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The non-payment of premium does not affect the (sec 64) The commencement of an action under the
incontestability rule, if the policy has been issued and insurance should not be less that one year from the
payment has already been acknowledged. time when the cause of action accrues (refusal of the
insurer to pay the insured), otherwise, the agreement
Incontestability clause cannot be invoked when: as to the time is void.
1. failure to pay premium – no premium no pay
2. material concealment found within 2 years Grounds for RESCISSION of Policy:
from the enforcement of the policy 1. non-payment of premium
3. there is no insurable interest (void ab initio) 2. conviction of a crime arising out of acts
4. no proof of death increasing then hazard insured against
5. willful act (to expose the subject to the risk 3. discovery of fraud or material
insured against) misrepresentation
6. exempted risk 4. discovery of willful or reckless acts or omissions
increasing the hazard insured against
MATERIALITY OF CONCEALED FACT 5. physical changes (material alteration) to the
- Determined by the probable and reasonable property insured which result in the property
influence of the facts upon the insurer in becoming uninsurable
forming his estimate of the disadvantages of 6. determination by the commissioner that the
the proposed contract or in making his continuation of the policy would violate the
inquiries. code or would place the insurer in violation of
the code
Each party in the contract is bound to know all the 7. Breach of warranty.
general causes which are open to his inquiry which may ** As long as the activity does not change the risk, the
affect the material perils contemplated. insurer is still liable.
The right to information of material facts may be CASH AND CARRY PROVISION
waived, either by the terms of the insurance of by - no premium, no insurance
neglect of the other party to make inquiry as to such - except:
facts. 1. In life or in industrial life insurance – because
there is a grace period in which the insured has
already been entitled to the insurance without
POLICY – the contract of insurance having paid the premiums for the agreed
period.
Cover notes – temporary insurance issued pending the 2. In case of temporary receipt or
issuance of insurance policy which usually lasts for 60 acknowledgment of premium by the insurer
days. It may be extended with the written approval of (even if there is actually no payment yet)
the commissioner if he determines that such extension through the principle of ESTOPPEL. However,
is not contrary to any provision of the insurance code. the insured is not exempt from payment of the
proceeds of insurance.
(sec. 58) The mere transfer of a thing insured does not - if there is credit: for as long as the insured paid
transfer the policy, but suspends it until the same within the period stipulated, and the insured
person becomes the owner of both the policy and the paid even after the loss, the insurer is liable.
thing insured. - If the insurer willingly accepted the payment
even after loss, the insurer is lable.
OPEN POLICY – a policy in which the value of the thing 3. If the payment was given to the agent of the
insured is not agreed upon, but is left to be ascertained insurer, the act of the agent is the act of the
in case of loss. principal. The insurer is still liable.
(the value of the thing at the time of the loss) 4. The insurer is liable as long as the check has
sufficient funds.
VALUED POLICY – a policy which expresses on its face
an agreement that the thing insured shall be valued at Insurance by installment – If the insured paid a part of
a specific sum. the insurance, and the property has been damaged or
(the value of the thing stated in the policy) lost before the completion of premium, the insurer
should pay the insured, but the insured is still liable to
RUNNING POLICY – a policy which contemplates pay the proceeds of the insurance.
successive insurances, and which provides that the CAN A POLICY BE TRANSFERRED?
LIFE insurance – can always be transferred even - Covers all risks in the shipment or navigation of
without the consent of the insurer. a vessel, including the goods shipped, profits,
and the ship itself.
PROPERTY insurance – could only be transferred with - CHARTERER (lessee) has insurable interest with
the consent of the insurer. the freightage of the goods.
- insurable interest must exist at the time of - Owner of the VESSEL has insurable interest with
execution and risk, but may not exist in the the vessel itself and the goods
mean time; suspended until the insurable - Owner of the GOODS has insurable interest with
interest and the policy is vested in the same the goods themselves.
person. - INSURABLE:
o Any peril during the voyage
PROXIMATE CAUSE – cause which was uninterrupted by o Any peril for a certain period
any event, without which, the injury would not have o Ay peril for a certain voyage
occurred. - PERILS OF THE SHIP : ordinary wear and tear of
the ship, ordinary occurrences in the voyage
** With FIRE INSURANCE – as ling as fire is the - PERILS OF THE SEA: unexpected and inevitable
proximate cause, whatever the immediate cause is, the circumstances and casualties due to the
insurer is still liable. violence of the sea (INCH MARIE CLAUSE)
THE INSURERE IS STILL LIABLE EVEN IF THE IMMEDIATE VOYAGE OR TIME CHARTER- AFREIGHTMENT
CAUSE OF THE LOSS IS NOT THE PERIL INSURED, AS - the owner of the vessel is the common carrier
LONG AS THE PROXIMATE CAUSE IS THAT PERIL (extraordinary diligence)
INSURED. - shipper is a private carrier
MARINE INSURANCE
RESPONSIBILITY OF THE SHIPPER - should look for a 3 party suit against insurer – depends on the policy
seaworthy ship (sometimes, the person at fault pays first, then the
- INSURER should investigate first the insurer pays afterwards)
seaworthiness of the ship before paying the
claimant. Compulsory 3rd party liability - the purpose is to give
financial assistance to victims of motor vehicle
CONCEALMENT IN MARINE INSURANCE accidents or their dependents
- opinion of 3rd persons are material and must be
disclosed (example: Pag-asa report, Engineer of Compulsory motor vehicle liability insurance
the ship report on the machine of the ship) - contract of insurance against liability for death
- if due to concealment, there was loss or or bodily injuries of passengers or 3rd parties
damage, that us the only time that the insurer arising from motor vehicle accidents
may rescind the contract
- CANNOT RESCIND contract with the following PROCESS UNDER COMPULSORY 3RD PARTY LIABILITY
grounds: 1. File notice of claim within 6 months from date
o National character of the ship of accident. Include cert. of physician.
o Falsified or simulated documents 2. Prescriptive period- action should be filed in:
o Illegal goods/contraband a. Insurance commission – less than Php
100,000 claim
GENERAL AVERAGE LOSS – damages and expenses b. RTC – more that Php 100,000 claim
incurred for the salvation of the cargo or ship from a
real or known risk everybody benefits! Within 1 year from denial of claim (with
stipulation) or 10 years (without stipulation)
PARTICULAR AVERAGE LOSS – damages and expenses 3. If there is agreement, the insurer should make
incurred not for the common benefit of all but only for payment within 5 days of Compulsory 3rd party
particular or certain persons. liability;
4. If there is no agreement, insurer shall pay “no
CONSTRUCTIVE TOTAL LOSS fault indemnity” without prejudice to pursue
– if the owner of the vessel would spend more claim further. The insurer has the right of
than ¾ of the value of the vessel to save it, or subrogation to sue for recovery against the
if the injury reduced the value of the thing vehicle at fault.
insured for more than ¾.
– the owner should abandon everything to the Authorized drivers clause – driver should be duly
insurer, so the insurer would look for something licensed or with permission, even if the license is fake.
to salvage from it. The insurer will pay the - Expired license of the driver (not the insured himself)
value of the vessel. is not authorized driver.
– Need to notify the insurer immediately, must
be made within reasonable time after receipt Theft Clause – if there is theft clause and the vehicle is
of reliable information of the loss unlawfully taken, insurer is liable under the clause and
authorized driver clause DOES NOT APPLY. Insured can
HOW ABANDONMENT IS MADE: recover even if thief has no license.
1. notice (generally in writing) to the insurer
2. notice should be made explicitly stating the OVER INSURANCE – same property insured for greater
cause of abandonment value; insured is entitled to ratable return of premium
3. if oral notice is made, there should be a proportioned to the amount by which the aggregate
written notice within 7 days from the oral sum insured exceeds the insurable value of the thing at
notice risk.