insurancereview.day5

8/13/2019 insurancereview.day5

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PARTIES


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PARTIES


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The beneficiary

Section 18 - no contract or policy on propertyshall be enforceable except for the benefit ofsome person having an insurable interest inthe property insured


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Double Insurance v. Over-insurance


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Double Insurance v.Over-insurance

Section 93 - DOUBLEINSURANCE same person isinsured by several insurers inrespect of the subject andinterest


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Double Insurance

Requisites:

1. insured is the same

2. two or more insurers insuring separately3. same subject matter

4. interest insured is the same

5. risk or peril insured against is the same


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Double Insurance v.Over-insurance

OVER- INSURANCE amountof insurance is beyond thevalue of insureds insurableinterest


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How to collect in case of over-insuranceby double insurance, Sec. 94

Insured may claim payment from insurersin such order he may select up to theamount they are severally liable

When policy is a valued policy, insurermust give credit as against the valuation

for any sum he receives without regard toactual value of the SM


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How to collect in case of over-insurance bydouble insurance,

Sec. 94

Policy is unvalued, determine actual loss andcollect from insurance in such order as he mayselect

If insured receives amount more than loss, holdsum in trust according to the right ofcontribution

Each insurer must contribute ratably to the lossin proportion to the amount for which he is liable


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Insured may claim payment from insurers in suchorder he may select up to the amount they areseverally liable

John owns a house worth P1.8 M and got thefollowing fire insurance policies:

A P600,000

B P1.8MC P2.4 M

If the house is totally burned, John can claim fromthem in whatever order he may select. Eg. GetP600T from A, P600T from B and P600T from C.Or, get entire amount from B.


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When policy is a valued policy, insurer must givecredit as against the valuation for any sum hereceives without regard to actual value of the SM

John's house was destroyed by fireand the value of restoring the same

was pegged at P1.8 M. He had thefollowing fire insurance policies: A P600,000 (VALUED)

B P1.8M (OPEN)C P2.4 M (OPEN)


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When policy is a valued policy, insurer must give creditas against the valuation for any sum he receiveswithout regard to actual value of the SM

If John gets P600T from A, a valued policy,he must give credit as against the P1.8 Mvaluation for the P600T he got from A. Hecan only get the balance of P1.2 M eitherfrom B or C or both.


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Policy is unvalued, determine actual loss andcollect from insurance in such order as hemay select

John insures the house but there is no valuation.The 3 policies have the following face values:

A P600,000B P1.8MC P2.4 M

If the valuation at the time of the loss is P1.5Million, he can collect only up to P1.5 Million andcollect in such order he may select. E.g. P600Tfrom A and P900T from B


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If insured receives amount more than loss, hold sumin trust according to the right of contribution

John owns a house and the valuation at the time ofloss is P1.5M. He can only recover up to P1.5M.

The policies are as follows: A P600,000, B P1.8M and C P2.4 M

John is able to collect P600T from A and P1 Mfrom C = P1.6 M, he must hold the excess ofP100T in trust for insurers A and B


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Each insurer must contribute ratably to theloss in proportion to the amount for which heis liable

Johns house was valued at P1.8 M at thetime of loss. He got the following fireinsurance policies:

A P600,000B P1.8M

C P2.4 MTOTAL P4.8 M


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Each insurer must contribute ratably to theloss in proportion to the amount for which heis liable

amount of policy x Loss

total insurance taken

A = P600,000 x P1.8 MP4,800,000

= 1/8 x P1.8

= P225,000


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Reinsurance

Contract by which an insurer procuresa third person to insure him against

loss or liability by reason of anoriginal insurance


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Illustration

A gets B to insure his building against fire forP10 Million.

B (insurer) can get C (reinsurer) to reinsurehim for P5 Million of the P10 Million insurancein favor of A. Thus, Bs liability shall be

limited to P5 Million.


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Reinsurance v. Double Insurance

subject of insuranceis property

subject of insuranceis the originalinsurers risk

Insurer remains theinsurer

insurer becomes theinsured


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insured is the partyin interest in allcontracts

original insured isnot a party

insurance of thesame interest

insurance of adifferent interest


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Insured has to give

his consent

consent of original

insured is notnecessary


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Kinds of Non-Life Insurance


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Marine


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Marine

Sections 99 and 100 conceptPeril covered perils of the sea or perils ofnavigation casualties due to unusualviolence or extraordinary action of wind andwave or other extraordinary causesconnected with navigation must be the

PROXIMATE CAUSEPeril of the ship is NOT covered


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Peril of the Ship v. Peril of the Sea

Roque v. IAC sinking of barge without extra-ordinary circumstances (SHIP)Go Tiaco v. Union loss results from natural and

inevitable action of the sea, from the ordinary wearand tear of the ship or from negligence of owner toprovide with proper equipment (SHIP)Cathay v. CA rusting of steel pipes in the courseof the voyage in view of the toll on cargo of wind,water and salt conditions (SEA)


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Is ship owners insurer liable in case ofloss if:

vessel is chartered (Sec. 100)YES. liable only for part of the loss which insuredcannot recover from charterer

Insurance of owner full value of property butrecovery shall be limited to amount not paid bycharterer

Insurance of charterer extent of his liability in caseof loss


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Illustration

B owns a vessel valued at P1 Million which itchartered to A. Per agreement, As insurershall be liable up to P500,000 in case of loss.

B has an insurance of P1 M.

In case of loss: As insurer = P500,000Bs insurer = P500,000


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Can ship owner get insurance for:

Expected freightage (Sec. 103)Expected freightage which in the ordinary andprobably course of things he would have earnedbut for the intervention of the peril insuredagainst

Important that insured must have an inchoateright to freightage which cannot be defeated

Expected profits (Sec. 105) YES.


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Fire


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Fire Insurance

Sec. 167 - Fire insurance insuranceagainst loss by fire, lightning, windstorm,tornado or earthquake and other allied risks,when such risks are covered by extension tofire insurance policies or under separatepolicies

Fire must be the proximate cause, and mustbe hostile in nature


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Measure of Indemnity

If there is a valuation shall be conclusiveas between parties in adjusting partial or

total loss in the absence of FRAUD


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If there is NO valuation - the expense it wouldbe to the insured to REPLACE the thing lostor injured in the condition in which it was atthe time of injury


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Loss and its amount may be determined onthe basis of such proof as may be offered byinsured which need not be of suchpersuasiveness as is required in judicialproceedings ( Malayan v. Cruz Arnaldo)


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How valuation is made

Sec. 172 independent appraiserexamines the property and fixes thevalue

Valuation shall be inserted in thepolicy


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GENERAL RULE: Valuation shall be thebasis for indemnity in case of total loss

EXCEPT: If there is a change increasing the risk

without the consent of insurer OR or there is fraud on the part of insured


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Partial loss full amount of the partial loss

Parties may agree that instead of payment,insurer may repair, rebuild or replace property


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Illustration

Subject matter is ahouse

Independent appraiservalues it at P5 Million

The valuation is

attached to the policy


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Illustration

If house is totally destroyed by fire, thevaluation of P5 M will be given

If the valuation is based on some fraud on thepart of the insured, e.g. adding fixtures whichare not part of the house OR there is an

alteration increasing the hazard such asconverting in to an ammunition factory, thevaluation is not used.


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Illustration

If the house is half-destroyed, the indemnitywill be half of P5 Million or P2.5 M.

Parties may agree that instead of paying theamount, insurer will rebuild the house.


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Casualty Insurance


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Casualty Insurance

Sec. 174 insurance covering lossor liability arising from accident ormishap excluding certain types ofloss which fall exclusively within thescope of other types of insurancesuch as fire or marine


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Casualty Insurance

Employers liabilityWorkmens CompensationPublic LiabilityMotor Vehicle LiabilityPlate glass insuranceBurglary and theft insurance

Personal accident and health insurance


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Motor Vehicle Liability Insurance

Motor vehicle any vehiclepropelled by any power other than

muscular power using the publichighways, with certain exceptions


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Motor Vehicle Liability Insurance

Section 374 unlawful for any landtransportation owner or operator tooperate the same in public highwaysunless there is a policy of insurance orguaranty in cash or bond to indemnify thedeath or bodily injury of a third party orpassenger

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