutiny)

    Implie$ #arranties: (sec 11!, 11?, 12@)1. :ea worthiness;2. /m#ro#er deviation;!. /m#ro#er or illegal venture;". :hi# will carry necessary documents to show nationality or neutrality.

    +oan of bottomr" -is a contract in the nature of a mortgage, by which theowner of a shi# borrows money for the use, eui#ment, or re#air of the vessel,and for a denite term, #ledges the shi# as a security for its re#ayment, withmaritime or e+traordinary interest on account of the marine risks to be borne bythe lender;

    /t being sti#ulated that if the shi# be lost in the course of s#ecied voyage,

    or during the limited time, by any of the #erils enumerated in the contract,the lender shall also lose his money.

    Respon$entia when the loan is not made u#on the shi#, but on the goodsladen on board, and which are to be sold, or e+changed in the course of thevoyage, the borrower$s #ersonal res#onsibility is deemed the #rinci#al security forthe #erformance of the contract;

    The lender must be #aid his #rinci#al and interest though the shi# #erish,

    #rovided the goods are saved.

    Concealment in maritime (s in propert" or life insurance9ere belief or o#inion of a !rd#erson is material in maritime insurance; while#ersonal knowledge is reuires in #ro#erty or life insurance.

    Concealment roun$: (sec 11@)1. The national character of the insured;2. The liability of the thing insured to ca#ture and detention;!. The liability to seiDure from breach of foreign laws of trade;". Cant of necessary documents;%. The use of false and simulated #a#ers.

    3e(iation: (sec 12!)Eeviation is a de#arture from the course of the voyage insured, or anunreasonable delay in #ursuing the voyage or the commencement of an entirelydi7erent voyage.

    !hen $e(iation proper: (sec 12")1. Chen caused by circumstances over which neither the master nor the

    owner of the shi# has any control;

    2. Chen necessary to com#ly with a warranty, or to avoid a #eril, wheththe #eril is insured against;

    !. Chen made in good faith, and u#on reasonable grounds of belief in itnecessity to avoid a #eril;

    ". Chen made in good faith, for the #ur#ose of saving human life or relianother vessel in distress.

    +oss: (how abandonment made, sec 1"@,"1,"!,"")

    &ctual loss: (sec 1!@) (no right of abandonment)1. * total destruction of the thing insured;2. The irretrievable loss of the thing by sinking, or by being broken u#;!. *ny damage to the thing which renders it valueless to the owner for t

    #ur#ose for which he held it;". *ny other event which e7ectively derives the owner of the #ossessio

    the #ort of destination, of the thing insured.

    Constructi(e loss (with right of abandonment)

    Riht on aban$onment: (sec 1!

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    furnishing nancial su##ort to members while out of em#loyment, or of #aying torelatives of deceased members of +ed or any sum of money

    ur#oseF benevolent, secondary in engaging insurance not intended for #rot.The #ur#ose is to hel# its members

    utual insurance commission:

    Re5uirements: must obtain a certicate of authority by the insurancecommissioner; the reuirements for the issuance of * are the followingF

    1. The com#any is ualied under the hili##ine law;2. Gustied to the of economic ' ca#able to run the com#any;!. 9ust be re#utable, not to defraud others.

    &sset re5uirements no new domestic life or non-life insurance com#anyshould be granted, unless they obtain an asset of more than 1 billion #esos. Horthe rst ! years, the asset of the com#any must increase in the amount of 2%@I;and another additional %@k or !@@k for the ne+t !yrs; another %@k or !%@k for thene+t !yrs and so on.

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    I6.Suret"ship (sec 1%) ' a contract of suretyshi# is an agreement whereby a #artycalled the surety guarantees the #erformance by another #arty called the

    #rinci#al or obligor of an obligation or undertaking in favor of a !rd#arty called theoblige.

    /uarant" (s Suret"ship*ormer:

    9ore of insurer of the insolvency of the debtor;

    4iability of the guarantor is secondary only;

    Juarantor has the right of e+haustion.

    +atter:

    9ore of insurer of the debt but not of the #erson;

    4iability of the surety is #rimary and solidary;

    :urety has no right of e+haustion.

    Casualt" insurance (sec 1") ' is an insurance covering loss or liability arisingfrom accident or misha#.Inclu$e$:

    m#loyer$s liability insurance;

    9otor vehicle liability insurance;

    late glass insurance;

    3urglary and theft insurance;

    ersonal accident and health insurance as written by non-life insura

    com#anies;

    :ubstantially similar kinds of insurance.

    Exclu$e$:

    ertain ty#es of loss which by law or custom are considered as fallin

    e+clusively w5n the sco#e of other ty#es of insurance such as re ormarine.

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    Comprehensi(e----------------------------------------------------------------------------------------------------------------------------------

    6.icro insurance' (sec 1

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    In$epen$ent a$9uster any #erson, #artnershi#, association or cor#orationwhich, for money, commission or any other thing of value, acts for or on behalf ofan insurer in the adusting of claims arising under insurance contracts or #oliciesissued by such insurer.

    7erm of commissioner:(sec "!) ' the commissioner shall be a##ointed by the#resident for the term of 0 years, without re-a##ointment; not reuired forcommission on a##ointment.

    !hat are their po#ers:the commissioner has the #ower to revoke, because hehas the #ower to a##rove. e also has the #ower to contem#t.

    uasi-9u$icial function: (sec "!?) ' #ower to adudicate claims or loss, claimnot more than %9 concurrent w5 the regular court. 9eaning you can le it eitherin the commissioner or in &T.

    ommissioner can only acce#t cases based only in insurance contract and nother basis.

    &$ministrati(e

    &$9u$icator" The commissioner is authoriDed, at his discretion, to im#ose u#on theinsurance com#anies, their director for any willful failure or refusal tocom#ly with, violation of any #rovision of this code, the followingF

    Hines not in e+cess of %oo a day; :us#ension, or after due hearing, removal of director and

    oAcers or agent.