CHAPTER II: Classes of Insurance Marine Insurance

Coverage:
Sec. 99 Other marine insurance risks not connected with marine navigation: a. Insurance against loss of or damage to aircraft. Aircraft- any contrivance now known or hereafter invented, used, or designed for navigation of, or flight in the air. b. Insurance against loss of or damage to goods and merchandise in the course of trans ortation and also including any risks to which said goods and merchandise may be e! osed while being assembled, acked crated, baled com ressed or similarly re ared for shi ment. "hen ur ose of assembly, acking etc.i.e., if the ur ose is for shi ment, then the insurance is classified as marine. c. Insurance against loss of or in#ury to erson in connection with marine transit or trans ortation insurance, it includes the liability of the shi owner or aircraft o erator for in#ury to its assengers but doesn$t include the liability of a land trans ortation o erator for in#uries to its assengers. d. Insurance against loss of or damage to recious stones, #ewels, #ewelry, recious metals, whether in the course of trans ortation or otherwise. e. Insurance against loss of or damage bridges, tunnels and other instrumentalities of trans ortation and communication. %rotection and Indemnity &lub- an association com osed of shi owners in general who band together for the s ecific ur ose of roviding insurance cover on a mutual basis against liabilities incidental to shi owning that the members incur in favor of third ersons. 'utual Insurance &om any- a coo erative enter rise where the members are both the insurer and the insured. &overage: a. rotection and indemnity b. war risks c. defense costs %eril of navigation- includes erils in making landings in rivers navigation, and damage from rain in conse(uence of im ro er stowage, unless such im ro er stowage was occasioned or ac(uiesced in by the insured. "ar risks ) e!tends only to erils due directly to some hostile action, military maneuver, or o erational war danger, and does not include the aggravation or increase of a maritime risks because of war o erations. *uilder$s risks- damage to ways from launching as well as damage to the shi . %erils of the sea- embrace all kinds of marine casualties and damages done to the shi or goods at sea by the violent action off the winds or waves, one that could not be foreseen and not attributable to the fault of anybody. %erils of the shi - losses or damages resulting from: a. natural and inevitable action of the sea

b. ordinary wear and tear of the shi c. negligent failure of the shi $s owner to rovide the vessel with ro er e(ui ment to convey the cargo under ordinary condition + ,nless otherwise stated in the olicy, loss due to erils of the shi is not within the coverage of marine insurance. It is the obligation of a cargo owner or insured to look for a reliable common carrier which kee s its vessels in seaworthy condition. *arratry- is any willful misconduct on the art of the master or crew in ursuance of some unlawful or fraudulent ur ose without the consent of the owners, and to the re#udice of the owner$s interest. Inchmaree clause- a rovision in the olicy that the insurance shall cover loss of, or damage to, the hull or machinery through the negligence of the master, charterers, mariners, engineers, or ilots, or through e! losions, bursting of boilers, breakage of shafts, or through any latent defect in the machinery or hull not resulting from want of due diligence. All -isk %olicy- all risks whatsoever and covering all losses by an accidental cause of any kind. In marine insurance, it is construed as creating a s ecial insurance and e!tending to other risks than are usually contem lated, and covers all losses e!ce t such as may arise from the fraud of the insured, intentional misconduct on the art of the insured or otherwise e!cluded in the olicy. .he insurer can avoid coverage u on demonstrating that a s ecific rovision e! ressly e!cludes the loss from coverage.

Insurable Interest
&harter %arty- the owner or the agent of a vessel binds himself to trans ort merchandise or erson for a fi!ed rice. Owner of &hartered /essel- owner still has insurable interest on the vessel. 0owever, in case of loss the owner may recover from the insurer only that art of the loss which he cannot obtain from the charterer. Sec. 121 *ottomry or res ondentia- a loan in which under any condition whatever, the re ayment of the sum loaned, and of the remium sti ulated, de ends u on the safe arrival in ort of the goods on which it is made or of the rice they may receive in case of accident. A loan with things e! osed to maritime risks as collaterals to be aid if the collaterals are safely trans orted and the lender shall lose his money if the latter are lost. *ottomry- security is a vessel -es ondentia- security is cargo /essel hy othecated on bottomry- the insurable interest thereon by the owner is only the excess of its value over the amount secured by bottomry. In case of loss, the owner need not ay the loan on bottomry and he is benefited to the e!tent of the amount of the loan obtained and actually the loss he suffers is only the difference between the actual value of the vessel and the loan on bottomry.
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 1

"hen vessel be the ob#ect of bottomry and marine insurance, after a loss, the value of what may be saved or salvaged shall be divided between the lender and the insurer, in ro ortion to the legitimate interest of each one, taking into consideration, for this ur ose only the rinci al with res ect to the loan. 6ender on bottomry or res ondentia- has an insurable interest in the shi or cargo to the e!tent of the amount of the loan granted. -atio: 6oss of the vessel or cargo e!tinguishes the loan, the lender stands to suffer damage by the loss of the vessel or cargo. 7reightage- signifies all the benefits derived by the owner, either from: a. chartering of the shi b. it em loyment for the carriage of his own goods or of those others. .he owner of a shi has an insurable interest on expected freightage which, according to ordinary and robable course of things, he would have earned but for the intervention of the eril insured against or other eril incident to the voyage. "here freightage is ayable in any event whether the vessel is lost or not, the shi owner has no insurable interest in such freightage. Insurable interest on 7reightage e!ists: a. In case of a charter arty, from the time the vessel has broken ground on the chartered voyage b. when there is no charter arty and the rice is to be aid for the carriage of goods, from the time said goods are actually on board the vessel, or if there is some contact for utting them on board, from the time both shi and goods are ready for the s ecific voyage. Sec. 128 Insurable interest in rofits -e(uires interest in the thing from which rofits are e! ected to come from which either may be legal or e(uitable Sec. 129 Insurable interest of shi charterer .o the e!tent that he is liable to be damnified by its loss

a. the national character of the insured b. liability of the thing insured to ca ture and detention c. liability to sei:ure from breach of foreign laws of trade d. want of necessary documents e. use of false and simulated a ers =ffect: Insurer will still be liable if the cause of the loss is not the fact concealed but will be e!em ted from liability should the fact concealed be the cause of the loss.

Representation
Sec. 111 'isre resentation in 'arine Insurance .o entitle the insurer to rescind the contract, it must be intentionally false in any material res ect, or in res ect of any fact on which the character and nature of the risk de ends. Sec. 11> 7alsity or re resentation as to e! ectation In the absence of fraud, it does not avoid the contract of insurance.

Implied Warranties
I. the shi is seaworthy II. 5o im ro er deviation from the agreed voyage will be made III. .he vessel will not engage in illegal venture, and I/. "here the nationality or neutrality of a ship or cargo is expressly warranted, it is im lied that the shi will carry the re(uisite documents which casts reasonable sus icion thereon. ;Sec 1>2< Sec 11? Seaworthiness de ends on circumstances. -easonable fitness to erform the service and to encounter the ordinary erils of the voyage contem lated by the arties is re(uired to satisfy the warranty of seaworthiness. =ffect of /iolation of Im lied "arranty of Seaworthiness .he insurer will not be liable for a loss occasioned thereby whether such fact was known to the insured or not. "aiver of Im lied "arranties by the Insurer It could only be done in writing, in the olicy and in the clearest language. And where the olicy sti ulates that the seaworthiness of the vessel as between the insured and the insurer is admitted, the (uestion of seaworthiness cannot be raised by the insurer without showing concealment or misre resentation of the insured. @elsan .rans ort 6ines v &A %ayment made by the insurer of the insured value of the lost cargo o erates as a waiver of its right to enforce the term of the im lied warranty against the insured under the marine insurance olicy. .he fact of ayment grants the insurer subrogatory right which enables it to e!ercise legal remedies that would otherwise be available to the insured as owner of the lost cargo against the common carrier. "hen seaworthiness is waived by the insurer: a. the warranty of seaworthiness is to be taken as fulfilledA or b. the risk of unseaworthiness is assumed by the insurer Sec. 118 "hen re(uirement of Seaworthiness is satisfied
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 >

Concealment
It is the duty of the insured in marine insurance, as re(uired of an insured in any kind of insurance, i.e., to reveal all information which he ossesses which is material to the risk. Insured must also reveal to the insurer information of the belief or e! ectation of a third erson, in reference to a material fact. .herefore, if the insured at the time of effecting the insurance receives, or has intelligence or information or knowledge of facts which affect the condition and safety of the shi on her voyage, and which, in the mind of a rudent and rational underwriter, would increase the ha:ard or liability to loss, it ought to be disclosed Sec. 129 %resum tion of knowledge of rior loss A erson insured is resumed to have knowledge, at the time of insuring, of a rior loss, if the information might ossibly have reached him in the usual mode of transmission and at the usual rate of communication. Sec. 11 A concealment in a marine insurance in res ect to any of the following matters e!onerates ;absolves< the insurer from a loss resulting from the risk concealed:

B-: Seaworthiness of the vessel is re(uired only at the commencement of the risk. C%5s: a. "hen the insurance is for a s ecific eriod, in which case, the vessel must be seaworthy at the commencement of every voyage she may undertake during such eriod. b. "hen the insurance is u on cargo re(uired to be transshi ed at an intermediate ort, in which case each vessel u on which the cargo is shi ed, or transshi ed, must be seaworthy at the commencement of each articular voyageA and c. "here the different ortions of the voyage contem lated by the olicy differ in res ect to things re(uisite to make the shi seaworthy, in which case the shi must be seaworthy at the commencement of each ortion with reference to that ortion. Sec 119 "arranty of Seaworthiness e!tends to: a. structure of the shi itself b. be ro erly laden c. with a com etent master d. sufficient number of com etent officers and seamen e. re(uisite a urtenances and e(ui ment ;ballasts, cables and anchors, cordage and sails, food, water, fuel and lights, and other necessary or ro er stores and im lements< Sec 11D ,nseaworthiness during the /oyage B-: It is the duty of the owner or shi ca tain to have the defect re aired without unreasonable delayA otherwise the insurer will be e!onerated from liability for any loss arising therefrom. C%5: "here the damage was not caused by the articular defect that made the shi unseaworthy, the insurer is still liable. Sec 119 Seaworthines for %ur ose of -eceiving &argo A shi which is seaworthy for the ur ose of an insurance u on the shi may, nevertheless, by reason of being unfitted to receive the cargo, be unseaworthy for the ur ose of insuranceupon cargo.

;b< made to com ly with a warranty, or avoid a eril ;c< made in good faith, to avoid a erilA or ;d< made in good faith, to save human life or relieve another vessel in distress. "ec# $%'# An insurer is not liable for any loss ha ening to the thing insured subse(uent to an im ro er deviation. =ffect of Im ro er deviation: In case of deviation without #ust cause, insurer is absolved from liability due to losses that occurred after the deviation ()"" "ec# $%*+,$. A ()"" may be: $# T)TA( a. ACT-A( total loss is caused by: i. .otal destruction of the thing insured ii. Irretrievable loss of the thing iii. @amage which renders the thing valueless iv. =vent which de rives the owner of the ossession b. C)."TR-CTIVE total loss ) making abandonment in case rovided by law >. PARTIA( ) loss that is not a total loss F: "hen is a marine insurance an indivisible contractG A: contract covers a single shi ment under one olicy and one remium, notwithstanding that sub#ect matter is loaded on different vessels. F: @etermination of loss A: &onstructive total loss will be determined on the basis of the total shi ment not on the loaded on one vessel one. "ec# $,%#%resum tion of actual loss due to continued absence of a shi without being heard of. .he length of time which is sufficient to raise this resum tion de ends on the circumstances of the case. "ec# $,,# "hen a shi is revented, at an intermediate ort, from com leting the voyage, by the erils insured against, the liability of a marine insurer on the cargo continues after they are thus reshi ed. 5othing in this section shall revent an insurer from re(uiring an additional remium if the ha:ard be increased by this e!tension of liability. "ec# $,&# In addition to the liability mentioned in the last section, a marine insurer is bound for a. @amages b. e! enses of discharging c. storage d. reshi ment e. e!tra freightage f. and all other e! enses incurred in saving cargo reshi ed ursuant to the last section, u to the amount insured. +&ontinuation of liability+ - insurance of the cargo shall continue and insurer is liable even though the shi u on which the cargo insured was loaded cannot continue the voyage due to eril insured against and such is loaded on another vessel
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 E

Vo age and !eviation

Sec 1>1- 1>> &ourse of the /oyage Insured "hen the voyage contem lated by a olicy is described by the laces of beginning and ending, the course of the voyage insured is: a. the one agreed u on by the arties b. in the absence of agreement, the course of sailing fi!ed by mercantile usage c. if the course of sailing is not fi!ed by mercantile usage, one which to a master of ordinary skill and direction would seem the most natural, direct and advantageous. Sec 1>E @eviation a. a de arture from the course of the voyage insured b. an unreasonable delay in ursuing the voyage c. the commencement of an entirely different voyage @=/IA.IO5 > kinds of @eviation: 1. %ro er ;Sec. 1>?< >. Im ro er ) those not included in Sec. 1>? ;Sec. 1>8< "ec# $%&#A deviation is ro er when: ;a< caused by circumstances beyond the control of master or owner of the shi

+ 5othing in this or in the receding section shall render a marine insurer liable for any amount in e!cess of the insured value or, if there be none, of the insurable value. gives the insurer the right to re(uire ayment of additional remium in case of delay in rosecuting the voyage there is actually no e!tension of liability on the insurer but what arises is a novated contract with an increased rate of remium. "ec# $,/# Actual .otal 6oss H notice of abandonment is 5O. necessary for the insured to be entitled to ayment &onstructive .otal 6oss H abandonment is 5=&=ssary for the insured to be entitled to ayment "ec# $,'# "here it has been agreed that an insurance u on a articular thing, or class of things, shall be free from articular average, a marine insurer is not liable for any articular average loss not de riving the insured of the ossession, at the ort of destination, of the whole of such thing, or class of things, even though it becomes entirely worthlessA but such insurer is liable for his ro ortion of all general average loss assessed u on the thing insured. Iinds of Averages 1. "IMP(E )R PARTIC-(AR Average o Includes all the e! enses and damages caused to the vessel or to her cargo which have not inured to the common benefit and rofit of all ersons interested in the vessel and her cargo o It is artial loss caused by a eril insured against, which is not a general average loss >. 0E.ERA( or 0R)"" Average o Includes all the damages and e! enses which are deliberately caused in order to save the vessel, its cargo, or both, from real and known risk. o All ersons having an interest in the vessel and cargo at the same time of the occurrence of the average shall contribute to the average %rocedural and formal re(uirements: @amages and e! enses are deliberately caused in order to save the vessel, its cargo, or both, from real and known risk .here must be a resolution, entered of the ca tain and after hearing the ersons interested in the cargo o If not com lied, no right to claim contribution for a general or gross average loss 7-== from %A-.I&,6A- A/=-AB= &lause ;7%A &lause< Sti ulation by the insured and the insurer =77=&.S: a. If the damage is a articular average: B-: insurer is 5O. liable C%5: in case of .O.A6 loss b. If damage is a general average: Insurer is liable ;either total or artial loss<, or for the contribution of the insured for his ro ortion of all general average losses assessed u on the thing insured which was saved

"ec# $,*#Actual .otal 6oss defined: does not cover a constructive total loss covers any loss that results in de riving the insured of the ossession or use of the entire thing insured at the ort of destination "ec# $,1# A2A.!).ME.T+ the act of the insured by which he declares the relin(uishment to the insurer of his interest in the thing insured A7.=- A &O5S.-,&.I/= .O.A6 6OSS =ffects: Insured is surrendering to the insurer whatever is left of the ro erty insured and resorting to the olicy for indemnity Insurer becomes the owner of whatever remains Insured may recover a total loss "ec# $,3. "hat to abandon: a. the thing insured b. any articular ortion of the thing insuredse arately valued by the olicy c. any articular ortion of the thing insuredse arately insured "hen to abandon in order to recover a total loss: ;a< If more than EJ? thereof in value is actually lost, or would have to be e! ended to recover it from the erilA ;b< If it is in#ured to such an e!tent as to reduce its value more than EJ?A ;c< If the thing insured is a shi , and the contem lated voyage cannot be lawfully erformed without incurring either an e! ense to the insured of more than EJ? the value of the thing abandoned or a risk which a rudent man would not take under the circumstancesA or ;d< If the thing insured, being cargo or freightage, and the voyage cannot be erformed, nor another shi rocured by the master, within a reasonable time and with reasonable diligence, to forward the cargo, without incurring the like e! ense or risk mentioned in the receding sub- aragra h. *ut freightage cannot in any case be abandoned unless the shi is also abandoned. =ffects of Abandonment in the above cases: a. insured may recover a total loss b. insurer ac(uires all the interest of the insured with all chances of recovery and indemnity + if insured omits to abandon, he may recover only his actual loss "ec# $&4 + &$# -=F,ISI.=S O7 /A6I@ A*A5@O5'=5.: 1. total and unconditional >. made within reasonable time after recei t of reliable information of the loss o information is of a doubtful character, the insured is entitled to a reasonable time to make in(uiry E. an e! licit notice of abandonment s ecifying the articular cause of abandonment must be given to the insurer ?. ro er and legal cause for abandonment 8. cou led with an actual abandonment or relin(uishment of claim of ownershi by the insured in favor of the insurer
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 ?

"ec# $&%# "henAbandonment becomes ineffectual: a. information u on which an abandonment has been made roves incorrect b. the thing insured was so far restored when the abandonment was made that there was then in fact no total loss "ec# $&,+&&#5otice of Abandonment to insurer: a. may oral or written. o *,. if notice is oral, a written notice of abandonment shall be submitted within K days from such oral notice. o ,nless, olicy re(uires it to be in writing b. must be e! licit, and must s ecify the articular cause of the abandonment o need to state only that which is enough to show that there is robable cause o does not need to be accom anied with roof of interest or of loss. "ec# $&/#An abandonment can be sustained only u on the cause s ecified in the notice thereof. "ec# $&'+&1.=ffects of Abandonment: a. e(uivalent to a transfer by the insured of his interest to the insurer, with all the chances of recovery and indemnity. ;sec. 1?9< b. If a marine insurer ays for an actual total loss, he is entitled to whatever may remain of the thing insured, or its roceeds or salvage, as if there had been a formal abandonment. ;sec. 1?K< c. acts done in good faith by agents of the insured in res ect to the thing insured, subse(uent to the loss, are at the risk of the insurer and for his benefit. F: after abandonment of the vessel insured, the master of shi incurred reasonable e! enses to save the vessel, who is liable for such e! ensesG A: Insurer since its title over the thing abandoned became vested as of the time of loss "ec# $&3 + /,# =ffect of ro erly given notice of abandonment: rights of the insured are not re#udiced even though insurer refuses to acce t the abandonment. ;sec. 1?9< o 5otwithstanding refusal, insurer is still liable, as u on an actual loss, deducting from the amount any roceeds of the thing insured which may have come to the hands of the insured ;sec. 18?< A&&=%.A5&= O7 A5 A*A5@O5'=5. : a. may be either e! ress or im lied from the conduct of the insurer. 'ere silence of insurer for an unreasonable length of time after notice is an acce tance ;Sec. 182< b. conclusive u on the arties ;sec. 181< c. admits the loss and the sufficiency of the abandonment ;sec. 181< d. irrevocable ,56=SS the ground u on which it was made roves to be unfounded. ;sec. 18>< e. On an acce ted abandonment of a shi , freightage earned revious to the loss belongs to the insurer of

said freightageA but freightage subse(uently earned belongs to the insurer of the shi . ;sec. 18E< "ec# $//# If a erson insured omits to abandon, he may nevertheless recover his actual loss. MEA"-RE )5 I.!EM.IT6 "ec# $/'# A valuation in a olicy of marine insurance is conclusive between the arties thereto in the ad#ustment of either a artial or total loss %-O/I@=@: 1. the insured has some interest at risk, and >. there is no fraud on his artA o in case of fraud, insurer can rescind the contract B-: insured does not have to rove the value of the thing insured C%5S: a. when a thing has been hy othecated by bottomry or res ondentia, before its insurance, and b. without the knowledge of the erson actually rocuring the insurance ;additionallang< c. thing has not been valued in the olicy, value mist be roven at the time of loss =ffect of Over-/aluation if fraudulent, it entirely avoids the insurance over-valuation and fraud must be alleged and clearly roven by the insurer honest valuation does 5O. avoid the olicy "ec# $/*# A marine insurer is liable u on a artial loss, only for such ro ortion of the amount insured by him as the loss bears to the value of the whole interest of the insured in the ro erty insured. &O-I5S,-A5&= ) a form of insurance in which the erson who insures his ro erty 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 ro erty and the amount of the insurance. Always e!ists in marine insurance -e(uisites: 1. insurance taken is less than the actual value of the thing insured ;,5@=--I5S,-A5&=< and >. loss is artial =ffect: ro ortionate division of risk between the insured and the insurer o insurer is liable u on a artial loss only for such ro ortion of the amount insured by him as the loss bears to the value of the whole interest of the insure in the ro erty insured.
6oss 6iability of insurer H LLLL C Insurance /alue

+,nder-insurance must be roven ) insurer must rove that the value of the ro erty insured is more than the amount of the olicy "ec# $/1# "here rofits are se arately insured in a contract of marine insurance, the insured is entitled to recover, in case of
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 8

loss, a ro ortion of such rofits e(uivalent to the ro ortion which the value of the ro erty lost bears to the value of the whole. +%resum tion of loss of e! ected rofits ) in case of insurance of e! ected rofits the loss of the cargo or ro erty out of which rofits are e! ected to arise "ec# $/3# In case of a valued olicy of marine insurance on freightage or cargo, if a art only of the sub#ect is e! osed to the risk, the evaluation a lies only in ro ortion to such art. "ec# $'4# "hen rofits are valued and insured by a contract of marine insurance, a loss of them is conclusively resumed from a loss of the ro erty out of which they are e! ected to arise, and the valuation fi!es their amount. +insurer is liable to a ro ortion of rofits e(uivalent to the ro ortion which the value of the ro erty lost bears to the value of the whole when: a. rofits are se arately insured, and b. ro erty out of which rofits are e! ected to arise is artially lost "ec# $'$#-,6=S in estimating a loss under an open polic of marine insurance: ;a< .he value of a shi is its value at the beginning of the risk, lus articles or charges which add to its ermanent value or which are necessary to re are it for the voyage insuredA ;b< .he value of the cargo is its actual cost to the insured, when laden on board, or where the cost cannot be ascertained, its market value at the time and lace of lading, adding the charges incurred in urchasing and lacing it on board, but without reference to any loss incurred in raising money for its urchase, or to any drawback on its e! ortation, or to the fluctuation of the market at the ort of destination, or to e! enses incurred on the way or on arrivalA ;c< .he value of freightage is the gross freightage, e!clusive of rimage, without reference to the cost of earning itA and ;d< .he cost of insurance is in each case to be added to the value thus estimated. @-A"*A&I - allowance made by the govt u on the duties due on im orted merchandise when the im orter re-e! orts it - O- the refunding such duties if already aid - not included in determining the loss in marine o en olicy %-I'AB= - small allowance or com ensation ayable to the master or owner of the vessel for the use of his cables and ro es to discharge the goods, and to the mariners for lading and unlading - not included in determining the loss in marine o en olicy

"ec# $',# A marine insurer is liable for all the e! enses attendant u on a loss which forces the shi into ort to be re airedA and where it is sti ulated in the olicy that the insured shall labor for the recovery of the ro erty, the insurer is liable for the e! ense incurred thereby, such e! ense, in either case, being in addition to a total loss, if that afterwards occurs. S,= and 6A*O- &6A,S= ermitting the insured to take every means for the recovery of ro erty without waving his right to abandon and to bind the insurer to reimburse the insured for the reasonable amount of the e! enses incurred a se arate and distinct contract =ffect when included in marine olicy insurer is liable for the e! ense incurred by the insured in recovering the ro erty, which e! ense is an addition to a total loss =!tent of liability of insurer: 1. Actual loss and >. All e! enses, caused by a loss which forces the shi into ort to be re aired "ec# $'&# A marine insurer is liable for a loss falling u on the insured, through a contribution in res ect to the thing insured, re(uired to be made by him towards a general average loss called for by a eril insured againstA %-O/I@=@, that the liability of the insurer shall be limited to the ro ortion of contribution attaching to his olicy value where this is less than the contributing value of the thing insured. "ec# $'/# "hen a erson insured by a contract of marine insurance has a demand against others for contribution, he may claim the whole loss from the insurer, subrogating him to his own right to contribution. *ut no such claim can be made u on the insurer after the se aration of the interests liable to the contribution, nor when the insured, having the right and o ortunity to enforce the contribution from others, has neglected or waived the e!ercise of that right. B=5=-A6 A/=-AB= )caused deliberately to save the vessel or cargo or both from real and known risk. All ersons having an interest in the vessel and cargo at the same time of the occurrence of the average shall contribute to the average. If the insured is the erson liable to contribute to a general average, he may hold the insurer liable for his contribution u to the value of the olicy. +Owner of the insured ro erty that suffered a general ave.loss may: a. claim from other ersons interested in the vessel or other cargoes to contribute to the gen.ave.loss he suffered Ob. demand the whole amount of the gen.ave.loss from his insurer, in which case, the insurer shall be subrogated to the right of the insured to contribution from the others. B-: Insurer is 5O. liable for Ben.Ave.6oss when: a. Insured neglected or waived the right to demand contribution from others Ob. .he insurer is being made liable after the se aration of the interests liable to contribution =ffects of waiver J negligence: 1. %ersons liable for contribution are released from liability
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 9

"ec# $'%# If cargo insured against artial loss arrives at the ort of destination in a damaged condition, the loss of the insured is deemed to be the same ro ortion of the value which the market rice at that ort, of the thing so damaged, bears to the market rice it would have brought if sound.

>. E.

Insurer is de rived the right to be subrogated to the right of the insured against the ersons liable for the contribution Insurer is no longer liable on the olicy

+6iability of every ortion of the cargo to contribute to general average continues until it has been com letely se arated from the rest of the cargo, and from the whole adventure, so as to leave no community of interest remaining. "ec# $''# In the case of a artial loss of shi or its e(ui ment, the old materials are to be a lied towards ayment for the new. ,nless otherwise sti ulated in the olicy, a marine insurer is liable for only two-thirds of the remaining cost of re airs after such deduction, e!ce t that anchors must be aid in full.

Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 K

5IRE I."-RA.CE
"ec# $'*# As used in t7is Code8 t7e term 9fire insurance9 s7all include insurance against loss b fire8 lig7tning8 :indstorm8 tornado or eart7;ua<e and ot7er allied ris<s8 :7en suc7 ris<s are covered b e=tension to fire insurance policies or under separate policies#

-An alteration in the useJcondition of the thing insured will entitle the insurer to -=S&I5@ the contract of insurance rovided the ff re(uisites are resent: a. .here must be violation of the rovisions of the olicyA b. .he alteration was made without the consent of the insurerA c. .he alteration as made by means within the control of the insuredA and

d. .he alteration increased the risk of loss. 7ire Insurance-it now includes insurance against lightning, windstorm, tornado, earth(uake and other allied risks. 7I-= I5S,-=@ ABAI5S.: the insured is entitles to recover the loss suffered where the cause of the damage is a hostile fireL 5O -=&O/=-M: .he fire caused the loss is friendly fire, one which is confined within the lace where it was intended to be and em loyed for the ordinary ur ose of lightning, heating or manufacturing, recovery cannot be had for loss or damage caused thereby. "ec# $'1# An alteration in t7e use or condition of a t7ing insured from t7at to :7ic7 it is limited b t7e polic made :it7out t7e consent of t7e insurer8 b means :it7in t7e control of t7e insured8 and increasing t7e ris<s8 entitles an insurer to rescind a contract of fire insurance# "ec# $'3# An alteration in t7e use or condition of a t7ing insured from t7at to :7ic7 it is limited b t7e polic 8 :7ic7 does not increase t7e ris<8 does not affect a contract of fire insurance# "ec# $*4# A contract of fire insurance is not affected b an act of t7e insured subse;uent to t7e e=ecution of t7e polic 8 :7ic7 does not violate its provisions8 even t7oug7 it increases t7e ris< and is t7e cause of t7e loss# Alteration in the ,S= or &O5@I.IO5 of the thing insured: One which burns at a lace where it is not intended to be -breaks out from where it is intended to be and becomes uncontrollable /IO6A.IO5 O7 %O6I&M 5=&=SSA-M: +there must be a corres onding violation of the rovision of the olicy with an increase of the risk of loss, otherwise there is no right to rescind the olicy. I5&-=AS= I5 -ISI O7 6OSSS 5=&=SSA-M: "hen the risk was increased, the insured should ay a remium based u on the increased risk. "hen the insured does not ay the remium u on the increased risk, the insurer is entitled to rescind the contract.

"ec# $*$# If t7ere is no valuation in t7e polic 8 t7e measure of indemnit in an insurance against fire is t7e e=pense it :ould be to t7e insured at t7e time of t7e commencement of t7e fire to replace t7e t7ing lost or in>ured in t7e condition in :7ic7 at t7e time of t7e in>ur ? but if t7ere is a valuation in a polic of fire insurance8 t7e effect s7all be t7e same as in a polic of marine insurance "ec# $*%# W7enever t7e insured desires to 7ave a valuation named in 7is polic 8 insuring an building or structure against fire8 7e ma re;uire suc7 building or structure to be e=amined b an independent appraiser and t7e value of t7e insured@s interest t7erein ma t7en be fi=ed as bet:een t7e insurer and t7e insured# T7e cost of suc7 e=amination s7all be paid for b t7e insured# A clause s7all be inserted in suc7 polic stating substantiall t7at t7e value of t7e insured@s interest in suc7 building or structure 7as been t7us fi=ed# In t7e absence of an c7ange increasing t7e ris< :it7out t7e consent of t7e insurer or of fraud on t7e part of t7e insured8 t7en in case of a total loss under suc7 polic 8 t7e :7ole amount so insured upon t7e insured@s interest in suc7 building or structure8 as stated in t7e polic upon :7ic7 t7e insurers 7ave received a premium8 s7all be paid8 and in case of a
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 D

partial loss t7e full amount of t7e partial loss s7all be so paid8 and in case t7ere are t:o or more policies covering t7e insured@s interest t7erein8 eac7 polic s7all contribute pro rata to t7e pa ment of suc7 :7ole or partial loss# 2ut in no case s7all t7e insurer be re;uired to pa more t7an t7e amount t7us stated in suc7 polic # T7is section s7all not prevent t7e parties from stipulating in suc7 policies concerning t7e repairing8 rebuilding or replacing of buildings or structures :7oll or partiall damaged or destro ed# '=AS,-= O7 I5@='5I.M: .he e! ense it would be to the insured to re lace the thing lost or insured in the condition in which it was at the time of the in#ury. -eason: the ob#ect of ro insurance is the I5@='5I.M of the insures, thus, the insured may recover the value of the damage at the time of loss, but in 5O &AS= =C&==@I5B .0= 'ACI',' amount of recovery sti ulated in the olicy. In /A6,= %O6&M-the valuation agreed is the conclusive between the arties in the ad#ustment of loss. I5S,-=-$S 6IA*I6I.M I5 /A6,=@ %O6I&M: .otal loss %artial loss the insurer shall ay the whole amount full amount of the artial loss shall be aid

s7all be void and of no effect insofar as it ma affect ot7er creditors of t7e insured# Any of the ff. circumstances shall constitute evidence of arson: rima facie

1. If the fire started simultaneously in more than one art of the building or establishmentA >. If the substantial amount of flammable substance or materials stored within the building neither necessary in the business of the offender nor for household use.

E. If gasoline, kerosene, etroleum or other flammable or combustible substance or material soaked therewith or containers thereof, or nay mechanical, electrical chemical, or electric contrivance designed to start a fire, or ashes or traces of any of the foregoing are found int he ruins or remises of the insured biding or ro .

?. If the building or ro erty is insured for substantially more than its actual value at the time of the issuance of the olicy.

"hen co-insurance is rovided in the fir insurance olice, the loss shall be ratably distributed between the insured and the insurer with the following formula: 6ossJ/alue ! Insurance H Insurer$s 6iability O%.IO5 .O -=*,I6@ &6A,S=: .he law e! ressly allows the arties to agree on the re airing, rebuilding, or re lacing of the buildings or structures, wholly or artially damaged or destroyed. "hen NO tion to -ebuild N is sti ulated- the insurer may either ay the amount of loss or rebuild the building damaged. .he insurer must give notice of election to rebuild, otherwise, it must ay the amount of the loss. "ec# $*,# .o polic of fire insurance s7all be pledged8 7 pot7ecated8 or transferred to an person8 firm or compan :7o acts as agent for or ot7er:ise represents t7e issuing compan 8 and an suc7 pledge8 7 pot7ecation8 or transfer 7ereafter made

8. If during the lifetime of the corres onding fir insurance olicy more than two fires have occurred in the same or other remises owned or under control of the offender andJor insured.

9. If shortly before the fire, a substantial ortion of the effects insured and a building or ro erty had been withdrawn from the remises e!ce t in the ordinary course of business.

K. If a demand for money or other valuable consideration was made before the fire in e!change for the desistance of the offender or for safety of the erson or ro erty of the victim.

Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 9

CA"-A(T6 I."-RA.CE
"ec# $*&# Casualt insurance is insurance covering loss or liabilit arising from accident or mis7ap8 e=cluding certain t pes of loss :7ic7 b la: or custom are considered as falling e=clusivel :it7in t7e scope of ot7er t pes of insurance suc7 as fire or marine# It includes8 but is not limited to8 emplo er@s liabilit insurance8 motor ve7icle liabilit insurance8 plate glass insurance8 burglar and t7eft insurance8 personal accident and 7ealt7 insurance as :ritten b non+life insurance companies8 and ot7er substantiall similar <inds of insurance# &asualty insurance includes insurance covering loss or liability arising from accident or misha other than those within the sco e of other ty es of insurance. It includes the ff: 1. =m loyer$s liability and workmen$s insurance in which the risk insured against is the liability of the assured to make com ensation or ay damages for an accident, in#ury, or death, occurring to a servant or other em loyee, in the course of his em loyment under statues im osing such liability on em loyees. >. %ublic utility insurance which indemnifies against liability on account of in#uries to the erson or ro erty of another. It may e!tend to automobiles, elevators, fly wheels, libel, theatres, and vessels.

assured against e! ense, loss of time, and suffering resulting from accidents causing him hysically in#ury, usually by ayment at a fi!ed rate er week while the conse(uent disability lasts, and sometimes including the ayment of a fi!ed sum to his heirs in case by his death by accident within the term of the olicy.

K. 0ealth insurance which is an indemnity to ersons for e! ense and loss of time occasioned by disease. &om arison: (ife insurance Ob#ect: to rovide a fund for the benefit of the estate or the heirs or beneficiaries of the insured after the latter$s death Accident and Healt7 Insurance ,sual ur ose: to rotect against not a loss of life but a loss of time, earning ca acity and e! enses.

"hen one of the risks insured in an accident insurance is the death of the insurance by accident, then such insurance may also be regarded as life insurance. 'otor vehicle insurance: it should also cover the liability for death of, or bodily in#uries to, assengers and Erd arties.

E. 'otor vehicle liability insurance which is a contract of insurance against assenger and thirdarty liability for death or bodily in#ures and damage to ro erty srising from, motor vehicle accidents.

Accidental bodily in#ury: death due to gastroenteritis or gastrointestinal allergy, or unknowingly eating food harmful to the insured comes within the coverage of an insurance olicy roviding for death from accidental bodily in#ury.

?. %late glass insurance which is an insurance against loss from accidental breaking of lateglass, doors, show-cases, etc.

8. *urglary and theft insurance which is an insurance against loss of ro erty by the de redations of burglars and thieves.

9. %ersonal accident insurance which is a form of insurance which undertakes to indemnify the
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 12

"-RET6"HIP
"ec# $*/# A contract of suret s7ip is an agreement :7ereb a part called t7e suret guarantees t7e performance b anot7er part called t7e principal or obligor of an obligation or underta<ing in favor of a t7ird part called t7e obligee# It includes official recogniAances8 stipulations8 bonds or underta<ings issued b an compan b virtue of and under t7e provisions of Act .o# /,'8 as amended b Act .o# %%4'#

cor orate surety, to the contrary, is in business to make rofit and charges a remium de ending u on the amount of guaranty and the risk involved. >. .he cor orate surety, like an insurance com any, re ares the instrument, which is a ty e of contract of adhesion, whereas the rivate surety usually does not re are the note or bond which he signs. E. .he obligation of the rivate surety is often assumed on the basis of the debtor$s re resentations and without legal advice, while the cor orate surety does not bind itself a full investigation. S,-=.M$S -IB0. .O &O66=&.: - .he surety can demand ayment from the rinci al u on the latter$s default even before the former has aid the creditor. "ec# $**# T7e suret is entitled to pa ment of t7e premium as soon as t7e contract of suret s7ip or bond is perfected and delivered to t7e obligor# .o contract of suret s7ip or bonding s7all be valid and binding unless and until t7e premium t7erefor 7as been paid8 e=cept :7ere t7e obligee 7as accepted t7e bond8 in :7ic7 case t7e bond becomes valid and enforceable irrespective of :7et7er or not t7e premium 7as been paid b t7e obligor to t7e suret : Provided8 T7at if t7e contract of suret s7ip or bond is not accepted b 8 or filed :it7 t7e obligee8 t7e suret s7all collect onl reasonable amount8 not e=ceeding fift per centum of t7e premium due t7ereon as service fee plus t7e cost of stamps or ot7er ta=es imposed for t7e issuance of t7e contract or bond: Provided8 7o:ever8 T7at if t7e non+acceptance of t7e bond be due to t7e fault or negligence of t7e suret 8 no suc7 service fee8 stamps or ta=es s7all be collected# In t7e case of a continuing bond8 t7e obligor s7all pa t7e subse;uent annual premium as it falls due until t7e contract of suret s7ip is cancelled b t7e obligee or b t7e Commissioner or b a court of competent >urisdiction8 as t7e case ma be# 0R: ayment of remium is a condition recedent for the validity of suretyshi contract or bond and, therefore, unless and until the remium is aid, the suretyshi contract or bond is not valid.
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 11

S,-=.M Is the insurer of the debt ,ndertakes to ay if the rinci al does not ay @oes not have such right

.he obligation of the surety is rimary Alike: that each default of another

B,A-A5.OIs the insurer of the solvency of the debtor *inds himself to ay if the rinci al is unable to ay &annot be com elled to ay the creditor unless the latter has e!hausted all the ro erty of the debtor and has resorted o all the legal remedies against the debtor .he obligation of the guarantor is secondary

romises to answer for the debt or

"ec# $*'# T7e liabilit of t7e suret or sureties s7all be >oint and several :it7 t7e obligor and s7all be limited to t7e amount of t7e bond# It is determined strictl b t7e terms of t7e contract of suret s7ip in relation to t7e principal contract bet:een t7e obligor and t7e obligee# BAs amended b Presidential !ecree .o# $&//C# Obligation: #oint and several liability I5.=-%-=.A.IO5 in &AS= O7 @O,*.: a surety contained in a form re ared by the com ensated surety must be construed against the surety and in favour of the promisee or construed in the same manner as contracts of insurance. -ationale of this doctrine: 1. ,nlike the rivate surety, the cor orate surety signs for cash and not for friendshi . .he rivate surety is regarded as someone doing a rather foolish act for raiseworthy motivesA the

DP.: when a bond or suretyshi contract is issued, and acce ted by the oblige or creditor, said bond or contract shall be valid and binding notwithstanding the nonayment of remium. WHE. "-RET6 E.TIT(E! T) "ERVICE 5EE ).(6: .he surety shall be entitled only to a reasonable service fee in an amount not e!ceeding 82O of the remium due, lus the cost of stam s and other ta!es im osed for the issuance of the bond, in the ff cases: or bond is not

a. "hen the contract of suretyshi acce ted by the obligeA or b. "hen the contract of suretyshi filed with the oblige.

or bond is not

+If it is due to negligence or fault of the surety, no service fee, stam s or ta!es can be collected. "ec# $*1# Pertinent provisions of t7e Civil Code of t7e P7ilippines s7all be applied in a suppletor c7aracter :7enever necessar in interpreting t7e provisions of a contract of suret s7ip#

Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 1>

(I5E I."-RA.CE
"ec# $*3. Life insurance is insurance on 7uman lives and insurance appertaining t7ereto or connected t7ere:it7# "ec# $14# An insurance upon life ma be made pa able on t7e deat7 of t7e person8 or on 7is surviving a specified period8 or ot7er:ise contingentl on t7e continuance or cessation of life# Ever contract or pledge for t7e pa ment of endo:ments or annuities s7all be considered a life insurance contract for purpose of t7is Code# In t7e absence of a >udicial guardian8 t7e fat7er8 or in t7e latter@s absence or incapacit 8 t7e mot7er8 or an minor8 :7o is an insured or a beneficiar under a contract of life8 7ealt7 or accident insurance8 ma e=ercise8 in be7alf of said minor8 an rig7t under t7e polic 8 :it7out necessit of court aut7orit or t7e giving of a bond8 :7ere t7e interest of t7e minor in t7e particular act involved does not e=ceed t:ent t7ousand pesos# "uc7 rig7t ma include8 but s7all not be limited to8 obtaining a polic loan8 surrendering t7e polic 8 receiving t7e proceeds of t7e polic 8 and giving t7e minor@s consent to an transaction on t7e polic # &O,-. A,.0O-I.M 5O. 5=&=SSA-M-when the amount does not e!ceed >2,222, in order that the minor$s father, or in his absence or inca acity, the mother may e!ercise any right in behalf of the minor, suach as obtaining a olicy loan, or given the minor$s consent to any transaction on the olicy. -"-A( EI.! )5 (I5E I."-RA.CE: a. Beneral, ordinary or old line life insurance is that in which for a fi!ed remium ayable, without condition, at stated intervals, a sum certain is to be aid on death, without condition. b. 6imited ayment life insurance is that form under which s ecified remiums are to be aid for a s ecified eriod or until the death of insured it it occurs before the e! iration of such eriod, and of the insured.

c.

=ndowment insurance is a contract to ay a certain sum to the insured if he lives a certain length of time, or if he dies before that time, to some other erson indicated as beneficiary

d. .erm life insurance is insurance for a term of years only, or until insured shall have arrived at a certain age. e. Advance insurance is a contract which rovides for the ayment to the insured of a lum sum immediately, in consideration of his agreement to make certain eriodical ayments to the insurer for a s ecified eriod, or for the end of the eriod, the erformance of the insured$s obligation being secured by mortgage or deed of trust.

f.

.ontine insurance is a form of life insurence by which the olicyholder agrees, in common with the other olicyholders under the same lan, that no dividends, return remium, or surrender value shall be received for a term of years called the Ntontine period. .he entire sur lus from all sources being allowed to accumulate to the end that eriod, and then divided among all who have maintained their insurance in force and who survived.

A..-IT6-is a contract to ay insured, or a named ersonJs a sum eriodically during a life or a certain eriod. A..-IT6 %ayable during the lifetime of the annuitant %ays a single remium .he insurer undertakes to ay annuities until the death of the annuitant (I5E I."-RA.CE %ayable u on the death of the insured %ays remium by instalment .he insurer ays a lum sum u on death of the insured

(I5E I."-RA.CE WHI(E I. MI(ITAR6 "ERVICE: .he insurer may be validly e!em t when the insured dies while engaged in naval or military service in the time of war. WHERE A""A-(T )R M-R!ER EDC(-!E!: when the death of the insured is by Nassault or murder or intentional killingP is e!ce ted from its coverage, the mere fact that the insured suffered a violent death by the hands of
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 1E

another erson will not necessary relieve the insurer liability. Insurer$s liability: will de end on whether the insured$s death was intended or not. If intentionally killed by another ersonH insurer is not liable. If the insured was not an intended victim of felonious assaultH the insurer is still liable. WHERE I."-RE! EDCEC-TE! 5)R CRIME: a olicy of life insurance does not insure against the legal e!ecution of the insured for a crime even though he may in fact have been innocent, and therefore un#ustly convicted and e!ecuted, and furthermore, it is against ublic olicy. "ec# $14+A# T7e insurer in a life insurance contract s7all be liable in case of suicides onl :7en it is committed after t7e polic 7as been in force for a period of t:o ears from t7e date of its issue or of its last reinstatement8 unless t7e polic provides a s7orter period: Provided8 7o:ever8 T7at suicide committed in t7e state of insanit s7all be compensable regardless of t7e date of commission# BAs amended b 2atasang Pambansa 2lg# 1*&C# "-ICI!E: .he views then may be viewed as follows: 1. .ot e=pressl stated whether suicide is e!ce ted in the olicy or covered therein, a distinction should be made whether suicide was committed while the insured is: Insane---- the insurer is liable on his contract as insanity is one of the diseases to which the insurer must have known that the insured was susce tible. Sane------the following views must have been advances: a. $st vie:: 6IA*6= since the suicide is one of the risks assumed by the insured unless it is by e! ress terms e!ce tedA b. %nd vie:: the insurer is not liable because: i. =ven in the absence of an e! ress e!ce tion of sane suicide in any contract of the insurance, such as e!ce tion is to be im lied. It inherent and fundamental a art of every such contract that the

ii.

insured shall not intentionally take his own life. It is against ublic olicy to allow recovery in case of suicide while sane.

>. E=pressl stated that suicide is e!ce ted from the coverage, such e!ce tion is generally considered to refer only to suicide of the insured while sane, and has no a lication to his selfdestruction due to the misfortune of insanity. -Still liable when suicide is committed while insane. -If the olicy covers suicide after the la se of the incontestable clause either in e! ress terms or by im lication from the terms of the I& 8 t7e insurer is still liable for suicide committed after e! iration of the eriod of incontestability, but not for suicide committed within the stated eriod of contestability. 2-R!E. )5 PR))5: .he arty alleging suicide as a defence, es ecially in actions involving insurance olicies to rove it by clear and convincing roof.

WHE. PR)CEE!" ARE C).F-0A(: -%remiums were aid thru con>ugal partners7ip, thus, the roceeds of the life insurance ayable to the insured$s estate constitute a con#ugal ro erty and belong to Q to the husband e!clusively and the other half to the wife. - If aid artly with con#ugal funds, the roceeds are like in ro ortion ara hernal or se arate ro erty and con#ugal. - if roceeds are ayable to an irrevocable beneficiary, roceeds shal belong e!clusively to the beneficiary even if aid out of con#ugal funds. "ec# $1$# A polic of insurance upon life or 7ealt7 ma pass b transfer8 :ill or succession to an person8 :7et7er 7e 7as an insurable interest or not8 and suc7 person ma recover upon it :7atever t7e insured mig7t 7ave recovered# "ec# $1%# .otice to an insurer of a transfer or be;uest t7ereof is not necessar to preserve t7e validit of a polic of insurance upon life or 7ealt78 unless t7ereb e=pressl re;uired#
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 1?

A""I0.ME.T -est on contract 'ust be su orted by a consideration "ith the consent of the beneficiary where the latter was designated irrevocably or even without consent of the revocable beneficiary, e!tinguishes the interest of the beneficiary since the assignment has the effect of change of beneficiary

CHA.0E )5 2E.E5ICIAR6 =!ercise of a ower of a ointmnet 'ust not be based on a valid consideration

.otice not re;uired b t7e polic : if the olicy does not e! ressly re(uired the insured to give notice of an assignment or transfer to the insurer, such notice is not essential to the validity of the assignment. .otice re;uired b t7e polic : an assignment without such notice, in the absence of waiver, shall have no effect so far as the insurer is concerned. .hus, the insurer without notice is relieved of any res onsibility in case of ayment is made to the beneficiary before recei t by the insurer of the notice. 0owever, without notice, the assignment is still binding between the assignee and the assignor ;insured<. "ec# $1,# -nless t7e interest of a person insured is susceptible of e=act pecuniar measurement8 t7e measure of indemnit under a polic of insurance upon life or 7ealt7 is t7e sum fi=ed in t7e polic # 6ife insurance is valued polic in t7e sense t7at t7e sum pa able to t7e beneficiar is t7e amount specified in t7e polic # .his is a conse(uence of the rule that life insurance is not a contract of indemnity and since the value of life lost could not be ascertained8 t7e amount of t7e polic s7ould be paid# "hen the insurable interest is susce tible of ecuniary estimation of measurement, then the amount of the loss suffered should be the basis of ayment, as in the case of insurance rocured by a creditor on the life of the debtor, life insurance of such nature is a contract of indemnity.

Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 18

COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE

"ection ,*,# 7or ur oses of this cha ter: ;a< R'otor /ehicleR is any vehicle as defined in section three, aragra h ;a< of -e ublic Act 5umbered 7our .housand One 0undred .hirty-Si!, Otherwise known as the R6and .rans ortation and .raffic &ode.R ;b< R%assengerR is any fare aying erson being trans orted and conveyed in and by a motor vehicle for trans ortation of assengers for com ensation, including ersons e! ressly authori:ed by law or by the vehicleSs o erator or his agents to ride without fare. ;c< R.hird-%artyR is any erson other than a assenger as defined in this section and shall also e!clude a member of the household, or a member of the family within the second degree of consanguinity or affinity, of a motor vehicle owner or land trans ortation o erator, as likewise defined herein, or his em loyee in res ect of death, bodily in#ury, or damage to ro erty arising out of and in the course of em loyment. ;As amended by %residential @ecree 5o. 1D1? and 19D1< ;d< ROwnerR or R'otor vehicle ownerR means the actual legal owner of a motor vehicle, in whose name such vehicle is duly registered with the 6and .rans ortation &ommissionA ;e< R6and trans ortation o eratorR means the owner or owners of motor vehicles for trans ortation of assengers for com ensation, including school busesA ;f< RInsurance olicyR or R%olicyR refers to a contract of insurance against assenger and thirty- arty liability for death or bodily in#uries and damaged to ro erty arising from motor vehicle accidents. ;As amended by %residential @ecree 5o. 1?88 and 1D1?< "ection ,*&# It shall be unlawful for any land trans ortation o erator or owner of a motor vehicle to o erate the same in the ublic highways unless there is in force in relation thereto a olicy of insurance or guaranty in cash or surety bond issued in accordance with the rovisions of this cha ter to indemnify the death, bodily in#ury, andJor damage to ro erty of a third- arty or assenger, as the case may be, arising from the use thereof. ;As amended by %residential @ecree 5o. 1?88 and 1D1?< "ection ,*/# .he &ommissioner shall furnish the 6and .rans ortation &ommissioner with a list of insurance com anies authori:ed to issue the olicy of insurance or surety bond re(uired by this cha ter. ;As amended by %residential @ecree 5o. 1D1?<

b. Buaranty in cash c. Surety bond to indemnify the death or in#ured Erd erson or assenger %ro erty damage to Erd arties is no longer included in the com ulsory motor vehicle liability insurance 'otor vehicle cannot be registered nor the registration renewed with the 6.O office unless such motor vehicle is covered by insurance, cash de osit or surety bond.

RI0HT T) "-E I."-RER: .he in#ured arty to whom the contract of insurance is intended can directly sue the insurer .he general ur ose of the statute is to rotect in#ured ersons against the insolvency of the insured who causes such in#ury and to give such in#ured erson a certain beneficial interest in the roceeds of the olicy and the statute are to be 6I*=-A66M construes so that their intended erson may be accom lished. 6iability of the insurer to E rd erson is based on &O5.-A&., while liability of the insured to the Erd arty is based on .O-..

WHE. (IA2I(IT6 ACCR-E": It accrues immediately u on the occurrence of the in#ury u on which the liability de ends, and does not de end on the recovery of #udgment by the in#ured arty against the insured. 5ote: S& held that there is no need for the insured to wait for the decision of the court finding the erson guilty of reckless im rudence before filing a case against the insurer. .he occurrence of the in#ury to the third arty immediately gives rise to the liability of the insurer under its olicy.

I."-RER .)T ")(I!ARI(6 (IA2(E WITH I."-RE!: B-: "hile it is true that where the insurance contract rovides for indemnity against liability to 3rd persons can directly sue the insurer C%5: the direct liability of the insurer under the contract does not mean that the insurer can be held solidarily liable with the insured andJor other arties found at fault. 6iability of the insured is based on contract.

C)MP-(")R6 I."-RACE: -

M)T)R

VEHIC(E

(IA2I(IT6

It is unlawful for any land trans ortation o erator or owner of a motor vehicle to o erate the same in highways unless there is: a. %olicy insurance

Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 19

5ote: S& held that the insurer cannot be held liable in solidum with the insured or other arties found at fault. .he liability of the insurer is based on contractA that of the insured carrier or vehicle owner is based on tort.

with the coverages set forth herein. ;As amended by %residential @ecree 5o. 1?88 and 1D1?<

"ection ,*'# .he 6and .rans ortation &ommission shall not allow the registration or renewal of registration of any motor vehicle without first re(uiring from the land trans ortation o erator or motor vehicle owner concerned the resentation and filing of a substantiating documentation in a form a roved by the &ommissioner evidencing that the olicy of insurance or guaranty in cash or surety bond re(uired by this cha ter is in effect. ;As amended by %residential @ecree 5o. 1?88< "ection ,**# =very land trans ortation o erator and every owner of a motor vehicle shall, before a lying for the registration or renewal of registration of any motor vehicle, at his o tion, either secure an insurance olicy or surety bond issued by any insurance com any authori:ed by the &ommissioner or make a cash de osit in such amount as herein re(uired as limit of liability for ur oses s ecified in section three hundred seventy-four. ;1< In the case of a land trans ortation o erator the insurance guaranty in cash or surety bond shall cover liability for death or bodily in#uries of third- arties andJor assengers arising out of the use of such vehicle in the amount not less than twelve thousand esos er assenger or third arty and an amount, for each of such categories, in any one accident of not less than that set forth in the following scale ;a< 'otor vehicles with an authori:ed ca acity of twenty-si! or more assengers: 7ifty thousand esosA ;b< 'otor vehicles with an authori:ed ca acity of from twelve to twenty-five assengers: 7orty thousand esosA ;c< 'otor vehicles with an authori:ed ca acity of from si! to eleven assengers: .hirty thousand esosA ;d< 'otor vehicles with an authori:ed ca acity of five or less assengers: 7ive thousand esos multi lied by the authori:ed ca acity. %rovided, however, .hat such cash de osit made to, or surety bond osted with, the &ommissioner shall be resorted to by him in cases of accidents the indemnities for which to thirdarties andJor assengers are not settled accordingly by the land trans ortation o erator and, in that event, the said cash de osit shall be re lenished or such surety bond shall be restored with si!ty days after im airment or e! iry, as the case may be, by such land trans ortation o erator, otherwise, he shall secure the insurance olicy re(uired by this cha ter. .he aforesaid cash de osit may be invested by the &ommissioner in readily marketable government bonds andJor securities. ;>< In the case of an owner of a motor vehicle, the insurance or guaranty in cash or surety bond shall cover liability for death or in#ury to third arties in an amount not less than that set forth in the following scale in any one accident: .he &ommissioner may, if warranted, set forth schedule of indemnities for the ayment of claims for death or bodily in#uries

I. %rivate &ars ;a< *antam ;b< 6ight ;c< 0eavy II. Other %rivate /ehicles ;a< .ricycles, scooters motorcyles, and : 1>k esosA >2k esos >2k esos E2k esos

;b< /ehicles with an unladen weight : >2k esosA of >,922 kilos or less ;c< /ehicles with an unladen weight : E2k esosA of between >,921 kilos and E,9E2 kilos Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 1K ;d< /ehicles with an unladen weight over E,9E2 kilos : 82k esos.

"ection ,*1# Any claim for death or in#ury to any assenger or third arty ursuant to the rovisions of this cha ter shall be aid without the necessity of roving fault or negligence of any kindA %rovided, .hat for ur oses of this section ;i< .he total indemnity in res ect of any not e!ceed five thousand esosA erson shall

!I"TI.0-I"H: GPassengerH

G)ccupantH8

GT7ird

Part H

and

;ii< .he following roofs of loss, when submitted under oath, shall be sufficient evidence to substantiate the claim: ;a< %olice re ort of accident and ;b< @eath certificate and evidence sufficient to establish the ro er ayee or ;c< 'edical re ort and evidence of medical or hos ital disbursement in res ect of which refund is claimedA ;iii< &laim may be made against one motor vehicle only. In the case of an occu ant of a vehicle, claim shall lie against the insurer of the vehicle in which the occu ant is riding, mounting or dismounting from. In any other case, claim shall lie against the insurer of the directly offending vehicle. In all cases, the right of the arty aying the claim to recover against the owner of the vehicle res onsible for the accident shall be maintained.

a. Occu ant ) includes both a assenger and a E rd arty, so long as they are riding in or mounting or dismounting from a motor vehicle. b. %assenger ) any fare aying erson being trans orted and conveyed in and by a motor vehicle for trans ortation of assengers for com ensation and those authori:ed by law to ride without fare ;eg. O erator or his agent< c. .hird arty ) any erson other than a assenger is a Erd erson. 5ote: S& held that laintiffs are not free to choose from which insurer they will claim the Nno fault indemnityP. *y using the word NshallP the law makes it mandatory that the claim be made against the insurer of the vehicle in which the occupant is riding, mounting or dismounting from. Irres ective whether or not fault or negligence lies with the driver of the Su erlines bus, as laintiffs were not occu ants of the bus, they cannot claim such indemnity from the insurer of the bus. "-55ICIE.T PR))5 )5 ()"": .he following roofs of loss when submitted under oath shall be sufficient evidence to substantiate the claim. a. %olice re ort of the accident b. @eath certificate and evidence sufficient to establish the ro er ayee c. 'edical -e ort and evidence of medicalJhos ital disbursement of which refund is claimed 5ote: "here claim e!ceeds 8,222, the insurance com any shall ay only 8,222 without re#udice to claimant from ursuing further claims. RI0HT )5 I.!EM.IT6H: I."-RER PA6I.0 G.) 5A-(T

.) 5A-(T I.!EM.IT6: An insurer may be held liable under the Nno fault indemnityP rovision without the necessity of roving fault or negligence of any kind rovided the following re(uisites are resent: a. .he claim is for @=A.0 or I5T,-M to any assenger or Erd arty b. .he total indemnity in res ect of any one erson does not e!ceed 82,222 c. .he necessary %-OO7 O7 6OSS under oath to substantiate the claim must be submitted R-(E" ). C(AIM" -.!ER THI" PR)VI"I).: %roof of fault or negligence is not necessary for ayment of any claim for death or in#ury to a assenger or a third erson are established: a. &laim may be made against one motor vehicle only. b. If victim is an occu ant of a vehicle, claim shall be against the insurer of the vehicle in which he is riding, mounting or dismounting from. c. In other case ;victim is not an occu ant of a vehicle<, claim shall lie against the insurer of the directly offending vehicle d. In all cases, right of the arty aying the claim to recover against the owner of the vehicle res onsible for the accident shall be maintained.

-ight of the arty aying the claim to recover against the owner of the vehicle res onsible for the accident shall be maintained. It is of no moment that the vehicle insured is not the one that caused the accident, since the law rovides that the insurer aying the claim may recover from the owner of the vehicle res onsible for the accident. %ur ose of 5o fault indemnity: to rovide the victims or their heirs immediate com ensation,
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 1D

although in a limited amount, ending final determination of who is res onsible for the accident and liable for the victim$s in#ury or death.
"ection ,*3# 5o land trans ortation o erator or owner of motor vehicle shall be unreasonably denied the olicy of insurance or surety bond re(uired by this cha ter by the insurance com anies authori:ed to issue the same, otherwise, the 6and .rans ortation &ommission shall re(uire from said land trans ortation o erator or owner of the vehicle, in lieu of a olicy of insurance or surety bond, a certificate that a cash de osit has been made with the &ommissioner in such amount re(uired as limits of indemnity in section three hundred seventy-seven to answer for the assenger andJor third- arty liability of such land trans ortation o erator or owner of the vehicle. 5o insurance com any may issue the olicy of insurance or surety bond re(uired under this cha ter unless so authori:ed under e!isting laws. .he authority to engage in the casualty andJor surety lines of business of an insurance com any that refuses to issue or renew, without #ust cause, the insurance olicy or surety bond therein re(uired shall be withdrawn immediately. ;As amended by %residential @ecree 5o. 1?88 and 1D1?< "ection ,14# 5o cancellation of the olicy shall be valid unless written notice thereof is given to the land trans ortation o erator or owner of the vehicle and to the 6and .rans ortation &ommission at least fifteen days rior to the intended effective date thereof. , on recei t of such notice, the 6and .rans ortation &ommission, unless it receives evidence of a new valid insurance or guaranty in cash or surety bond as rescribed in this cha ter, or an endorsement of revival of the cancelled one, shall order the immediate confiscation of the lates of the motor vehicle covered by such cancelled olicy. .he same may be reissued only u on resentation of a new insurance olicy or that a guaranty in cash or surety band has been made or osted with the &ommissioner and which meets the re(uirements of this cha ter, or an endorsement or revival of the cancelled one. ;As amended by %residential @ecree 5o. 1?88< "ection ,1$# If the cancellation of the olicy or surety bond is contem lated by the land trans ortation o erator or owner of the vehicle, he shall, before the olicy or surety bond ceases to be effective, secure a similar olicy of insurance or surety bond to re lace the olicy or surety bond to be cancelled or make a cash de osit in sufficient amount with the &ommissioner and without any ga , file the re(uired documentation with the 6and .rans ortation &ommission, and notify the insurance com any concerned of the cancellation of its olicy or surety bond. ;As amended by %residential @ecree 5o. 1?88< "ection ,1%# In case of change of ownershi of a motor vehicle, or change of the engine of an insured vehicle, there shall be no need of issuing a new olicy until the ne!t date of registration or renewal of registration of such vehicle, and rovided that the insurance com any shall agree to continue the olicy, such change of ownershi or such change of the engine shall be indicated in a corres onding endorsement by the insurance com any concerned, and a signed du licate of such endorsement shall, within a reasonable time, be filed with the 6and .rans ortation &ommission.

"ection ,1,# In the settlement and ayment of claims, the indemnity shall not be availed of by any accident victim or claimant as an instrument of enrichment by reason of an accident, but as an assistance or restitution insofar as can fairly be ascertained.

!RIVERI" (ICE.CE -"-A((6 REJ-IRE!: It is a common ractice of the insurers to rovide in the olicy that the authori:ed drivers of the vehicle insured are the insured himself, or a erson ermitted or ordered by him to drive who has a license to do so.

!RIVER" (ICE."E PRE"-ME! 0E.-I.E: A driver$s license that bears all the earmarks of duly issued license is a ublic document which is resumed genuine. 5O.=: S& held that the insurance olicy shall be liberally inter reted in favor of the insured and against the insurer. A driver license that bears all the earmarks of duly issued license is a ublic document which is resumed genuine. 'ere certification by an agency of the 'otor /ehicle Office does not dis rove the resum tion.

P-RP)"E )5 A-TH)RIKE! !RIER C(A-"E: .o assure that the ersons other than the insured owner, who drive the car on the insured$s order, such as family member, em loyee, agent are duly licensed drivers and have no dis(ualification to drive a motor vehicle.

E55ECT )5 EDPIRE! !RIVERI" (ICE."E: .he insurer is not liable where it is shown that the driver$s license has already e! ired at the time of the accident. -enewal of the license one week after the accident does not cure the deficiency or revalidate the license which already e! ired. 5O.=: S& held that insurer is not liable because the driver$s ermit to drive under the .raffic /iolation -e ort ;ticket< had e! ired. .he e! iration bars recovery under the olicy as the driver is not considered an Nauthori:ed driverP

WHE. (ICE."E T) !RIVE .)T .ECE""AR6:

Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 19

If the insured himself is the driver of the vehicle insured, he has the right to recover the damage, even if he has no license or the same had e! ired at the time of the accident. 5O.=: S& held that the driver of the insured vehicle at the time of the accident was the insured himself, hence, an authori:ed driver under the olicy. "hile it is true that the law rohibits a erson from driving without a license or an e! ired license, an infraction of the 'otor /ehicle 6aw on the art of the insured, is not a bar to recovery under the insurance contract. Also, when a motor vehicle is covered by a com rehensive olicy that includes theft, the insurer is liable for the damage to the motor vehicle in case such damage is sustained on the occasion of or while the theft is being committed even if thief is not licensed to drive. "hen the thief had e! ired license when the car insured was stolen, the insurer is still liable because there is no casual connection between the ossession of a valid license and the loss of a vehicle. 5O.=: S&, the taking of the vehicle by another erson without the ermission of the owner is sufficient to lace it within the word NtheftP as contem lated in the olicy, thus, com ensable. In case the insurance does not include theft, then the driver of the vehicle, if a erson other than the owner must be duly licensed to drive, otherwise, insurer is not liable.

recover from the insurer should the vehicle be damaged during the unauthori:ed tri . (IA2I(T6 5)R 5RA.CHI"E A.! !EPRECIATI). C)"T": .he insurer may not im ose u on the owner the ayment of the olicy franchise and a ercentage on the de reciation cost of the damaged car covered by the insurance, in the absence of a rovision in the olicy sti ulating such ayment.

!EC(ARATI). )5 I."-RE! CAR A" T)TA( ()"": .he insured may declare the car insured as a total loss where there is an unreasonable delay in the settlement of his claim. 5O.=: S& held that the declaration of the car as a total loss is legal and valid considering the unreasonable delay in the settlement of laintiffs claim under the olicy. If the insured cannot use his car because of the insurer$s act, then the car is as good as lost and conse(uently, the latter$s liability under the insurance contract arises.

E55ECT )5 "ETT(EME.T 2ETWEE. I."-RE! A.! 0-I(T6 PART6: "hen the insured acce ts settlement, the insurer could no longer be subrogated to the rights of the insured as against the tortfeasor.

-.A-TH)RIKE! -"E: ,nauthori:ed use of a motor vehicle for a N#oyrideP constitutes theft and rior criminal conviction is not necessary to enable the insured in a com rehensive olicy to recover from the insurer. 5O.=: .he act of the gasoline boy in taking the car for a #oy ride constitutes theft and recovery of the damage to the car is not barred by the illegal use of it. .hus, insurer is liable.

"ection ,1&# Any erson having any claim u on the olicy issued ursuant to this cha ter shall, without any unnecessary delay, resent to the insurance com any concerned a written notice of claim setting forth the amount of his loss, andJor the nature, e!tent and duration of the in#uries sustained as certified by a duly licensed hysician. 5otice of claim must be filed within si! months from date of the accident, otherwise, the claim shall be deemed waived. Action or suit for recovery of damage due to loss or in#ury must be brought, in ro er cases, with the &ommissioner or the &ourts within one year from date of accident, otherwise, the claimantSs right of action shall rescribe. ;As amended by %residential @ecree 1D1?< As amended by *% DK?, by roviding that the eriod of rescri tion should be counted from the date of denial of the claim by the insurer instead counting the eriod from the date of the accident.

A-TH)RIT6 )5 !RIVER .)T A55ECTE! 26 -.A-TH)RIKE! TRIP: - "hen the driver is authori:ed to drive, the fact that the ur ose of the tri was not authori:ed will not affect the right of the owner-insured to

"ection ,1/# .he insurance com any concerned shall forthwith ascertain the truth and e!tent of the claim and make ayment within five working days after reaching an agreement. If no agreement is reached, the insurance com any shall ay only the Rno-faultR indemnity rovided in section three hundred seventy-eight without re#udice to the claimant from ursuing his claim further, in which case, he shall not be re(uired or com elled by the insurance com any to e!ecute any (uit claim or document releasing it from liability under the olicy of
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 >2

insurance or surety bond issued. ;As amended by %residential @ecree 5o. 1?88< In case of any dis ute in the enforcement of the rovisions of any olicy issued ursuant to this cha ter, the ad#udication of such dis ute shall be within the original and e!clusive #urisdiction of the &ommissioner, sub#ect to the limitations rovided in section four hundred si!teen.

"ection ,1*# 5o government office or agency having the duty of im lementing the rovisions of this cha ter nor any official or em loyee thereof shall act as agent in rocuring the insurance olicy or surety bond rovided for herein. .he commission of an agent rocuring the said olicy or bond shall in no case e!ceed ten er centum of the amount of the remiums therefor. "ection ,11# Any land trans ortation o erator or owner of motor vehicle or any other erson violating any of the rovisions of the receding sections shall be unished by a fine of not less than five hundred esos but not more than one thousand esos andJor im risonment for not more than si! months. .he violation of section three hundred seventy-seven by a land trans ortation o erator shall be a sufficient cause for the revocation of the certificate of ublic convenience issued by the *oard of .rans ortation covering the vehicle concerned. "ection ,13# "henever any violation of the rovisions of this cha ter is committed by a cor oration or association, or by a government office or entity, the e!ecutive officer or officers of said cor oration, association or government office or entity who shall have knowingly ermitted, or failed to revent, said violation shall be held liable as rinci als.

PERI)! T) 5I(E C(AIM" A.! ACTI).": a. 5otice of &laim ) must be filed within 9 months from date of the accident. b. Action to enforce &laim ) must be filed within 1 year from denial of the claim. E55ECT )5 A2"E.CE )R !E(A6 I. 5I(I.0 C(AIM" )R ACTI).": 7ailure to submit the notice of claim with the eriod rovided by law shall release the insurer from liability. a. If notice of claim is not filed within 9 months from date of accident H claim shall be deemed "AI/=@. b. If action to enforce claim is not filed within 1 year from date of denial of the claim H right of action shall %-=S&-I*=. Sec.ED? has been a lied to a ersonal accident insurance and hence, the claim must be filed within 9 months from date of the accident.

F-RI"!ICTI).: Insurance &ommissioner and the courts have &O5&,--=5. #urisdiction over action for recovery of damage due to loss or in#ury covered by motor vehicle liability insurance where the amount involved does not e!ceed 122,222. Insurance &ommission has O-IBI5A6 #urisdiction to ad#udicate and settle insurance claims and com laints where the claim$s amount does not e!ceed 122,222. Such original #urisdiction is concurrent with that of the 'e.&, '.& and '&.&.

"ection ,1'# It shall be unlawful for a land trans ortation o erator or owner of motor vehicle to re(uire his or its drivers or other em loyees to contribute in the ayment of remiums.
Alba, Almadin, 'anica and /i3as444 Insurance 5otes 444 %age 4 >1