Insurance Law1

7/24/2019 Insurance Law1

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INSURANCE LAW

1. 1. Laws applicable to insurance in the order of priority:

1. a. Insurance Code

2. b. Civil Code

3. c. General Principles prevailing on the subect in the !"

1. 2. Contract of Insurance # an agree$ent whereby one underta%es for a consideration to

inde$nify another against loss& da$age or liability arising fro$ an un%nown contingent event.

1. 3. Contract of "uretyship # dee$ed to be an insurance contract within the $eaning of the

Insurance Code& only if $ade by a surety who or which& as such& is doing an insurance business

1. '. (efinition of )doing an insurance business*:

1. a. $a%ing or proposing to $a%e& as insurer& any insurance contract+

2. b. $a%ing or proposing to $a%e as a surety& any contract of suretyship as a vocation

and not $erely incidental to any other legiti$ate business or activity of the surety+

3. c. doing reinsurance business+

'. d. doing or proposing to do any business in the substance e,uivalent to any of the

foregoing in a $anner designed to evade the provisions of the Insurance Code.1. -. e,uisites of Insurance:

1. a. e/istence of an insurable interest+

2. b. ris% of loss+

3. c. assu$ption of ris%+

'. d. sche$e to distribute losses+ and

-. e. pay$ent of pre$iu$s

0ote: If only a& b& and c are present& it is not a contract of insurance but a ris% shifting device.

1. . Characteristics of an insurance contract:

1. a. consensual

2. b. voluntary

3. c. aleatory # depends upon so$e contingent event+ however& it is not a wagering

nor a ga$bling contract

'. d. e/ecuted as to the insured after pay$ent of the pre$iu$

-. e. e/ecutory as to insurer # not e/ecuted until pay$ent for a loss

. f. personal # each party ta%es into account the character& credit and the conduct

of the other

. g. conditional # liability is based on the happening of the event insured against

1. . Parties to a contract of Insurance:

1. a. insurer # party who assu$es the ris% or underta%es to inde$nify the insured or to

pay a certain su$ on the happening of a specified contingency

2. b. insured # person in whose favor the contract is operative& and who is inde$nifiedagainst& or is to receive a certain su$ upon the happening of a specified contingency

3. c. beneficiary # $ay or $ay not be the sa$e as the insured

hat perils $ay be insured4


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5a6 any contingent or un%nown event& whether past or future& which $ay da$nify a person

having an insurable interest+ or

5b6 any contingent or un%nown event& whether past or future& which $ay create a liability

against the person insured.

1. 7. 8very person has an insurable interest in the life and health of:

1. a. hi$self& his spouse and his children

2. b. any person on who$ he depends wholly or in part for education or support& or in

who$ he has a pecuniary interest

3. c. any person under a legal obligation to hi$ for the pay$ent of $oney& or

respecting property or services& of which death or illness $ight prevent the perfor$ance

or delay it

'. d. any person upon whose life any estate or any interest vested in hi$ depends

1. 9. Insurable Interest in Property $ay consist of:

1. a. an e/isting interest

2. b. an inchoate interest& founded on an e/isting interest

3. c. an e/pectancy& coupled with an e/isting interest out of which the e/pectancy

arises

(efinition of Insurable Interest in Property: Interest in property& whether real or personal& or

any relation thereto& or liability in respect thereof& of such nature that a conte$plated peril

$ight directly da$nify the insured.

1. 1. Instances when Insurable Interest $ust e/ist:

1. a. Interest in Property insured $ust e/ist when the insurance ta%es effect andwhen the loss occurs& but need not e/ist in the $eanti$e.

2. b. Interest in the Life or ;ealth of a Person Insured $ust e/ist when the insurance

ta%es effect& but need not e/ist thereafter or when the loss occurs.

3. c.


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ti$e of the loss

3. a$ount of insurable

interest

no li$it 8=C8P>: if insurableinterest is based on creditor?debtor relationship 5only tothe e/tent of the credit or

debt6

li$ited to the actual value of

da$age@inury@loss

1. 11. General Rule: A change of interest in any part of a thing insured unacco$panied by a

corresponding change in interest in the insurance suspends the insurance to an e,uivalent

e/tent& until the interest in the thing and the interest in the insurance are vested in the sa$e

person.

Exceptions: a. In case of life& health& and accident insurance

1. b. when the change in interest results after the occurrence of an inury which results in a

loss

2. c. a change of interest in one or $ore several distinct things& separately insured by one

policy

3. d. a change in the interest by will or succession on the death of the insured 5interest passesto the heirs6

'. e. a transfer of interest by one of several partners& oint owners in co$$on who are ointly

insured to the others 5even though it has been agreed that the insurance shall seiBe upon the

alienation of the thing insured6

1. !" Re#ocation of $eneficiaries

General Rule: Insurance contracts are revocable.

Exception: Any person who is forbidden to receive any donation under Article 39 of the Civil

Code cannot be na$ed beneficiary of a life insurance policy by the person who cannot $a%e the

donation to hi$.

>he following donations shall be void:

1. a. those $ade between persons who were guilty of adultery or concubinage at the ti$e of

the donation+

2. b. those $ade by persons found guilty of the sa$e cri$inal offense& in consideration

thereof+

3. c. those $ade to a public officer or his wife& descendants& ascendants& by reason of his

office.

ther Pertinent Provisions on evocation:

5a6 >he ter$ination of a subse,uent $arriage shall allow the innocent spouse to revo%e the

designation of the other spouse who acted in bad faith as beneficiary in any insurance policy& even

if such designation be stipulated as irrevocable.

5b6 After the finality of the decree of legal separation& the innocent spouse $ay revo%e the

donations as well as the designation of the latter as a beneficiary in any insurance policy& even if

such designation is irrevocable. >he revocation of or change in the designation shall ta%e effect

upon written notification thereof to the insured. >he action to revo%e the donation under this


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article $ust be brought within - years fro$ the ti$e the decree of legal separation has beco$e

final.

5c6 >he interest of a beneficiary in a life insurance policy shall be forfeited when the

beneficiary is the principal& acco$plice or accessory in willfully bringing about the death of the

insured& in which event& the nearest relative of the insured shall receive the proceeds of said

insurance if not otherwise dis,ualified.

1. 13. "uspension # a change of interest in any part of a thing insured unacco$panied by a

corresponding change of interest in the insurance suspends the insurance to an e,uivalent

e/tent until the interest in the thing and the interest in the insurance are vested in the sa$e

person.

1. 1'. Conceal$ent # a neglect to co$$unicate that which the party %nows or ought to

co$$unicate

General ule: >he insured is not re,uired to co$$unicate the nature 5or %ind6 or the a$ount

of his insurable interest in the life or property insured to the insurer. 8/ception: a. hen the insurer $a%es in,uiry fro$ the insured of the nature or a$ount of the

latterDs insurable interest& whether in life or property insurance+

1. b. insurance policy $ust specify the interest of the insured in the property insured& if he is

not the absolute owner thereof.

A conceal$ent& whether intentional or not& entitles the inured party to rescind a contract of

insurance.

e,uisites:

5a6 the party concealing $ust have %nowledge of the facts concealed+

5b6 the facts concealed $ust be $aterial to the ris%+

5c6 the party is duty bound to disclose such fact to the other+

5d6 the party concealing $a%es no warranty as to the facts concealed+

5e6 the other party has no other $eans of ascertaining the facts concealed.

0ote: An insured need not die of the very disease he failed to reveal to the insurer. It is

sufficient that the non?revelation has $isled the insurer in for$ing his esti$ate of the

disadvantages of the proposed policy or in $a%ing his in,uiries in order to entitle the insurance

co$pany to avoid the contract.

0ote: >he insured is under an obligation to disclose not only such $aterial facts as are %nown

to hi$& but also those %nown to his agent where:

1. a. it was the duty of the agent to ac,uire and co$$unicate infor$ation of the facts in

,uestion+

2. b. it was possible for the agent& in the e/ercise of reasonable diligence& to have $ade the

co$$unication before the $a%ing of the insurance contract.


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n Eailure on the part of the insured to disclose such facts %nown to his agent& or wholly due to

the fault of the agent& will avoid the policy& despite the good faith of the insured.

1. 1-. 0either party to the insurance contract is bound to co$$unicate infor$ation on the

following $atters e/cept in answer to the in,uiries of the other:

1. a. those of which the other %nows+2. b. that which& in the e/ercise of ordinary care& the other ought to %now and of

which the for$er has no reason to suppose his ignorance& i.e. political situation& general

usages of trade+

3. c. those of which the other waives co$$unication+

'. d. those which prove or tend to prove the e/istence of the ris% e/cluded by a

warranty and which are not otherwise $aterial+

-. e. those which relate to a ris% e/cepted fro$ the policy and which are not

otherwise $aterial.

0either party is bound to co$$unicate his $ere opinion& even upon in,uiry& because such

opinion would add nothing to the appraisal of the application. aiver of $aterial facts $ay be:

5a6 by the ter$s of the insurance+ or

5b6 by the neglect to $a%e in,uiry as to such facts& where they are distinctly i$plied in other

facts which infor$ation is co$$unicated

Fateriality is to be deter$ined not by the events but solely upon the probable and reasonable

influence of the facts on the party to who$ the co$$unication is due in for$ing his esti$ate of

the disadvantages of the proposed contract or in $a%ing his in,uiries.

Conceal$ent& whether intentional or not& entitles the other party to rescind the contract.

1. 1. epresentation

It is a factual state$ent $ade by the insured at the ti$e of& or prior to& the issuance of the

policy& to give infor$ation to the insurer and otherwise induce hi$ to enter into the insurance

contract.

It $ay be $ade orally or in writing.

It $ay be $ade at the ti$e of& or before& the issuance of the policy.

It $ay be altered or withdrawn before the insurance is effected& but not afterwards.

A representation cannot ,ualify an e/press provision in a contract of insurance but it $ay

,ualify an i$plied warranty.

A representation as to the future is to be dee$ed a pro$ise unless it appears that it was

$erely a state$ent of belief or an e/pectation. 5$ust be susceptible of present& actual

%nowledge6

>he state$ent of an erroneous opinion& belief or infor$ation& or of an unfulfilled intention&

will not avoid the contract of insurance& unless fraudulent.

ight to rescind because of false representation:


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1. a. $ust be e/ercised previous to the co$$ence$ent of an action on the contract 5the

action referred to is that to collect a clai$ on the contract6

2. b. $isrepresentation& whether intentional or not& gives the right to rescind

Incontestable Clause: After a policy of life insurance$adepayable on the death of the

insuredshall have been in force during the lifetime of the insured for a period of 2 years from

the date of its issue or of its last reinstatement& the insurer cannot prove that the policy is void

ab initio or is rescindable by reason of the fraudulent conceal$ent or $isrepresentation of the

insured or his agent.

8/ceptions: 5a6 absence of insurable ris%

5b6 cause of loss is an une/pected ris%

5c6 fraud

5d6 non?pay$ent of pre$iu$

5e6 violation of conditions relating to naval or $ilitary services

5f6 failure to co$ply with conditions subse,uent to the occurrence of the loss

1. 1. arranties:

General ule: 0on?perfor$ance of a pro$issory warranty avoids a contract of insurance.

8/ceptions:

1. a. when before the ti$e for perfor$ance of the pro$issory warranty& a loss insured against

occurs+

2. b. when before the ti$e of the perfor$ance of the warranty& the act beco$es unlawful+

3. c. when before the ti$e of the perfor$ance of the warranty& said perfor$ance beco$es

i$possible.

A state$ent or a pro$ise set forth in the policy or by reference incorporated therein& the non?

fulfill$ent of which in any respect and without reference to whether the insurer was in fact

preudiced by such non?fulfill$ent& renders the policy voidable by the insurer& wholly

irrespective of the $ateriality of such state$ent or pro$ise.

Warranty Representation

part of the insurance contract collateral induce$ent

always written on the policy $aybe oral or written

conclusively presu$ed $aterial $ateriality $ust be proved

$ust be strictly co$plied with re,uires substantial truth

$ade by the insured $ay be $ade by insurer or insured

0ote: If there is a breach of warranty& even if the cause of the loss is a different ris%& the

insurer is entitled to rescind the contract of insurance.


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1. 17. Policy

hat is a ider4 It is an additional provision in a policy not part of the body of the printed

for$.

Cover 0ote: written $e$orandu$ of the $ost i$portant ter$s of a preli$inary contract of

insurance& intended to give te$porary protection pending the investigation of the ris% by the

insurer& or until the issuance of a for$al policy. General ule: Cover notes bind insurer te$porarily pending the issuance of the policy.

8/ception: here it is $erely an ac%nowledg$ent on behalf of the co$pany that the latterDs

branch office had received fro$ the applicant the insurance pre$iu$ and accepted the

application subect for processing by the insurance co$pany and that the latter will either

approve or reect the sa$e.

inds of Policies:

1. a. pen # the value of the thing insured is not agreed upon& but is left to be ascertained at

the ti$e of the loss

2. b. Halued # e/presses on its face an agree$ent that the thing insured shall be valued at a

specific su$3. c. unning # conte$plates successive insurance which provides that the obect of the policy

$ay be fro$ ti$e to ti$e defined especially as to the subect of insurance by additional

state$ents or endorse$ents

n 0ote: If an a$ount is written on the face of an open policy& it is $erely a deter$ination of the

$a/i$u$ li$it of recovery and not as the value of the policy.

Category %pen Policy &alue' Policy

what needs to be proven in

order to be able to clai$ value of property upon loss

no need for proof of value of

property upon loss

deter$ining value of lossvalue of property is to beascertained upon loss

value of property upon loss isconclusively stipulated to aspecified a$ount

Period for co$$encing an action against the policy: ithin 1 year fro$ the ti$e the cause of

action accrues& i.e.& fro$ the ti$e of reection of the clai$ by the insurer. Any condition&

stipulation& or agree$ent li$iting the ti$e to less than 1 year is void.

Grounds for Cancellation of a Policy by the Insurer:

For Policies Other than Life:

516 prior notice of the cancellation to insured

526 notice $ust be based on the ff. occurrences after effective date of the policy

5a6 non?pay$ent of pre$iu$s

5b6 conviction of a cri$e arising out of acts increasing the haBard insured against


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5c6 discovery of fraud or $aterial $isrepresentation

5d6 discovery of willful or rec%less acts or o$issions increasing the haBard insured against

5e6 physical changes in the property insured which results in the property beco$ing uninsurable

5f6 deter$ination by the Co$$issioner that the continuation of the policy would violate or

would place the insurer in violation of the Insurance Code

536 notice $ust be in writing

5'6 it $ust be $ailed or delivered to the insured at the address shown in the policy

5-6 notice $ust state the ground relied upon and that upon written re,uest of the insured& the

insurer will furnish facts on which the cancellation is based

enewal of the Policies ther than Life:

Insurer $ust $ail or deliver to the insured notice of its intention not to renew the policy or to

condition its renewal upon reduction of li$its or eli$ination of coverages within '- days before

the policy ends. therwise& insured entitled to renew the policy upon payment of the premium

due on the effective date of the renewal.

1. 19. Pre$iu$

General ule: 0o policy is binding until the pre$iu$ thereof has been paid.

8/ceptions: 5a6 in case of life or industrial life policy& whenever the grace period applies

5b6 in case of estoppel

Insurer is entitled to pay$ent of pre$iu$s as soon as the thing insured is e/posed to the perils

insured against.

hen insurer entitled to eturn of Pre$iu$s

1. a. when the contract is voidable on account of fraud or $isrepresentation of the insurer+

2. b. when on account of facts& the e/istence of which the insured was ignorant without his

fault

3. c. when by any default of the insured other than actual fraud& the insurer never incurred

any liability under the policy

'. d. when the insured has beco$e a public ene$y and the policy auto$atically canceled 5on

the ground of e,uity6

-. e. in case of over?insurance by several insurers 5ratable return of pre$iu$s& proportioned

to the a$ount by which the aggregate su$ insured in all policies e/ceed the insurable value of

the thing at ris%6

1. 2. Loss

hen Insurer is Liable:


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1. a. where the peril insured against was the pro/i$ate cause& although a peril not

conte$plated by the contract $ay have been the re$ote cause or even the i$$ediate cause of

the loss

2. b. where the thing insured is rescued fro$ the peril insured against that would otherwise

have caused a loss& if& in the course of such rescue& the thing is e/posed to a peril not insured

against& which per$anently deprives the insured of its possession in whole or in part

3. c. where loss is caused by efforts to rescue the thing insured fro$ a peril insured against

'. d. insurer is not e/onerated by a loss caused by si$ple negligence of the insured if the

pro/i$ate cause of the loss is a peril insured against

-. e. loss& the i$$ediate cause of which is a peril insured against e/cept when the pro/i$ate

cause is an e/cepted peril

hen Insurer 0ot Liable:

1. a. where the peril insured against was only a re$ote cause

2. b. where the peril is specifically e/cepted& a loss which would not have occurred but for

such peril is thereby e/cepted

3. c. loss caused by the connivance of the insured'. d. loss caused by the willful act of insured

-. e. loss caused by insuredDs negligence& if it a$ounts to bad faith

General ule: >he insurer is not liable for a loss caused by the willful act of the insured.

8/ception: "uicide Clause in Life Insurance: Insurer liable in case insured co$$itted suicide

after the policy has been in force for a period of 2 years fro$ the date of its issue or last

reinstate$ent. If insured %ills hi$self within a period of 2 years& insurer is not liable.

8/ception to 8/ception: If suicide is co$$itted in a state of insanity& regardless of the ti$e of

co$$ission& the insurer is liable.

1. 21. (ouble Insurance # e/ists where the sa$e person is insured by several insurers separately

in respect to the sa$e subect and interest

e,uisites: a. person insured $ust be the sa$e

1. b. e/istence of several insurers

2. c. subect $atter insured $ust be the sa$e

3. d. interest the sa$e

'. e. ris% insured against also the sa$e

%#er Insurance (ouble Insurance

$ay be only one insurer $ust be 2 or $ore insurers

insurance covers $ore than the value ofinsurable interest

insurance $ay or $ay not e/ceed the value ofinsurable interest

>he Code prohibits double insurance without the consent of the insurer.

Liability of Insurer:

Insurance ta%en

fro$ each insurer

? / value of property received J liability of insurer total insurance


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1. 22. einsurance: A process by which an insurer procures a third person to insure hi$ against

loss or liability by reason of such original insurance.

>he original insured cannot recover fro$ this insurance unless there is a specific grant& or

assign$ent of& the reinsurance contract in favor of the insured& or a $anifest intention of the

contracting parties to the reinsurance contract to favor the insured.

General ule: >he insurer who obtains reinsurance $ust co$$unicate:

1. a. all the representations of the original insured+ and

2. b. all the %nowledge and infor$ation he possesses& whether previously or subse,uently

ac,uired which are $aterial to the ris%

8/ception: under auto$atic reinsurance treaties

Reinsurance (ouble Insurance

1. 1. insurer beco$es the insured

2. 2. subect $atter is the insured ris%

or liability

3. 3. different ris%s and interests of

insured

'. '. there $ust be consent of original

-. -. one who is original insured has no

interest in the contract of reinsurance

which is independent of the original

contract of insurance

. 1. insurer re$ains the insurer

. 2. subect $atter is property

7. 3. the sa$e interest and ris% are

insured

9. '. insured has to give his consent

1. -. insured is the party in interest in

all contracts

1. 23. Farine Insurance: insures against perils of the sea& not of the ship

Perils of t)e Sea Perils of t)e S)ip

covered by $arine insurance not covered by $arine insurance

denote nature accidents peculiar to the sea

which do not happen by intervention of $an norare to be prevented by hu$an prudence

da$age or losses resulting fro$:

1. 1. natural and inevitable action of

the sea

2. 2. ordinary wear and tear of a ship&

or

3. 3. negligent failure of the ship

owner to provide the vessel with proper

e,uip$ent to convey the cargo under


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ordinary conditions

wner of the "hip has Insurable Interest:

1. a. in the ship even if it has been chartered by one who pro$ises to pay hi$ in value in case

of loss 5insurer is liable for what insured cannot recover fro$ the charterer6& even when

hypothecated by botto$ry 5only the e/cess of its value over the a$ount secured by botto$ry6and

2. b. in the freightage& which according to the ordinary and probable course of things he

would have earned but for the intervention of a peril insured against or other peril incident to

the voyage

Charterer has insurable interest in the ship to the e/tent that he is liable to be da$nified by its

loss.


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I$plied arranties:

1. a. that the ship is seaworthy # co$plied with if the ship is seaworthy at the ti$e of

co$$ence$ent of ris%& e/cept: 5a6 insurance for a specified length of ti$e # at the

co$$ence$ent of every voyage it underta%es during that ti$e+ 5b6 cargo to be transshipped at

indeter$inate port # each vessel upon which cargo is shipped is seaworthy at the

co$$ence$ent of each particular voyage

2. b. that the vessel shall not engage in illegal venture

3. c. that the vessel shall not deviate fro$ the course of the voyage insured

'. d. where the nationality or neutrality of a ship or cargo is e/pressly warranted& it is i$plied

that the ship will carry the re,uisite docu$ents to show such nationality or neutrality and that it

will not carry any docu$ents which $ay cast reasonable suspicion thereon

"eaworthiness depends on:

1. a. nature of the ship

2. b. nature of the voyage

3. c. nature of the service

n "eaworthiness of the vessel is re,uired only at the co$$ence$ent of the ris%

n 8/ceptions:

1. a. in a >i$e Policy # co$$ence$ent of every voyage that $ust be underta%en

2. b. in a Cargo Policy # co$$ence$ent of each particular voyage

3. c. in a Hoyage Policy # co$$ence$ent of each portion of the voyage

(eviation

1. a. a departure fro$ the course of the voyage insured

2. b. unreasonable delay in pursuing the voyage

3. c. co$$ence$ent of an entirely different voyage hen is (eviation proper4

1. a. when caused by circu$stances over which neither the $aster not the owner of the ship

has any control

2. b. when necessary to co$ply with a warranty or to avoid a peril whether it is insured

against or not

3. c. when $ade in good faith for the purpose of saving hu$an life or relieving another vessel

in distress

'. d. when $ade in good faith and upon reasonable grounds of belief in its necessity to avoid

a peril

Loss

1. a. Actual >otal Loss

n a total destruction of the thing insured

n the irretrievable loss of the thing by sin%ing or by being bro%en up

n any da$age to the thing which renders it valueless tot he owner for which he held it


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n any other event which effectively deprives the owner of possession& at the port of destination&

of the thing insured

1. b. Constructive >otal Loss # gives to the person insured the right to abandon

Average # any e/traordinary or additional e/pense incurred during the voyage for the

preservation of the vessel& cargo& or both and all da$ages to the vessel and cargo fro$ the ti$eit is loaded and the voyage co$$enced until it ends and the cargo unloaded

General Average # an e/pense or da$age suffered deliberately in order to save the vessel& its

cargo& or both fro$ the real or %nown ris%

Abandon$ent # act of the insured by which& after a constructive total loss& he declares the

relin,uish$ent to the insured of his interest in the thing insured 5where the cause of loss is a

peril insured against6

5a6 $ore than thereof in value is actually lost or would have been e/pended to recover it fro$

the peril

5b6 it is inured to such an e/tent as to reduce its value by $ore than

5c6 if the thing insured is the ship and the voyage cannot be lawfully perfor$ed without

incurring an e/pense of $ore than of the whole& or a ris% which a prudent $an would not

underta%e under the circu$stances

5d6 if the thing insured is cargo or freightage& and the voyage cannot be perfor$ed on another

ship procured by the $aster within a reasonable ti$e and with reasonable diligence to forward

the cargo without incurring an e/pense or a ris% as stated above

Ereightage cannot be abandoned unless ship is also abandoned. e,uisites of a Halid Abandon$ent:

1. a. $ust be total and conditional

2. b. $ade within a reasonable ti$e

3. c. e/plicit notice

'. d. coupled with actual abandon$ent

e,uisites for Halid Haluation in the Halued Farine Policy:

1. a. insured $ust have interest at ris%

2. b. there $ust be no fraud on the insuredDs part

0otice of Abandon$ent:

1. a. $ay be oral or in writing 5if oral& written notice $ust be sub$itted within days fro$

oral notice6

2. b. $ust be e/plicit

3. c. $ust specify the particular cause for abandon$ent

'. d. need not be acco$panied by proof of interest or loss

Acceptance of Abandon$ent

1. a. $ay be e/press or i$plied 5i.e. silence for unreasonable length of ti$e6

2. b. conclusive upon the parties and ad$its the loss and sufficiency of abandon$ent


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3. c. irrevocable& unless the ground on which it is $ade is proved to be unfounded

If insurer refuses to accept a valid abandon$ent # liable as upon actual total loss

!pon actual abandon$ent

1. a. freightage earned before loss # belongs to the insurer of freightage

2. b. freightage earned after loss # belongs to insurer of ship

Co?insurance: for$ of insurance in which the person who insures his property for less than the

entire value is understood to be his own insurer for the difference which e/ists between the true

value of the property and the a$ount of insurance

Co?insurance applies only where the:

1. a. insurance ta%en is less than the actual value of the thing insured

2. b. loss is partial

Pri$age # increase in freightage

1. 2'. Eire Insurance

Insurer is liable for loss or da$age caused by hostile fire 5fire that escapes fro$ the place where it

was intended to burn and ought to be in6 and not that caused by friendly fire 5fire which burns ina place where it is intended to burn6.

"cope of Eire Insurance:

1. a. fire

2. b. lightning

3. c. windstor$s

'. d. tornado

-. e. earth,ua%e

. f. other allied ris%s

hen does alteration in the use or condition entitle the insurer to rescind the contract4

1. a. such alteration violates a provision in the policy

2. b. it was $ade without the insurerDs consent

3. c. it is done within the insuredDs control& and it increases the ris% of loss or da$age

ules:

1. a. policy shall not protect the insured fro$ inury conse,uent upon his negligent use or

$anage$ent of fire& so long as it is confined to the place where it ought to be

2. b. if it escapes& even though the insured was negligent& the insurer is liable

3. c. even though a fire $ay re$ain in its proper place& it $ay beco$e hostile if it by

accident& beco$es so e/tensive as to be beyond control

ptions of the Insurer

1. a. purchase the property at appraised valuation2. b. restore the property da$aged # contract of insurance is discharged and parties enter

into a new contract of insurance

1. 2-. Casualty Insurance: Any inury that is intended& une/pected and unusual& even though it

results fro$ an act or even which was intelligently done.

Insurer is Liable for death@inury to insured:

1. a. by his own hand while insane

2. b. by ta%ing poison by $ista%e


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3. c. by overdoes of drugs ad$inistered or ta%en by $ista%e& by ignorance or $aterial

pathological conditions

'. d. by une/pected bacterial infection conse,uent upon doing acts& even though such acts

were intentionally done

-. e. by unprovo%ed violence of others

Co$pulsory Fotor Hehicle Liability Insurance

Persons subect to CFHLI:

1. a. $otor vehicle owner or one who is the actual legal owner of a $otor vehicle in whose

na$e such vehicle is registered with the L>

2. b. land transport operator or one who is the owner of a $otor vehicle or vehicles being

used for conveying passengers for co$pensation 5including school buses6

0o Eault Inde$nity Clause: >he insurance co$pany shall pay any clai$ for death or bodily

inuries sustained by a passenger or 3rdparty without the necessity of proving fault or negligence

of any %ind subect to certain conditions. >his does not apply to property da$age.

1. 2. "uretyship # an agree$ent whereby the surety guarantees the perfor$ance of the

principal or obligor of an obligation or underta%ing in favor of a 3rdparty called the obligee

1. 2. Life Insurance: an insurance in hu$an life and insurance appertaining thereto or

connected therewith $ay be payable:

1. a. on the death of the insured

2. b. on his surviving a specified period

3. c. otherwise& contingently on the continuance or cessation of life

5b and c refer to endow$ent or annuities6

!ses and Co$$on inds of Life Insurance:

1. a. hole Life or rdinary Policies # here& the insured agrees to pay annual& se$i?annual or

,uarterly pre$iu$s while he lives. >he insurer agrees to pay the face value of the policy upon

the death of the insured.

2. b. Li$ited Pay$ent Life Policy # pre$iu$s paid only for a specified period of years.

3. c. >er$ Policy # insurerDs liability arises only upon the death of the insured within the

agreed ter$ as period. If the latter survives the period& the contract ter$inates and the insurer

is not liable

'. d. 8ndow$ent Policy # insurer agrees to pay a certain su$ to the insured if the latter

outlives a designated period+ if he dies before that ti$e& the proceeds are paid to the

beneficiary

-. e. Life Annuity # debtor binds hi$self to pay an annual pension or inco$e during the life of

one or $ore persons in consideration of a capital consisting of $oney or other property& whose

ownership is transferred to hi$ with the burden of inco$e

1. 27. >he


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Period of Incontestability # after the lapse of 2 years fro$ the date of issue or date of approval of

last reinstate$ent

einstate$ent of Policy # within 3 years fro$ the date of default of pre$iu$& upon:

1. a. production of evidence of insurability& and2. b. pay$ent of all overdue pre$iu$s and any indebtedness to the co$pany upon said policy

8/ceptions:

1. a. if cash surrender value has been paid

2. b. if period of e/tension has e/pired

1. b. Clai$s "ettle$ent

!nfair Clai$s "ettle$ent Practices:

5a6 %nowingly $isrepresenting to clai$ants pertinent facts or policy provisions relating tocoverage at issue

5b6 failing to ac%nowledge with reasonable pro$ptness pertinent co$$unications with respect

to clai$s arising under its policies

5c6 failing to adopt or i$ple$ent reasonable standards for the pro$pt investigation of clai$s

arising under its policies

5d6 no atte$pt in good faith to effectuate pro$pt& fair and e,uitable settle$ent of clai$s

sub$itted in which liability has beco$e reasonably clear

5e6 co$pelling policy holders to institute suits to recover the a$ount due under its policies by

offering with no ustifiable reason an a$ount substantially less than that ulti$ately recovered in

suits brought by the$

Proceeds of Life Insurance # payable within days after:

5a6 presentation of clai$s& and

5b6 filing of proof of death 5upon failure to pay interest& at the rate of 2 ti$es the ceiling

prescribed by the Fonetary


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1. c. Power of Co$$issioner to "uspend@evo%e License

5a6 if insurance contract is in unsound condition

5b6 if it has failed to co$ply with the provisions of law or regulations obligatory upon it

5c6 its conditions or $ethods of business s such as to render its proceedings haBardous to the

public or to its policy holders

5d6 that its paid up capital stoc%& or its available cash assets& or its security deposits& as the case

$ay be& is i$paired or deficient

5e6 that the $argin of solvency re,uired of each co$pany is deficient

Insurance Agent # any person who for co$pensation solicits or obtains insurance on behalf of any

insurance co$pany or transacts for a person other than hi$self an application for a policy or

contract of insurance to or fro$ such co$pany or offers or assu$es to act in negotiating of such

insurance. ;e $ust be first licensed as such before doing any acts as insurance agent.

Insurance

Insurance Law1

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Transcript of Insurance Law1