Escolar Documentos
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Cultura Documentos
2010 EDITION
Notes and Study Guide
SECTION 67
A warranty is either express or implied.
EXPRESS WARRANTY is an agreement contained in the policy or clearly whereby
the insured stipulates that certain facts relating to the risk are or shall be true or
certain acts to the same subjects have been or shall be done.
IMPLIED WARRANTY is a warranty which from the very nature of the contract,
although no express warranty is mentioned, is necessarily embodied in the policy as
a part thereof and which binds the insured as though expressed in the contract.
AFFIRMATIVE WARRANTY is one which asserts the existence of a fact or condition
at the time it is made. The warranty is continuing if it is one that must be satisfied
during the entire coverage period of the insurance.
PROMISSORY WARRANTY, also called executory warranty, is one where the
insured stipulates that certain facts or conditions pertaining to the risk shall exist or
that certain things with reference thereto shall be done or omitted.
Unless the contrary intention appears, the courts will presume that the
warranty is merely affirmative.
SECTION 68
A warranty may relate to the past, the present, the future, or to any or
all of these.
In the case of a promissory warranty, the same may refer only to future
events.
SSECTION 69
Gratuitous answers written in the application, that is, answers not responsive
to any questions asked, are not warranties even though the policy makes the
statements in the application warranties.
WARRANTY FROM REPRESENTATIONS (distinctions)
(1) The falsity or nonfulfillment of a warranty operates as a breach of contract,
while falsity of representation renders the policy void on the ground of fraud.
Failure to comply with a promissory warranty may be due not only to legal
impossibility but also to physical impossibility.
INSURER BARRED BY WAIVER OR ESTOPPEL
Failure on the part of the insurer to assert forfeiture upon breach of warranty or
condition, after knowledge thereof, amounts to a waiver or estoppel.
SECTION 74
The violation of a material warranty, or other material provision of a
policy, on the part of either party thereto, entitles the other to rescind.
RESCISSION BY THE INSURED
The insured can sue for rescission for breach of contract due to the refusal of the
insurer to grant a loan applied for although this was expressly agreed upon in the
policy. He can recover the full amount of the premiums.
RESCISSION BY THE INSURER
The insurer is entitled to rescind a contract of insurance for violation of a
warranty only if said warranty is material; otherwise, the breach thereof will not
avoid the policy.
The insurer may rescind the contract even though the violation was not the
direct cause of the loss.
SECTION 75
A policy may declare that a violation of specified provisions thereof
shall avoid it, otherwise the breach of an immaterial provision does not
avoid the policy.
If the insured, without fraud, makes a false warranty, he cannot recover for
any loss thereafter because the breach prevents the policy from attaching to the
risk. But, all premiums should be
returned to the insured.
This entire policy shall be void if the insured building be or becomes vacant or
unoccupied and so remained for more than 10 days.
Exception
This company shall not be liable for any loss while the insured building is vacant.
But the occurrence of an excepted peril, such as the vacancy of the insured
house, does not affect
the binding force of the contract.
(1) Where the insurer has become insolvent and has suspended business, or has
refused without justification a valid tender of premiums; or
(2) Where the failure to pay was due to the wrongful conduct of the insurer as when
the insurer induced the beneficiary to surrender it for cancellation by falsely
representing that the insurance was illegal and void and returning the premiums
paid; or
(3) Where the insurer has in any wise waived his right to demand payment.
UCPB General Insurance Co., Inc. v. Masagana Telemart, Inc., 308 SCRA
259
The Supreme Court ruled that an insurance policy other than life issued
originally or on renewal is not valid and binding until actual payment of
the premium.
When the insurance is void because it is illegal, the general rule is
that the premiums cannot be
recovered. But if, in fact, the parties are
not in pari delicto, the law will allow an innocent
insured to take again
his premiums as when the insured was ignorant.
LOSS
SECTION 83
An agreement not to transfer the claim of the insured against the insurer
after the loss has happened, is void if made before the loss.
An insurer is liable for a loss of which a peril insured against was the
proximate cause, although a peril not contemplated by the contract may have been
a remote cause of the loss; but he is not liable for a loss of which the peril insured
against was only a remote cause.
SECTION 85
The loss of goods by theft during the removal of the goods to save them from
loss by fire is covered by a policy against fire.
In one case, it was held that the loss is not covered by Section 85
since the loss did not take
place in the course of such rescue nor caused
by efforts to rescue from a peril insured against.
SECTION 86
The insurer is not liable if the proximate cause of the loss is a peril
excepted from the policy
although the immediate cause is a peril not
excepted.
EXAMPLE
In a fire insurance policy which excludes loss through explosion, if an explosion
occurs first and causes a fire which results in a loss, the insurer is not liable. The
proximate cause of the loss is the explosion which is an excepted peril.
SECTION 87
An insurer is not liable for a loss caused by the intentional act (suicide) of the
insured or through his connivance. Thus, when the insured intentionally burns the
insured goods and submits fraudulent proof of loss, the policy is avoided.
FGU Insurance Corporation v. CA, 454 SCRA 337
It is a basic rule in insurance that the carelessness and negligence of
the insured or his agents constitute no defense on the part of the insurer.
The purpose of a notice of loss is to apprise the insurer with the occurrence of
the loss, so that it may gather information and make proper investigation while the
evidence is still fresh.
Failure to give notice and proof of loss will be excused when it is due
to the death or incapacity of the insured or the fact that the beneficiary
had no knowledge of the existence of the policy of the insured who died
before the fire.
DEFECTS IN NOTICE OR PROOF OF LOSS DEEMED WAIVED
There is waiver where the insurer:
(1) Writes to the insured that the furnishing of the notice or proof of loss would be
vain and useless;
(2) Recognizes his liability to pay the claim;
(3) Denies all liability under the policy; or
(4) Joins in the proceeding for determining the amount of the loss by arbitration,
making no objections;
(5) Makes objection on any ground other than a formal defect in the preliminary
proof.
DOUBLE INSURANCE
SECTION 93
A double insurance exists where the same person is insured by several
insurers separately in respect to the same subject and interest.
SECTION 97
A reinsurance is presumed to be a contract of indemnity against
liability, and not merely against damage. (The practice is for the reinsurer to
pay the insurer even before the latter has indemnified the original insured.)
CLASSES OF INSURANCE
(1) Marine Insurance
(2) Life Insurance
(3) Fire Insurance
(4) Casualty Insurance
(5) Suretyship
TWO MAJOR DIVISION OF MARINE INSURANCE
(1) Ocean marine insurance (sea perils)
(2) Inland marine insurance (land perils)
In this case the insurer shall be liable for only that part of the loss which the
insured cannot recover from the charterer.
SECTION 101
The insurable interest of the owner of a ship hypothecated by Bottomry
is only the excess of its value over the amount secured by Bottomry.
SECTION 102
Freightage signifies all the benefits derived by the owner, either from the
chartering of the ship or its employment for the carriage of his own goods or those
of others.
SECTION 114
A ship is seaworthy, when reasonably fit to perform the service, and to
encounter the ordinary perils of the voyage, contemplated by the parties
to the policy.
SECTION 124
A deviation is proper:
(1) When caused by circumstances over which the master or owner of the ship has
no control;
(2) When necessary to comply with a warranty, or to avoid a peril;
(3) When made in good faith, and upon reasonable grounds of belief in its necessity
to avoid a peril;
(4) When made in good faith, for the purpose of saving or relieving another vessel
in distress.
(Every deviation not specified under Section 124 is improper.)
SECTION 135
(1) In constructive total loss, abandonment by the insured is necessary in order to
recover for a total loss.
(2) In case of actual total loss, the right of the insured to claim the whole insurance
is absolute. There is no need to give notice of abandonment.
SECTION 138
Abandonment is the act of the insured by which, after a constructive
total loss, he declared the relinquishment to the insurer of his interest in
the thing insured.
SECTION 142
Where the information upon which an abandonment has been made proved
incorrect, the abandonment becomes ineffectual.
After a valid abandonment has been made, the insured property was
recovered, the insured cannot withdraw the abandonment.
SECTION 143