Warranties
undertakes during that time;
1. Warranty of Seaworthiness
2. Warranty that the ship has
documents of neutrality or
nationality
3. Warranty against improper
deviation
4. Warranty of legality of voyage
Seaworthiness. The ship must be
seaworthy at the inception of the
voyage. A finding of otherwise
precludes the insured from recovery.
Sec. 113. In every marine insurance
upon a ship or freight, or freightage, or
upon any thing which is the subject of
marine insurance, a warranty is
implied that the ship is seaworthy.
A ship is seaworthy if it can withstand
the rigors of the voyage, and that it is
properly laden, provided with
competent crew and equipped with
appropriate appurtenances and
equipment.
Sec. 114. A ship is seaworthy when
reasonably fit to perform the service
and to encounter the ordinary perils of
the voyage contemplated by the
parties to the policy.
Sec. 115. An implied warranty of
seaworthiness is complied with if the
ship be seaworthy at the time of the of
commencement of the risk, except in
the following cases:
(a) When the insurance is made for
a specified length of time, the implied
warranty is not complied with unless
the ship be seaworthy at the
1 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
commencement of every voyage it
(b) When the insurance is upon the
cargo which, by the terms of the
policy, description of the voyage, or
established custom of the trade, is to
be transhipped at an intermediate
port, the implied warranty is not
complied with unless each vessel upon
which the cargo is shipped, or
transhipped, be seaworthy at the
commencement of each particular
voyage.
Sec. 116. A warranty of seaworthiness
extends not only to the condition of
the structure of the ship itself, but
requires that it be properly laden, and
provided with a competent master, a
sufficient number of competent
officers and seamen, and the requisite
appurtenances and equipment, such
as ballasts, cables and anchors,
cordage and sails, food, water, fuel
and lights, and other necessary or
proper stores and implements for the
voyage.
A ship may be seaworthy for the
purpose of insurance upon the
ship and yet be unseaworthy for
purposes of insurance upon the
cargo. The shipper has the obligation
to find a common carrier that would
transport his cargo competently.
Sec. 119. A ship which is seaworthy for
the purpose of an insurance upon the
ship may, nevertheless, by reason of
being unfitted to receive the cargo, be
unseaworthy for the purpose of the
insurance upon the cargo.
Waiver. The warranty of
seaworthiness is waived if the insurer
paid the insured the value of the lost
cargoes. This does not mean however
that the waiver of the warranty for
insurance purposes that the insurer
can no longer raise the fact that the
vessel is not seaworthy when insurer
will exercise its right of subrogation
agains the party who is at fault.
The vessel must be seaworthy when
Sec. 115. An implied warranty of
seaworthiness is complied with if the
ship be seaworthy at the time of the of
commencement of the risk, except in
the following cases:
(a) When the insurance is made for
a specified length of time, the implied
warranty is not complied with unless
the ship be seaworthy at the
commencement of every voyage it
undertakes during that time;
(b) When the insurance is upon the
cargo which, by the terms of the
policy, description of the voyage, or
established custom of the trade, is to
be transhipped at an intermediate
port, the implied warranty is not
complied with unless each vessel upon
which the cargo is shipped, or
transhipped, be seaworthy at the
commencement of each particular
voyage.
Sec. 117. Where different portions of
the voyage contemplated by a policy
differ in respect to the things requisite
to make the ship seaworthy therefor, a
warranty of seaworthiness is complied
with if, at the commencement of each
2 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
portion, the ship is seaworthy with
reference to that portion.
1. Voyage policy – at the
commencement of the voyage
2. Time policy - at the
commencement of every
voyage commenced during a
specified time
3. Port policy – at the time the
vessel is exposed to any risk at
the port
4. Cargo policy and the goods
are to be transshipped – at
the commencement of each
particular voyage.
Generally it is only the
commencement of the voyage that is
the reckoning point to determined if
the implied warranty of seaworthiness
is complied with. IF the vessel
becomes unseaworthy during the
voyage, there is no breach of
warranty. Except.
Sec. 118. When the ship becomes
unseaworthy during the voyage to
which an insurance relates, an
unreasonable delay in repairing
the defect exonerates the insurer
on ship or shipowner's interest from
liability from any loss arising
therefrom.
EG. If ship is damaged and the ship
owner does not have it fixed at once.
DOCUMENTS OF NATIONALITY OR
NEUTRALITY
Sec. 120. Where the nationality or
neutrality of a ship or cargo is
expressly warranted, it is implied that
the ship will carry the requisite
documents to show such nationality or
neutrality and that it will not carry any
documents which cast reasonable
suspicion thereon.
1. The vessel has the requisite
documents of nationality or
neutrality if nationality or
neutrality is expressly
warranted and
2. The vessel will not carry
documents that will cast
reasonable suspicion of its
nationality or neutrality if
nationality or neutrality is
expressly warranted.
Nationality or neutrality is NOT
impliedly warranted. It is the presence
of documents and absence of
documents that will cast suspicion that
are impliedly warranted. However the
implied warranties flow from the
express warrant of neutrality or
nationality.
LEGALITY There is an implied
warranty that the adventure is a lawful
one and that so far as the insured can
control the matter the adventure shall
be carried out in a lawful manner..
IF an integral voyage is illegal in any
respect at its commencement, no
insurance can legally be effected on
any part of it, though such part, taken
by itself would be illegal.
3 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
VOYAGE AND DEVIATION
ROUTE.
Sec. 121. When the voyage
contemplated by a marine insurance
policy is described by the places of
beginning and ending, the voyage
insured in one which conforms to the
course of sailing fixed by mercantile
usage between those places.
Sec. 122. If the course of sailing is not
fixed by mercantile usage, the voyage
insured by a marine insurance policy
is that way between the places
specified, which to a master of
ordinary skill and discretion, would
mean the most natural, direct and
advantageous.
The course shall be determined in the
ff. order.
1. Course agreed upon by the
parties
2. If nothing agreed upon then one
that conforms to the course of
sailing fixed by mercantile
usage
3. IF there is no mercantile usage
one which a master of ordinary
skill and discretion would find to
be the most natural, direct and
advantageous.
DEVIATION
Sec. 123. Deviation is a departure
from the course of the voyage insured,
mentioned in the last two sections, or
an unreasonable delay in pursuing the
voyage or the commencement of an
entirely different voyage.
1. Departure from the course
of the voyage insure
mentioned in the last two
sections
2. Unreasonable delay in
pursuing the voyage or the
commencement of an
entirely different voyage
Deviation is proper when.
Sec. 124. A deviation is proper:
(CAGG)
(a) When caused by
circumstances over which neither
the master nor the owner of the ship
has any control;
(b) When necessary to comply with
a warranty, or to avoid a peril,
whether or not the peril is insured
against;
(c) When made in good faith, and
upon reasonable grounds of belief in
its necessity to avoid a peril; or
(d) When made in good faith, for
the purpose of saving human life or
relieving another vessel in distress.
Sec. 125. Every deviation not specified
in the last section is improper.
Sec. 126. An insurer is not liable for
any loss happening to the thing
insured subsequent to an improper
deviation.
LOSS – means the injury or damage
sustained by the insured in
4 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
consequence of the happening or one
or more of the accidents or misfortune
insured against by the marine insurer.
Kinds.
1. Total
2. Partial
Every loss which is not total is partial.
Sec. 127. A loss may be either total or
partial.
Sec. 128. Every loss which is not total
is partial.
Sec. 129. A total loss may be either
actual or constructive.
Sec. 130. An actual total loss is cause
by:
(a) A total destruction of the thing
insured;
(b) The 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; or
(d) Any other event which
effectively deprives the owner of the
possession, at the port of destination,
of the thing insured.
Sec. 131. A constructive total loss is
one which gives to a person insured a
right to abandon, under Section one
hundred thirty-nine.
There is total loss of the vessel if it is
rendered valueless to the owner. To
render it valueless to the owner, it is
not necessary that there should be an
actual or total loss or destruction of all
the different parts of the entire vessel.
There is total loss of the ship when she
has sustained such extensive damage
that it would not be reasonably
practical to repair her.
Constructive Total Lost
Also called commercial total loss or
conventional total laws, based on
arithmetic computation fixed by law.
Sec. 139. A person insured by a
contract of marine insurance may
abandon the thing insured, or any
particular portion thereof separately
valued by the policy, or otherwise
separately insured, and recover for a
total loss thereof, when the cause of
the loss is a peril insured against:
(a) If more than three-fourths
thereof in value is actually lost, or
would have to be expended to
recover it from the peril;
(b) If it is injured to such an
extent as to reduce its value more
than three-fourths;
(c) If the thing insured is a
ship, and the contemplated
voyage cannot be lawfully
performed without incurring
either an expense to the insured
of more than three-fourths the
value of the thing abandoned or a
risk which a prudent man would
5 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
not take under the circumstances;
or
(d) If the thing insured, being
cargo or freightage, and the
voyage cannot be performed, nor
another ship procured by the
master, within a reasonable time
and with reasonable diligence, to
forward the cargo, without
incurring the like expense or risk
mentioned in the preceding sub-
paragraph. But freightage cannot
in any case be abandoned unless
the ship is also abandoned.
Presumed actual total loss
1. Continued absence of the
ship for a considerable
length of time
2. The vessel has not been
heard of
Sec. 132. An actual loss may be
presumed from the continued absence
of a ship without being heard of. The
length of time which is sufficient to
raise this presumption depends on the
circumstances of the case.
Reshipment –
Sec. 133. When a ship is prevented, at
an intermediate port, from completing
the voyage, by the perils insured
against, the liability of a marine
insurer on the cargo continues after
they are thus reshipped.
Nothing in this section shall prevent
an insurer from requiring an additional
premium if the hazard be increased by
this extension of liability.
Sec. 134. In addition to the liability
mentioned in the last section, a
marine insurer is bound for damages,
expenses of discharging, storage,
reshipment, extra freightage, and all
other expenses incurred in saving
cargo reshipped pursuant to the last
section, up to the amount insured.
Nothing in this or in the preceding
section shall render a marine insurer
liable for any amount in excess of the
insured value or, if there be none, of
the insurable value.
Rules
1. If goods are reshipped, the
insurance over the goods
continue until they are thus
reshipped
2. The insurer may require the
additional premium if the
hazard is increased by this
extension of liability
3. The marine insurer is bound to
pay for damages, expenses of
discharging, storage,
reshipment, extra freightage,
and all other expenses incurred
in saving the cargo reshipped
pursuant to the last section up
to the amount insured
4. The marine insurer shall not be
liable for any amount in excess
of the insured value, if there be
none, the insurable value.
ABANDONMENT.
Abandonment different from
abandonment in Maritime law.
Under the limited liability rule in
maritime law, there is no need for
constructive total loss of the vessel
6 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
and the abandonment is made in favor
of the persons to whom the carrier is
liable. In marine insurance there is a
need for constructive total loss and
the abandonment is made in favor of
the insurer.
REQUISITES
Sec. 140. An abandonment must be
neither partial nor conditional.
Sec. 141. An abandonment must be
made within a reasonable time after
receipt of reliable information of the
loss, but where the information is of a
doubtful character, the insured is
entitled to a reasonable time to make
inquiry.
Sec. 142. Where the information upon
which an abandonment has been
made proves incorrect, or the thing
insured was so far restored when the
abandonment was made that there
was then in fact no total loss, the
abandonment becomes ineffectual.
Sec. 143. Abandonment is made by
giving notice thereof to the insurer,
which may be done orally, or in
writing; Provided, That if the notice be
done orally, a written notice of such
abandonment shall be submitted
within seven days from such oral
notice.
Sec. 144. A notice of abandonment
must be explicit, and must specify the
particular cause of the abandonment,
but need state only enough to show
that there is probable cause therefor,
and need not be accompanied with
proof of interest or of loss.

Sec. 145. An abandonment can be
sustained only upon the cause
specified in the notice thereof.
Thus requisites are.
(ACNRFOE)
1. There must be an actual
relinquishment by the person
insured of his interest in the
thing insured.
2. There must be constructive
total loss
3. The abandonment be neither
partial nor conditional
4. It must be made within a
reasonable time after receipt
of reliable information of the
loss
5. It must be factual
6. It must be made by giving
notice therof to the insurer
which may be done orally or in
writing (if orally, written in
7 days)
7. The notice of abandonment
must be explicit and must
specify the particular cause of
abandonment.
EFFECTS OF ABANDONMENT
Sec. 146. An abandonment is
equivalent to a transfer by the insured
of his interest to the insurer, with all
the chances of recovery and
indemnity.
Sec. 147. If a marine insurer pays for a
loss as if it were an actual total loss,
he is entitled to whatever may remain
of the thing insured, or its proceeds or
7 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
salvage, as if there had been a formal
abandonment.
Sec. 148. Upon an abandonment, acts
done in good faith by those who were
agents of the insured in respect to the
thing insured, subsequent to the loss,
are at the risk of the insurer and for
his benefit.
Sec. 149. Where notice of
abandonment is properly given, the
rights of the insured are not
prejudiced by the fact that the insurer
refuses to accept the abandonment.
Sec. 150. The acceptance of an
abandonment may be either express
or implied from the conduct of the
insurer. The mere silence of the
insurer for an unreasonable length of
time after notice shall be construed as
an acceptance.
Sec. 151. The acceptance of an
abandonment, whether express or
implied, is conclusive upon the parties,
and admits the loss and the
sufficiency of the abandonment.
Sec. 152. An abandonment once made
and accepted is irrevocable, unless
the ground upon which it was made
proves to be unfounded.
Sec. 153. On an accepted
abandonment of a ship, freightage
earned previous to the loss belongs to
the insurer of said freightage; but
freightage subsequently earned
belongs to the insurer of the ship.
ACCEPTANCE OF ABANDONMENT .
If the requisites are complied with for
a valid abandonment, the insurer may
not reject the abandonment.
REVOCATION . Generally is
irrevocable except when the ground
proves to be unfounded, as in the case
where there is in fact no constructive
total loss.
Sec. 142. Where the information upon
which an abandonment has been
made proves incorrect, or the thing
insured was so far restored when the
abandonment was made that there
was then in fact no total loss, the
abandonment becomes ineffectual.
Sec. 152. An abandonment once made
and accepted is irrevocable, unless
the ground upon which it was made
proves to be unfounded.
FAILURE TO ABANDON. If the
insured fails to abandon, he may still
be indemnified for the actual value of
the loss.
Sec. 155. If a person insured omits to
abandon, he may nevertheless
recover his actual loss.
MEASURE OF INDENMNITY
The amount of indemnity in marine
insurance is affected by the type of
policy involved.
VALUED POLICY. In a valued policy,
the valuation is conclusive upon the
parties except when there is fraud
when the valuation was fixed.
Sec. 156. A valuation in a policy of
marine insurance in conclusive
8 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
between the parties thereto in the
adjustment of either a partial or total
loss, if the insured has some interest
at risk, and there is no fraud on his
part; except that when a thing has
been hypothecated by bottomry or
respondentia, before its insurance,
and without the knowledge of the
person actually procuring the
insurance, he may show the real
value. But a valuation fraudulent in
fact, entitles the insurer to rescind the
contract.
Sec. 156. A valuation in a policy of
marine insurance in conclusive
between the parties thereto in the
adjustment of either a partial or total
loss, if the insured has some interest
at risk, and there is no fraud on his
part; except that when a thing has
been hypothecated by bottomry or
respondentia, before its insurance,
and without the knowledge of the
person actually procuring the
insurance, he may show the real
value. But a valuation fraudulent in
fact, entitles the insurer to rescind the
contract.
Sec. 157. A marine insurer is liable
upon a partial loss, only for such
proportion of the amount insured by
him as the loss bears to the value of
the whole interest of the insured in the
property insured.
Sec. 158. Where profits are separately
insured in a contract of marine
insurance, the insured is entitled to
recover, in case of loss, a proportion of
such profits equivalent to the
proportion which the value of the
property lost bears to the value of the
whole.
Sec. 159. In case of a valued policy of
marine insurance on freightage or
cargo, if a part only of the subject is
exposed to the risk, the evaluation
applies only in proportion to such part.
Sec. 160. When profits are valued and
insured by a contract of marine
insurance, a loss of them is
conclusively presumed from a loss of
the property out of which they are
expected to arise, and the valuation
fixes their amount.
Open policy. In a valued policy,
there is no conclusive value that is
fixed therein. The determination of the
value of the thing insured is governed
by the ff provisions.
Sec. 161. In estimating a loss under an
open policy of marine insurance the
following rules are to be observed:
(a) The value of a ship is its value
at the beginning of the risk, including
all articles or charges which add to its
permanent value or which are
necessary to prepare it for the voyage
insured;
(b) The 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 place of lading, adding the
charges incurred in purchasing and
placing it on board, but without
reference to any loss incurred in
raising money for its purchase, or to
any drawback on its exportation, or to
9 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
the fluctuation of the market at the
port of destination, or to expenses
incurred on the way or on arrival;
(c) The value of freightage is the
gross freightage, exclusive of
primage, without reference to the
cost of earning it; and
(d) The cost of insurance is in each
case to be added to the value thus
estimated.
*primage- Primage (adopted from the
Fr. primage, from prime, recompense,
Lat. praemium, reward), a commercial
term signifying originally a small
customary payment over and above
the freight made to the master of the
ship for his care and trouble. It is now
generally included in the freight, as an
additional percentage. It varies
according to the usages of different
ports and particular trades.
CO-INSURANCE CLAUSE
Sec. 157. A marine insurer is liable
upon a partial loss, only for such
proportion of the amount insured by
him as the loss bears to the value of
the whole interest of the insured in the
property insured.
There is always co-insurance in marine
insurance
Requisites
1. There must be partial loss
2. There is under-insurance,
meaning the insurance
coverage is less than the value
of the property insured.
Formula
Amount of partial loss x Amt of
insurance = SI
Amount of insurance
SI= Share of insurer
Sec. 157 applies only to marine
insurance. If in fire, there must be
stipulation
If in freightage or cargo, if only part is
exposed to risk, valuation applies only
in proportion to such part.
PROFITS. May be valued policy
Sec. 160. When profits are valued and
insured by a contract of marine
insurance, a loss of them is
conclusively presumed from a loss of
the property out of which they are
expected to arise, and the valuation
fixes their amount.
1. If shipowner insured the profits
that he expects from the sale of
the goods that he is
transporting in his ship for a
particular voyage. If the profits
are fixed at 1M, the insurer is
liable for such amount upon the
total loss of the goods in transit.
The amount fixed in the policy
as the profits is conclusively
presumed to be the amount of
the profits which were lost.
2. However, when profits are
separately insured in a contract
of marine insurance, the insured
is entitled to recover, in case of
loss, a proportion of such profits
equivalent to the proportion
which the value of the property
10 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
lost bears to the value of the
whole.
Thus formula
Value of lost property/value of
property x Expected profits = liability.
Partial Loss of cargo.
Sec. 162. If cargo insured against
partial loss arrives at the port of
destination in a damaged
condition, the loss of the insured
is deemed to be the same
proportion of the value which the
market price at that port, of the
thing so damaged, bears to the
market price it would have
brought if sound.
SUE AND LABOR CLAUSE. Requires
the insured and his representative to
take all reasonable steps that are
necessary to limit or reduce an
imminent loss. Indemnity will be given
by the insurer for such efforet,
Sec. 163. A marine insurer is liable for
all the expenses attendant upon a loss
which forces the ship into port to be
repaired; and where it is stipulated in
the policy that the insured shall labor
for the recovery of the property, the
insurer is liable for the expense
incurred thereby, such expense, in
either case, being in addition to a total
loss, if that afterwards occurs.
APPLICATION OF OLD MATERIALS.
If old materials are to be applied
towards payment of the new, in case
of partial loss of the ship or its
equipment. Unless otherwise stated in
the policy, a marine insurer is liable
only for two-thirds of the remaining
cost of repairs after such deduction,
except that anchors must be paid in
full.
AVERAGES.
Averages are all extraordinary or
accidental expenses which may be
incurred during the voyage in order to
preserve the vessel, the cargo or both
and any damage or deterioration
which the vessel may suffer from the
time it puts to sea from port of
departure until it casts anchor in the
port of destination as well as those
suffered by the merchandise from the
time they are loaded in the port of
shipment until they are loaded.
FREE FROM PARTICULAR AVERAGE
CLAUSE (FPA). Clause which limits
liability in case of partial loss.
Particular average also known as
simple average.
Sec. 136. Where it has been agreed
that an insurance upon a particular
thing, or class of things, shall be free
from particular average, a marine
insurer is not liable for any particular
average loss not depriving the insured
of the possession, at the port of
destination, of the whole of such thing,
or class of things, even though it
becomes entirely worthless; but such
insurer is liable for his proportion of all
general average loss assessed upon
the thing insured.
FPAAC- American conditions – a
particular average is not payable
unless the loss is caused by the
11 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
vessel’s being stranded, sunk, burnt
on fire or collision
FPAEC- English conditions. Not payable
unless the carrying vessel has been
stranded, sunk or burnt in collision. If
any of those perils occurs, the FPAEC
is breached and the particular average
caused by the peril of the sea or any
other insured peril during the voyage
will be covered even if there is no
causal connection between the
stranding, sinking, burning or collision
and the particular average loss.
SIMPLE PARTICULAR AVERAGE.
All expenses and damages caused to
vessel or her cargo which have not
inured to the common benefit and
profit of all the person interested in
the vessl and her cargo.
If not general, then it is particular.
Not so deliberate. Such as victuals and
wages of the crew when stranded
GENERAL AVERAGE. Shall include all
damages and expenses which are
deliberately caused in order to save
the vessel, its cargo or both at the
same time for real and known risk.
Requisites.
1. There must be common danger
2. For the common safety, part of
the vessel or of the cargo or
both is sacrificed deliberately.
3. From the expenses or damages
caused follows the successful
saving of the vessel and cargo
4. The expenses or damages have
been incurred or inflicted after
 taking proper legal steps and
authority.
Common danger- Well, must be
coming from the danger that arises
from the accidents of the sea,
dispositions of authority or faults of
men. Must be imminent.
It must be VOLUNTARY SACRIFICE.
Jettisoning of goods in order to save
the ship. It must be deliberate, not
destroyed because of circumstances
without fault of the captain, or
fortuitous event.
There must be Successful Saving
and proper legal steps should be
taken.
Who will PAY GENERAL AVERAGE.
Those who benefited from the
sacrifice. Code of Commerce Article
812 all persons having interest in the
vessel and cargo at the time of the
occurrence of the average shall
contribute.
Art. 859 of the code of commerce
imposes statutory obligation on part of
marine insurer to shoulder the share
pertaining to the property that it
insured.
Sec. 164. A marine insurer is liable for
a loss falling upon the insured,
through a contribution in respect to
the thing insured, required to be made
by him towards a general average loss
called for by a peril insured against;
provided, that the liability of the
insurer shall be limited to the
proportion of contribution attaching to
his policy value where this is less than
12 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
the contributing value of the thing
insured.
Formula.
Amount of insurance/value of property
insured x GA contribution of insured =
amount paid
Sec. 165. When a person 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. But no
such claim can be made upon the
insurer after the separation of the
interests liable to the contribution, nor
when the insured, having the right and
opportunity to enforce the contribution
from others, has neglected or waived
the exercise of that right.
Insurer must pay for the lost but is
subrogated to the rights of insured
and collect from those who benefited
in the average.
Insurer cannot recover if.
1. There is separation of interest
liable to contribution
2. Insured neglects to claim
contribution when he already
has opportunity to enforce the
same
3. Insured waives the right to
claim contribution
FIRE INSURANCE
Shall include insurance against
lost by FLEW TO
1. Fire
 2. Lightning
3. Earthquake
4. Windstorm
5. Tornado
6. Other Allied risks
Fire – oxidation of a degree that is
sufficient to produce a visible flame.
Hostile fire only. Meaning fire out of
control.
Friendly fire is when fire is controlled,.
Lightning. May be provided that
discharge of atmospheric electricity
may be insured against.
If fire results, the loss is compensable
because fire is the immediate cause so
long as lightning is not an excepted
peril.
WINDSTORM. 75 miles per hour.
However, since evidence of velocity is
hard to get. Then if wind is such a
force as to cause damage it is deemed
a windstorm and the resulting losses
are covered.
Earthquake. Covered by separate
policy, because it increases the risk
and cost. Always an exclusion
PROPERTY INSURED. Must be
adequately described in policy. In
construing words used to describe
property , the greates liberality is
shown by the courts in giving effect to
the insurance.
Courts are inclined to consider that
the policy covers any building which
the parties manifestly intended to
insure however inaccurate the
description may be.
13 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
ALTERATIOn.
Sec. 168. An alteration in the use
or condition of a thing insured
from that to which it is limited by
the policy made without the
consent of the insurer, by means
within the control of the insured,
and increasing the risks, entitles
an insurer to rescind a contract of
fire insurance.
Sec. 169. An alteration in the use
or condition of a thing insured
from that to which it is limited by
the policy, which does not
increase the risk, does not affect
a contract of fire insurance
Thus the rules.
(ULWCI)
1. The alteration is on the use or
condition of the thing insured
2. The use or condition of the
thing insured is limited in the
policy
3. The alteration is without
consent of insurer
4. The alteration is within the
control of the insured
5. The alteration increases the
risk.
Mere negligence temporarily
endangering the property does not
violate the law.
SUBSEQUENT ACTS OF THE
INSURED. Contract not affected by
any act of the insured executed
subsequent to the execution of the
policy., which does not violate its
provisions, even if it increases the risk
and is the cuase of the loss.

Measure of indemnity depends if
it is an open policy or valued
policy.
VAlUED POLICY.
Valuation shall be fixed in policy and
binding upon the parties. Valuation
fraudulent in fact entitles insurer to
rescind the contract.
Sec. 172. Whenever the insured
desires to have a valuation named in
his policy, insuring any building or
structure against fire, he may require
such building or structure to be
examined by an independent
appraiser and the value of the
insured's interest therein may then be
fixed as between the insurer and the
insured. The cost of such examination
shall be paid for by the insured. A
clause shall be inserted in such policy
stating substantially that the value of
the insured's interest in such building
or structure has been thus fixed. In the
absence of any change increasing the
risk without the consent of the insurer
or of fraud on the part of the insured,
then in case of a total loss under such
policy, the whole amount so insured
upon the insured's interest in such
building or structure, as stated in the
policy upon which the insurers have
received a premium, shall be paid, and
in case of a partial loss the full amount
of the partial loss shall be so paid, and
in case there are two or more policies
covering the insured's interest therein,
each policy shall contribute pro rata to
the payment of such whole or partial
loss. But in no case shall the insurer
be required to pay more than the
amount thus stated in such policy.
14 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
This section shall not prevent the
parties from stipulating in such
policies concerning the repairing,
rebuilding or replacing of buildings or
structures wholly or partially damaged
or destroyed.
OPTION TO REBUILD CLAUSE.
Parties may stipulate that the insurer
may cause the repair, rebuilding or
replacement of the building or
structures wholly or partially
destroyed or damaged. Operates as a
wholesale check upon the insured in
estimating the valued off the damaged
goods.
OPEN POLICY. There is no valuation
in the policy, the measure of
indemnity in an insurance agains fire
is the expense it would be to the
insured at the time of the
commencement of the fire to replace
the thing lost or injured in the
condition in which at the time of the
injury.
INDIRECT LOSSES.
1. Financial loss due to the direct
physical damage of physical
property
2. Indirect or consequential losses
arising out of the loss of use of
the property.
Consequential losses
1. Business interruption
insurance – Insurer is liable for
the loss suffered consisting of
loss of earnings comprising of
net profits that could have been
 realized had the business
continued.
2. Extra Expense insurance –
Covers extraordinary expenses
that may be incurred in an
effort to avoid interruption of
service. Covers additional
expenses over and above the
normal cost of doing business if
necessitated by a afire or other
insured peril at the described
premises.
3. Rent insurance – protects the
insured from loss of rent income
Prohibition.
Sec. 173. No policy of fire insurance
shall be pledged, hypothecated, or
transferred to any person, firm or
company who acts as agent for or
otherwise represents the issuing
company, and any such pledge,
hypothecation, or transfer hereafter
made shall be void and of no effect
insofar as it may affect other creditors
of the insured.
NON ALIENATION CLAUSE. Fire
insurance policy may not be
transferred without consent of the
insurer even if alienation is
ALLOWED IN THE INSUREANCE
POLICY. It is also required that
the transferee has insurable
interest over the insured
property.
CO INSURANCE . means the insured
shall be paid only in proportion that
the amount of insurance purchased
bears to the minumun amount of
tinsurance that the contract requires
the insured to carry. Apportionment of
losses between the insurer and its
15 Notes on Warranties from : Timoteo Aquino’s Insurance Laws
“Amat Victoria Curam”
By: Felipe S.R. RSI
Petitor Aequi
insured such that the insuraer will pay
a fraction of each loss equal to the so
called coinsurance apportionment
ratio.
Formula
Amount of insurance/value of property
X amount of loss = Amount payable.
EXCEPTIONs. May exclude different
perils from coverage of policy such as
war, insurrection, rebellion, invasion
and other similar causes. Even theft
clause.
In case of war, there could be recovery
if fire was purely an ordinary or
accidental one.
Intentional Act. No liability to
insurer. But insurer must prove that
there was an intentional burning, by
sufficient evidence.
Warranty. Contract may have
express warranties.
Such as no inflammable substances,
which must clearly be stated in the
policy. However, even if there is a
prohibition, it is not avoided when
such keeping is incidental to business.
Like in varnishes, in a company that
makes furnitures.