INSURANCE CODE

I. Concept of Insurance 1. One of these statements is not correct: a. A contract of insurance is an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. b. A protection and indemnity club composed of shipowners is engaged in the insurance business. c. A health maintenance organization whose primary business is to provide health care services to its members is engaged in the insurance business. d. An association of jeepney drivers which collects monthly dues from its members and in return answers for the cost of repair of their jeepneys and medical expenses of their passengers in case the drivers are involved in a vehicular accident is engaged in the insurance business. 2. One of these statements is not an element of the contract of insurance: a. A person possesses an interest susceptible of pecuniary estimation. b. That person is subject to a risk of loss through destruction of that interest by the happening of designated perils. c. The risk of loss is assumed by another person. d. The other person is assuming the risk as a benefit to induce more customers to patronize its services. 3. One of these statements is not a characteristic of the contract of insurance: a. b. c. d. It is an aleatory contract. It is a contract of indemnity. It is a real contract. It is a conditional contract.

II. Perfection of Contract 1. One of these statements is not correct: a. There is no contract of insurance unless the insured and the insurer have assented to it. b. If the application for an insurance policy has not been accepted or rejected, delay in acting upon it does not make the proposal a contract. c. If the applicant for life insurance was mailed to the insurer and the acceptance was received by mail, the contract is perfected even if he died before receipt of the acceptance. d. If the policy provides that the insured must be alive and in good health at the time of its delivery, if the applicant died

2 or was not in good health at the time of its delivery, the insurer is not liable. III. Insurable Interest A. Life Insurance 1. The insured has no insurable interest on the life and health of: a. Himself, his spouse, and his children. b. Any person on whom he depends wholly or in part for education or support or in whom he has a pecuniary interest. c. Any person under a legal obligation to him for payment of money, or respecting property or services, whose death or illness might delay or prevent the performance. d. A person to whom he is engaged to be married. B. Property Insurance 1. There is no insurable interest in property in one of these: a. An existing interest. b. An inchoate interest founded on an existing interest. c. An expectancy, coupled with an existing interest in that out of which the expectancy arise. d. A contingent or expectant interest not founded on an actual right to the property nor upon a valid contract for it. 2. One of these has no insurable interest in property: a. b. c. d. An owner. A seller of undelivered property. A buyer of property pursuant to a fictitious deed of sale. An unpaid seller with a lien on the property sold.

3. One of these has no insurable interest in property: a. An unpaid contractor with a lien on the building he constructed. b. A lessor of the property being leased. c. A lessee of the property being leased. d. A lessor over the stocks in trade of his lessee. 4. One of these has no insurable interest in property: a. A donor who reserved to himself the right to use the property donated. b. An heir and the properties of his living predecessor-ininterest. c. A possessor allowed by the owner to use the property insured. d. A stockholder and the properties of the corporation. 5. One of these has no insurable interest:

3 a. b. c. d. A carrier and property delivered to it to be transported. A depository and property entrusted to its custody. An importer of smuggled goods. A garment factory and the textiles delivered to it to be sewed into finished dresses.

C. Continuation of Insurable Interest 1. One of these statements is not correct: a. The insurable interest in the life or health of the insured must exist when the insurance contract takes effect but need not exist thereafter or at the time of loss. b. If a spouse insured the life of the other spouse, a subsequent court decision annulling or declaring their marriage void will not destroy the insurable interest of the spouse in the life of the other spouse. c. In case a court decision annulled a marriage or declared it void or decreed the legal separation of the spouses, the innocent spouse may revoke the designation of the other spouse who acted in bad faith as beneficiary in any insurance policy, except if the designation is irrevocable. d. An insurable interest in property insurance must exist when the insurance contract takes effect and when the loss occurs but need not exist in the meantime. 2. One of these statements is not correct: a. If the building covered by a fire insurance policy was burned after the owner had sold it, he cannot recover for its loss. b. If a building covered by a fire insurance policy was sold at an execution sale and the period of redemption had expired when the building was burned, the insured cannot claim against the policy. c. If the owner of a motor vehicle which was covered by an insurance policy sold it but bought it back before it was wrecked in a collision, the insured can recover under the insurance policy. d. If the owner of a motor vehicle which was covered by an insurance policy sold it, the policy will automatically extend to the buyer. D. Double Insurance and Over-Insurance 1. One of these statements is not correct: a. In double insurance the insured obtains two insurance policies on his insurable interest, and there may be double insurance but no over-insurance. b. In over-insurance, the insured takes insurance beyond the value of his insurable interest and can exist even if there is only one insurance policy. c. For double insurance to exist, the interest insured must be the same. d. There is double insurance if the owner of a store insured his stocks-in-trade with the proceeds payable to himself and

4 then after mortgaging them insured the stocks-in-trade with the proceeds payable to the mortgagee. 2. One of these statements is not a requisite of double insurance: a. b. c. d. IV. Rescission A. Concealment 1. One of these statements is not correct: a. Concealment is the neglect to communicate that which a party knows and ought to communicate. b. Concealment must be intentional or fraudulent to entitle the injured party to rescind the policy. c. If the insured authorized the agent of the insurer to write for him the answers in an application for a life insurance policy and the answers contained concealment, he is bound by the answers. d. An insurer is not liable under a policy if the insured is guilty of concealment, even if the fact concealed was not the cause of the loss. 2. One of these statements is not an element of concealment: a. The party making the concealment must have knowledge of the fact concealed. b. The fact concealed must be material to the policy. c. The party making the concealment warranted the fact concealed. d. The other party does not have the means of ascertaining the fact concealed. 3. One of these statements is not correct: a. Materiality is determined by the probable and reasonable influence of the facts on the party to whom the communication is due in forming his estimate of the disadvantages of the proposed policy or in making his inquiries. b. Materiality does not require that the fact concealed contributed to the loss. c. An insurer is not liable under a life insurance policy if the insured concealed that he was suffering from a kidney ailment and died of a plane crash. d. Good faith is a valid excuse for concealment. 4. The failure to disclose one of these ailments does not constitute concealment: a. Cancer The insured is the same. There are several insurers The subject matter insured need not be the same. The risk insured against is the same.

5 b. Bronchial asthma c. Diabetes d. Chronic cough 5. The failure to declare one of these ailments does not constitute concealment: a. b. c. d. Hypertension Liver disorder Heart ailment Gastric discomfort

6. One of these statements is not correct: a. If the insured in a life insurance policy stated the name of the hospital where he was confined and the dates of confinement, his failure to disclose his ailment does not constitute concealment. b. Each party to an insurance contract is bound to know all the general causes which are open to his inquiry and which may affect the political or material perils contemplated and all general usages of trade. c. Neither party to an insurance contract is bound to communicate his opinion upon matters in question, even upon inquiry. d. The waiver of medical examination in life insurance is a waiver of information about ailments of the insured. 7. A party to an insurance contract is bound to communicate information on one of these: a. Those which the other knows. b. Those which, in the exercise of ordinary care, the other ought to know and of which the former has no reason to suppose him ignorant. c. Those which the other waives communication. d. Those which proves the existence of a risk excluded by a warranty but which are material. B. Misrepresentation 1. One of these statements is not correct: a. A representation is a statement made by an applicant or insurer about the subject matter of the insurance to induce it to enter into the contract. b. A representation may be made at the time of or before the issuance of the policy. c. A representation may be altered or withdrawn before the insurance is effected but not afterwards. d. A representation may qualify an implied warranty. 2. One of these statements is not correct: a. A representation is false when the facts do not correspond with its assertions.

6 b. A representation is presumed to refer to the date on which the policy goes into effect. c. When the insured has no personal knowledge of a fact, he may not repeat the information which he has on the subject, even if he believes it to be true. d. The materiality of a representation is determined by the same rule as materiality of a concealment. 3. There is no misrepresentation in one of these: a. If the insured stated that no insurer ever disapproved his application for reinstatement of a lapsed policy, he is not guilty of misrepresentation if his application was initially disapproved but was eventually approved. b. The insured stated that he had no illness but he was suffering from the same serious ailments which are material is concealment. c. A drug addict who stated that he never used prohibited drugs is guilty of misrepresentation. d. An alcoholic who stated he only drank small quantities of beer is guilty of misrepresentation. 4. There is no misrepresentation in one of these cases: a. An insured in a life insurance policy whose parents died of pulmonary tuberculosis told the insurer that they died of other causes. b. An insured in a life insurance policy told the insurer that he does not take alcoholic beverages, but he drinks small quantities of beer on social occasions. c. An insured in a life insurance policy who is suffering from pulmonary tuberculosis asked somebody else to take his place during the medical examination. d. A bank applying for a bankers blanket policy falsely told the insurer that all its transactions were pre-audited by an internal auditor. C. Warranties 1. One of these statements is not correct: a. A warranty is either express or implied. b. An express warranty is a statement in a policy of a matter relating to the person or thing insured, or to the risk, as a fact. c. A statement in a policy which imparts that it is intended or not to do a thing which materially affects the risk is a warranty that such act or omission shall take place. d. A warranty may relate only to the present or the future. 2. There is no breach of warranty in one of these: a. Violation of a provision in a fire insurance policy requiring the insured to inform the insurer of any other insurance policies covering the same property.

7 b. Placing fireworks in a building covered by a fire insurance policy which prohibits the storing of hazardous goods. c. Keeping in a warehouse covered by a fire insurance policy gasoline equivalent to the consumption for two days of motor vehicles used to deliver stored goods to customers. d. Transporting cargoes and passengers in return for compensation with the use of a truck covered by a motor vehicle insurance policy, which prohibits its use for hire. 3. There is no breach of warranty in one of these: a. Keeping fire extinguishers, two fire hoses, external fire hydrants, and a fire engine on the premises of a warehouse covered by a fire insurance policy which required the maintenance of fire extinguishers, internal hydrants, external hydrants, and a fire pump. b. Authorizing a third person with an expired drivers license to drive a car covered by a motor vehicle insurance policy which required the third person to possess a drivers license. c. Authorizing an alien who is using the drivers license from his own country to drive a motor vehicle more than 90 days after his arrival when the law allows him to use it for 90 days only. d. Driving with an expired seventy-two hour temporary drivers license a motor vehicle covered by a motor vehicle policy which required the authorized driver to have a valid drivers license. 4. One of these statements is not correct: a. An employee of a car repair shop to which an insured motor vehicle was brought for repair is not authorized to drive it for a road test. b. An intoxicated person is not authorized to drive a motor vehicle. c. A person under the influence of narcotic drugs is not authorized to drive a motor vehicle. d. A third person whose drivers license prohibited him from driving a motor vehicle with a gross weight of 4,500 kilograms is not authorized to drive a motor vehicle with a gross weight of more than 4,500 kilograms. 5. One of these statements is not correct: a. The breach of warranty does not exempt an insurer from liability if did not contributed to the loss. b. If an insurer renewed an insurance contract despite its knowledge of the breach, the breach is waived. c. The failure of an insured to comply with a warranty is excused if the loss occurred before the expiration of the period for its performance, or performance has become unlawful or impossible. d. A breach warranty without fraud exonerates the insurer from liability only for loss that occurred from the time of the breach.

V. Premiums A. Payment 1. One of these statements is not correct: a. As a rule, no insurance policy is valid and binding unless and until the premium has been paid. b. A separate premium should be paid for a cover note. c. Payment of the premium to an agent of the insurer is binding on it. d. If an insurer delivered the policy to an insurance, broker, it is deemed to have authorized him to receive the payment of the premium in its behalf. 2. One of these statements regarding the requirement for the payment of the premium is not correct: a. A grace period of 30 days is given to pay the insured in life insurance and industrial life insurance contracts to pay the subsequent premiums after the first premium. b. An acknowledgment in an insurance contract of receipt of the premium is conclusive for the purpose of making it binding. c. The insurer cannot grant credit extension to pay the premium. d. An insurer which consistently granted credit extension for payment of the premium is estopped to deny liability for loss which occurred within the term of the credit extension. 3. One of these statements is not correct: a. An insurance contract is valid and effective if there is an agreement that the premium will be paid in installments. b. If there is an agreement that the premium will be paid in installments and the insurance contract provides that it will be effective only upon full payment of the premium, the insurer is not liable for loss which occurred before the full payment. c. If the premium was not paid, the insurer can cancel the policy. d. If the premium was not paid, the insurer can sue for payment of the premium. B. Refund 1. One of these statements is not correct: a. The insured is entitled to a return of the whole premium if no part of his interest in the thing insured was exposed to any of the perils insured against. b. If the insurance is made for a definite period of time and the insured surrendered the policy, he is entitled to a return of a portion of the premium as corresponds with the unexpired time, at a pro rata rate; unless a short

9 period rate was agreed upon in the policy, after deducting any claim for loss which has previously accrued. c. The insured in a life insurance policy may also surrender the policy to obtain a return of the premium. d. If a peril insured against has existed and the insurer has been liable for any period, however short, the insured is not entitled to a return of the premium so far as that particular risk is concerned. 2. One of these statements is not correct: a. The insured is entitled to a return of the premium if the contract is voidable on account of fraud or misrepresentation of the insurer or of its agent, or an account of facts, or the existence of which the insured was ignorant without his fault. b. The insured is not entitled to return of the premium in case of any default of the insured. c. The insured is not entitled to a refund of the premium if the insurance contract is annulled because of his misrepresentation. d. In case of over-insurance by several insurers, the insured is entitled to a proportionate return of the premium proportioned to the amount by which the aggregate sum insured in all the policies exceeds the insurable value of the property. VI. Classes of Insurance A. Marine Insurance 1. One of these statements is not correct: a. Each party is bound to communicate all the information which he possesses, material to the risk, and to state the exact and whole truth in relation to all matters that he represents, or upon inquiry discloses or assumes to disclose. b. The rules as to concealment are stricter in marine insurance than in fire insurance. c. Information of the belief or expectation of a third person in reference to a material fact, is not material. d. The insured is presumed to know, at the time of insuring, of a prior loss, if the information might possibly have reached him in the usual mode of transmission. 2. Concealment does not merely exonerate the insurer from loss resulting from the risk concealed in one of these: a. The national character of the insured. b. The liability of the thing insured to capture and detention. c. The liability to seizure from breach of foreign laws of trade. d. The unseaworthiness of the vessel.

10 3. One of these statements is not an implied warranty in marine insurance: a. b. c. d. The ship is seaworthy. The ship will not deviate from the agreed voyage. The ship will not engage in illegal ventures. The shipowner has been paid the stipulated freightage in accordance with the charter party.

4. One of these statements is not correct: a. A vessel is seaworthy if it is reasonably fit to perform the service and to encounter the ordinary perils of the voyage contemplated by the parties to the policy. b. A ship which is seaworthy for the purpose of insurance of the ship may be unseaworthy for the purpose of insurance on the cargo. c. A warranty of seaworthiness does not extend only to the condition of the structure of the ship. d. The warranty of seaworthiness of the ship is limited to insurance on its cargoes. 5. One of these statements does not constitute deviation: a. b. c. d. Departure from the voyage insured. Unreasonable delay in pursuing the voyage. Commencement of an entirely different voyage. Misconduct on the part of the master and the crew.

6. Deviation is proper if: a. It is caused by circumstances over which neither the master nor the owner of the ship has any control. b. It is necessary to comply with a warranty or to avoid a peril, whether or not the peril is insured against. c. It was made in good faith and on reasonable grounds of belief in its necessity to avoid a peril. d. Damage caused by barratry on the part of the master and the crew. 7. One of these statements does not constitute actual total loss: a. Total destruction of the thing insured. b. Irretrievable loss of the thing by sinking or by being broken up. c. Any damage to the thing which renders it valueless to the owner for the purpose for which he held it. d. It was caused by barratry of the master or the crew. 8. One of these statements is not correct: a. Constructive total loss is one which gives to an insured a right to abandon. b. Abandonment is the act of the insured by which, after a constructive total loss, he declares the relinquishment to the insurer of his interest in the thing insured.

11 c. The insured may abandon the thing insured if the loss is more than three-fourths of its value or of the expenses to recover it from the peril. d. If logs loaded on two barges were insured under one policy and because of the rough sea and strong winds more than three fourths of the logs in one barge were lost, the insured can declare a constructive total loss with respect to the logs in that barge. 9. One of these statements is not correct: a. Abandonment must be neither partial nor conditional. b. Abandonment, once accepted, is irrevocable. c. Accepted abandonment does not become ineffectual if the information on which it was made proves incorrect. d. If notice of abandonment is properly given, the rights of the insured are not prejudiced by the refusal of the insurer to accept it. 10. One of these statements is not correct: a. Since an all-risk policy insures against all losses except those excluded in the policy or due to fraud or misconduct of the insured, the insured has to prove loss only and need not prove its cause. b. A policy which is not an all-risk policy insures against perils of the sea only and does not include perils of the ship. c. Two requisites are required for perils of the sea: (1) the violence must be unusual or unexpected and (2) the peril must be connected with navigation. d. Perils of the ship do not refer to unseaworthiness of the ship. 11. Losses due to one of these are not covered by a marine policy: a. b. c. d. Barratry Error of judgment, simple negligence, and lack of skill. Contribution to a general average loss. Sue and labor expenses.

B. Fire Insurance 1. One of these statements is not correct: a. An insurer is liable only for loss caused by hostile fire, one that escaped from the place where it is intended to burn, and not for loss caused by friendly fire, one that burns in the place where it is intended to burn. b. The insured has the burden of proving his loss. c. The insurer has the burden of proving that the loss was due to an excluded risk like rebellion. d. An alteration in the use of the thing insured from that to which it is limited by the policy made without the consent of the insurer and by means within the control of the

12 insured and which, increases the risk entitles the insurer to rescind the fire insurance policy. C. Casualty Insurance 1. One of these statements is not correct: a. An insurer which issued a liability insurance policy is not liable unless the insured is legally liable to the third person who was injured. b. If a liability insurance policy insures against liability to third parties, third parties who were injured can sue the insurer. c. If the liability insurance policy provides for indemnity to the insured against actual loss or payment, third persons who were injured cannot sue the insurer. d. An insured which insured a payroll against robbery is liable if the policy excluded loss caused by an authorized representative of the insured and if the payroll was stolen by the driver and the security guard escorting it who were provided by an independent security guard agency. 2. One of these statements is not correct: a. An insurer is liable under a personal accident policy issued to a security guard who joined a police officer and a homeowner who were going to the house of the homeowner because it was being robbed and the security guard was killed when the robber fired upon them to scare them. b. An insurer is liable under a personal accident insurance issued to a person who joined an amateur boxing contest and was killed when he accidentally slipped and was hit in the head by his opponent. c. An insurer is not liable under a personal accident policy when the insured was killed without any provocation or warning while waiting for a bus ride, because his death was unexpected. d. An insurer is not liable under a personal accident policy it issued to a seaman who drowned when he jumped from the ship to rescue a passenger who fell overboard. D. Suretyship 1. One of these statements is not correct: a. 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 obligee. b. The liability of a surety is joint and several with the obligor and is limited to the amount of the bond.

13 c. The liability of the surety is determined strictly by the terms of the suretyship in relation to the principal contract between the obligor and the obligee. d. A surety is not liable even if the bond has been accepted by the obligee if the premium has not been paid. 2. One of these statements is not correct: a. If the obligation whose performance was guaranteed by a surety bond has been extinguished, the surety is not entitled to collect any renewal premium any more. b. In the case of continuing bonds, such as judicial bonds, the obligor must pay the annual premiums until the bond is cancelled by the obligee or by a court of competent jurisdiction. c. The obligation of the surety is extinguished at the same time as that of the obligor and for the same causes as all other obligations. d. The surety can invoke defenses that are purely personal to the obligor. V. Life Insurance Policy 1. The insured can designate as beneficiary: a. A person who has no insurable interest in his life. b. A person with whom the insured was committing adultery or concubinage. c. A person with whom he committed a criminal offense in consideration of it. d. A public officer, his wife, descendants and ascendants, by reason of his office. 2. One of these statements is not correct: a. The insured can change the beneficiary he designated in the policy. b. The insured cannot change the beneficiary he designated in the policy if he expressly waived his right. c. The insured cannot change the irrevocable beneficiary in the policy even if the beneficiary consents to it. d. If a court decision annuls a marriage, declares it void, or decrees the legal separation of the spouses, the innocent spouse may revoke the designation of the other spouse who acted in bad faith as beneficiary in any life insurance policy even if the designation is irrevocable. 3. One of these statements is not correct: a. If an insured named a woman with whom he is committing adultery as beneficiary in his insurance policy, it is his legal wife who should receive the proceeds of the policy.

14 b. The designation of the illegitimate children of the insured as beneficiaries in the insurance policy is valid. c. If only the illegitimate children were designated as beneficiaries in life insurance policy, the legitimate children are not entitled to receive any share in the proceeds of the policy. d. If the beneficiary designated in a life insurance policy predeceases the insured and he did not designate another beneficiary, the proceeds of the policy should be paid to his estate. 4. One of these statements is not a requisite for the insured to be barred from proving that the policy is void or rescindable by reason of fraudulent concealment or misrepresentation: a. The policy is a life insurance policy. b. It is payable on the death of the insured. c. It has been in force during the lifetime of the insured for two years from the date of its issuance or its last reinstatement. d. The insured was in good health when the two-year period lapsed. 5. One these defenses is barred by the incontestability period: a. The person who obtained the policy had no insurable interest. b. The cause of the death of the insured is an excepted risk. c. The policy lapsed because the premiums were not paid. d. The insured is guilty of concealment. 6. One these defenses is barred by the incontestability period: a. The conditions of the policy regarding military or naval service in times of war were violated. b. The policy was taken in furtherance of a scheme to kill the insured. c. The insured substituted another person for himself during the medical examination. d. The insured made a misrepresentation. 7. One of these defenses is barred by the incontestability period: a. The beneficiary failed to furnish proof of death or to comply with any condition imposed by the policy after the loss had happened. b. The action was not filed on time. c. The insurer waived the ground for rescission of the policy. d. The insured was guilty of deceit. 8. One of these statements is not correct:

15 a. The insurer is not liable if the insured committed suicide within two years from the date of the issue of the life insurance policy or of its last reinstatement. b. The insurer will be liable if the insured committed suicide in the state of insanity regardless of the date of its commission. c. The interest of the beneficiary in a life insurance policy shall be forfeited if he willfully and unlawfully brought about the death of the insured as principal, accomplice or accessory. d. If the beneficiary forfeited his interest in a life insurance policy, the proceeds shall not be paid to anyone. 9. One of these statements is not correct: a. Cash surrender value is the amount of money the insurer agrees to pay to the insured if he surrenders it and releases his claims upon it. b. If the designation of the beneficiary is irrevocable, his consent is required for the insured to obtain a policy loan or surrender the policy. c. If the irrevocable beneficiary life insurance policy is a minor, in the absence of a judicial guardian, the father or the mother may obtain a policy loan or surrender the policy if the amount involved does not exceed P50,000. d. The proceeds of a life insurance policy are not exempt from execution. 10. One of these is not a relief from forfeiture of the benefits of a life insurance policy: a. b. c. d. Grace period to pay the subsequent premiums. Surrender of the policy for the cash surrender value. Reinstatement of a lapsed policy. Condonation of the arrears in the premium.

11. One of these is not a relief from the forfeiture of the benefits of a life insurance policy: a. b. c. d. Granting extended insurance for a certain period. Granting paid-up insurance for a certain period. Automatic loan. Reformation of the insurance contract.

VI. Compulsory Motor Vehicle Liability Insurance 1. One of these is not a third party: a. A member of the household of the owner of the motor vehicle. b. A member of the family within the second degree of affinity or consanguinity. c. An employee in the course of employment. d. An employee who is not in the course of employment.

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2. One of these statements is not correct: a. The policy provides indemnity for death or bodily injury. b. The amount of the coverage for private cars is P100,000. c. Third parties can sue the insurer directly. d. The requirement in the policy that the person authorized by the driver of the motor vehicle must have a drivers license is applicable. 3. One these statements is not correct: a. Under the no-fault indemnity provision, a claim for death injury to a third party shall be paid without necessity of proving fault or negligence. b. The insurer should not be held jointly and severally liable with the insured, because its liability is based on contract. c. If the amounts of the liabilities of the insured and the insurer are the same, they should be jointly and severally liable. d. If an insurer paid the no-fault indemnity, it cannot recover reimbursement from the owner of the other motor vehicle who was responsible for the accident. 4. One of these statements is not correct: a. The maximum indemnity under the no-fault indemnity provision is P15,000. b. A third party may file a claim for a no-fault indemnity against one motor vehicle only. c. If the victim is riding in a vehicle, the claim should be filed against the insurer of the motor vehicle in which he is riding. d. If the victim is not riding in a vehicle, the claim should be filed against the insurer of the offending vehicle. 5. To recover against the no-fault indemnity provision, one of these is not required: a. Police report of the accident. b. Death certificate and proof of the right of the proper party to receive the indemnity. c. Medical report and evidence of medical expenses. d. Photographs. 6. One of these statements is not correct: a. The payment of the no-fault indemnity is without prejudice to the right of the victim to pursue his claim in excess of it on showing that the driver of the motor vehicle was at fault. b. The insured should pay the total claim of the victim within ten working days after it has ascertained the

17 claim of the insured and reached an agreement with him. c. If no agreement was reached, the insurer should pay the no-fault indemnity without prejudice to the right of the victim to pursue his excess claim. d. If the insured settled with the victim without the written consent of the insurer, when this required by the policy, the insured cannot ask for reimbursement from the insurer. 7. One of these statements is not correct: a. The victim must file his claim with the insurer within six months from the date of the accident. b. If the claim is denied, he must file an action against the insurer within one year from the denial of the claim. c. The Insurance Commissioner and the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts have concurrent jurisdiction over claims against a compulsory motor vehicle liability policy. d. The decision of the Insurance Commission may be appealed to the Supreme Court if the appeal involves a question of law. VII. Claims Settlement A. Cause of Loss 1. An insurer is not liable for one of these losses: a. Loss the proximate cause of which is the peril insured against even though the immediate cause is not a peril insured against. b. Loss the immediate cause of which is the peril insured against. c. Loss the immediate cause of which is the peril insured against but the proximate cause is an excepted risk. d. Loss caused by the negligence of the insured. 2. An insurer is liable for one of these losses: a. Loss caused by the gross negligence of the insured. b. Loss where the thing insured is rescued from the peril insured against that would otherwise have caused a loss if in the course of it the thing is exposed to a peril not insured against, which permanently deprived the owner of its possession. c. Loss where the peril insured against is its remote cause. d. Loss caused by connivance of the insured. 3. An insurer is liable for one of these losses:

18 a. Loss caused by willful act of the insured. b. Loss caused by efforts to rescue the thing insured from a peril insured against. c. Loss the proximate cause of which is an excepted peril. d. Loss of property whose possession is illegal. B. Notice and Proof of Loss 1. One of these statements is not correct: a. In case of a fire insurance policy, if notice of loss is not given without unnecessary delay, the insurer is exonerated. b. When preliminary proof is required, the insured is not bound to give such proof as would be necessary in a court of justice, as it is sufficient to give the best evidence he has in his power at the time. c. All defects in a notice of loss or preliminary proof which the insured might remedy are waived if the insurer does not specify them to the insurer. d. Delay is not waived even if the insurer did not invoke it as a ground for denying a claim. C. Period for Filing Action 1. One of these statements is not correct: a. A stipulation limiting the period to file an action to less than one year from the time when the cause of action accrued is void. b. If the policy requires the filing of written claim as a condition for filing an action, the period for filing an action should be counted from denial of the claim. c. The filing of a request for reconsideration of the denial of claim suspends the running of the period to file an action. d. A request for explanation of the denial of the claim does not suspend the remaining of the period to file an action. D. Claims Settlement 1. One of these does not constitute unfair claim settlement practice: a. Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to the coverage at issue. 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.

19 d. Paying less than what is being claimed under its policies. 2. One of these statements is not correct: a. Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear is an unfair settlement practice. b. 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 by them is an unfair settlement practice. c. The certificate of authority of an insurer may be suspended or revoked for unfair settlement practice. d. In case of litigation for the enforcement of any insurance contract, if the decision held the insurer liable, the insurer must be held liable for attorneys fees. 3. One of these statements is not correct: a. In case of litigation for the enforcement of an insurance contract, the decision should make a finding as to whether the refusal of the insurer to pay was unreasonable. b. If the refusal of the insurer to pay was unreasonable, it should be held liable for attorneys fees and other expenses incurred by the insured. c. The insurer may be held liable for exemplary damages for unreasonably refusing to pay a plainly valid claim. d. An insurer cannot be held liable for moral damages for denying a claim in bad faith. 4. One of these statements is not correct: a. If an insurer was adjudged liable under a policy, it should be held liable for interest at the rate of six per cent a year from the time a written demand was made or from the time the action was filed, whichever comes first. b. Upon finality of the decision, the interest will be 12 per cent a year until the insured is paid. c. If the insurer acted in bad faith in denying a claim, it will be liable for interest at the rate of 24 per cent a year until the insured is paid. d. If a claim on a fire insurance policy is partly fraudulent, it does not make the whole claim fraudulent and the actual loss should be paid. 5. One of these statements is not correct: a. The mere fact that the amount claimed by the insured exceeded the amount awarded by 20 per cent does not make the claim fraudulent.

20 b. The proceeds of a life insurance company shall be paid immediately upon maturity of the policy. c. If the proceeds of a life insurance policy is payable in installments or as annuities, the installments or annuities shall be paid as they fall due. d. If a life insurance policy matures upon the death of the insured, the proceeds shall be paid within 90 days after the presentation of the claim and proof of the death of the insured. 6. One of these statements is not correct: a. In property insurance, the loss shall be paid within 30 days after presentation of proof of loss and ascertainment of the loss by agreement between the insured and the insurer or by arbitration. b. If the loss is not ascertained within 60 days after receipt of proof of loss, the loss shall be paid within 90 days after receipt of proof of loss. c. If property has been insured and the insurer indemnified the insured for a loss, the insurer is subrogated to the rights of the insured against the wrongdoer. d. For the insurer to be subrogated to the rights of the insured, the insured must execute a written assignment in its favor. 7. One of these is not a requirement of subrogation: a. The property was insured. b. The insured received indemnity from the insurer. c. The indemnity was for injury or loss arising from the loss complained of. d. The wrongdoer admitted his liability. 8. One of these statements is not correct: a. If the insurer paid the insured, the insured cannot sue the wrongdoer for the amount paid because of the subrogation in favor of the insurer. b. If a mortgagee insured his interest in the property mortgaged and was indemnified by the insurer because of a loss, he cannot claim against the mortgagor to the extent of the indemnity paid. c. If the insured released the wrongdoer from liability or settled with him, the insurer cannot recover from the wrongdoer but will be entitled to a refund from the insured for the payment he received. d. If the insured was required to file a claim with the wrongdoer within a certain period by law or by contract with the wrongdoer and failed to do so, the insurer can recover from the wrongdoer. 9. One of these statements is not correct:

21 a. If the goods insured were lost by the sinking of a vessel and were replaced but the insured still collected indemnity from the insurer, the insurer cannot recover from the shipowner. b. If the amount recoverable by the insured in case of loss of the goods insured is limited to a certain amount because of a provision in the bill of lading but the insurer paid the insured more on the basis of the fair market value, the insurer can recover the fair market value. c. If the cause of action of the insured against the wrongdoer is barred by prescription, this will also bind the insurer if it paid the insured for the loss. d. If the goods insured were covered by a bill of lading issued by a shipowner which provided for arbitration, if the insurer paid the insured for the loss of the goods it will be bound by the provision for arbitration.