01 Q: How does misrepresentation?

concealment

differ

from

A: In concealment, the insured withholds the information of material facts from the insurer, whereas in misrepresentation, the insured makes erroneous statements of facts with the intent of inducing the insurer to enter into the insurance contract. 02 . INCONTESTABILITY CLAUSE Clause in life insurance policy that stipulates that the policy shall be incontestable after a stated period. Requisites: 1. Life insurance policy 2. Payable on the death of the insured 3. It has been in force during the lifetime of the insured for a period of at least two years from the date of its issue or of its last reinstatement Note: The period of 2 years may be shortened but it cannot be extended by stipulation. Incontestability only deprives the insurer of those defenses which arise in connection with the formation and operation of the policy prior to loss. (Prof. De Leon, p. 173 citing Wyatt and Wyatt, p. 878) 03 Q: How is concealment and misrepresentation applied in case of loss or death? A: GR: If the concealment or misrepresentation is discovered before loss or death, the insurer can cancel the policy. If the discovery is after loss or death, the insurer can refuse to pay. XPN: The incontestability clause under paragraph 2 of Section 48. XPN to XPN: 1. Nonpayment of premiums. (Secs. 77, 22 [b], 228 [b], 203 [b]) 2. Violation of condition. (Secs. 227 [b], 228 [b]) 3. No insurable interest 4. Cause of death was excepted or not covered 5. Fraud of a vicious type 6. Proof of death was not given. (Sec. 242) 7. That the conditions of the policy relating to military or naval service. (Secs. 227 [b], 228 [b]) 8. That the action was not bought within the time specified. (Sec. 62) 05 Cover Note (Ad Interim) A concise and temporary written contract issued to the insurer through its duly authorized agent embodying the principal terms of an expected policy of insurance. Purpose: It is intended to give temporary insurance protection coverage to the applicant pending the acceptance or rejection of his application. Duration: Not exceeding 60 days unless a longer period is approved by Insurance Commissioner (Sec. 52).

06 What is Proximate cause? Proximate cause is the active efficient cause which sets in motion a train of events which in turn brings about a result without the intervention of any force operating and working actively from a new and independent force What is a remote cause? Remote cause is a cause that does not necessarily or immediately produce an event or injury Immediate cause? it is the happening immediately before the loss. It is possible that the happening before the loss is not the proximate cause. 07 Q: What does the phrase perils of the sea or perils of navigation mean? A: It includes only those casualties due to the unusual violence or extraordinary action of wind and wave, or to other extraordinary causes connected with navigation. Q: What does perils of the ship mean? A: It is a loss which, in the ordinary course of events, results from: 1. The natural and inevitable action of the sea 2. The ordinary wear and tear of the ship 3. The negligent failure of the ships owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions. PERILS OF THE SEA Includes only those casualties due to the: 1. unusual violence; or 2. extraordinary action of wind and wave; or 3. Other extraordinary causes connected with navigation. PERILS OF THE SHIP A loss which in the ordinary course of events, results from the: 1. natural and inevitable action of the sea 2. ordinary wear and tear of the ship or 3. Negligent failure of the ships owner to provide the vessel with proper equipment to convey the cargo under ordinary conditions.

08 DOUBLE INSURANCE VS REINSURANCE DOUBLE INSURANCE Involves the same interest Insurer remains in such capacity Insured is the party in interest in the 2 contracts Subject of insurance is property Insured has to give his consent REINSURANCE Involves different interest Insurer becomes the insured in relation to reinsurer Original insured has no interest in the reinsurance contract. Subject of insurance is the original insurers risk Insureds consent not necessary

09 Q: What is seaworthiness? A: It is a relative term depending upon the nature of the ship, voyage, service and goods denoting in general, a ships fitness to perform the service and to encounter the ordinary perils of the voyage, contemplated by the parties to the policy. (Sec. 114)

ACTUAL TOTAL LOSS It exists when the subject matter of the insurance is wholly destroyed or lost or when it is so damaged as no longer to exist in its original character.

CONSTRUCTIVE TOTAL LOSS It is one which the loss, although not actually total, is of such a character that the insured is entitled, if he thinks fit, to treat it as total by abandonment. (Sec. 131) Abandonment by the insured is necessary in order to recover for a total loss (Sec. 138) in the absence of any provision to the contrary in the policy.

GENERAL RULE: The warranty of seaworthiness is complied with if the ship be seaworthy at the time of the commencement of the risk. Prior or subsequent unseaworthiness is not a breach of the warranty nor is it material that the vessel arrives in safety at the end of her voyage. EXCEPTIONS: 1. In the case of a time policy, the ship must be seaworthy at the commencement of every voyage she may undertake 2. In the case of cargo policy, each vessel upon which the cargo is shipped or transshipped, must be seaworthy at the commencement of each particular voyage 3. In the case of a voyage policy contemplating a voyage in different stages, the ship must be seaworthy at the commencement of each portion
10 Q. What is deviation in marine insurance policy? A: Deviation is a departure of the vessel from the course of the voyage, or an unreasonable delay in pursuing the voyage, or the commencement of an entirely new voyage. (Sec. 123) Q: What are the four cases of deviation in marine insurance? A: 1. Departure from the course of sailing fixed by mercantile usage between the places of beginning and ending specified in the poliy. (Sec. 121) 2. Departure from the most natural, direct, and advantageous route between the places specified if the course of sailing is not fixed by mercantile usage. (Sec. 122) 3. Unreasonable delay in pursuing the voyage. (Sec. 123) 4. The commencement voyage. A: 1. Proper This will not vitiate a policy of marine insurance because deviation is considered justified or caused by actual necessity whih is equal in importance to such deviation. (Sec. 124) 2. Improper The insurer becomes immediately absolved from further liability under the policy for losses occurring subsequent to the deviaton because deviation is considered to be without just cause. Every deviation not specified in Sec.124 is improper. (Sec. 125) 11 Q: What are the distinctions between the two? A: of an entirely different

The right of the insured to claim the whole insurance is absolute. No need to give notice of abandonment. (Sec. 135)

Q: What constitutes actual total loss? A: 1. A total destruction of the thing insured 2. The irretrievable loss of the thing by sinking, or by being broken up 3. Any damage to the thing which renders it valueless to the owner for the purpose for which he held it; or 4. Any other event which effectively deprives the owner of the possession, at the port of destination, of the thing insured. (Sec. 130) Note: Complete physical destruction is not essential to constitute actual total loss. Q: What is constructive total loss? A: 1. Actual loss of more than of the value of the object 2. Damage reducing value by more than of the value of the vessel and of cargo; and 3. Expense of transshipment exceeds of the value of the cargo. (Sec. 131) Q: When is actual loss presumed? A: It may be presumed from the continued absence of a ship without being heard of. The length of time which is sufficient to raise his presumption depends on the circumstances of the case. (Sec. 132) 12 Q: What is abandonment? A: It is the act of the insured by which, after a constructive total loss he declared the relinquishment to the insurer of his interest in the thing insured. Q: What are abandonment? A: 1. There must be an actual relinquishment by the person insured of his interest in the thing insured. (Sec. 138) 2. There must be a constructive total loss. (Sec. 139) 3. The abandonment must neither be partial nor conditional. (Sec. 140) the requisites for the validity of

Q: What are the two kinds of deviation?

4. It must be made within a reasonable time after receipt of reliable information of the los.s (Sec. 141) 5. It must be factual. (Sec. 142) 6. It must be made by giving notice thereof to the insurer which may be done orally or in writing. (Sec. 143) 7. The notice of abandonment must be explicit and must specify the particular cause of abandonment. (Sec. 144) Q: What is the form of notice of abandonment? A: Abandonment 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 7 days from such ora notice. (Sec. 143) Q: What is the effect of a valid abandonment? A: It is equivalent to a transfer by the insured of his interest, to the insurer, with all the chances of recovery and indemnity. The insurer becomes entitled to all the rights which the insured possessed in the thing insured. (Sec. 146) Q: What are the forms of acceptance of abandonment? A: 1. Express 2. Implied from the conduct of the insurer 3. Mere silence of the insurer for unreasonable length of time after notice. (Sec. 150) Q: When may the insured, by a contract of marine insurance, abandon the thing insured? A: 1. If more than threefourths thereof in value is actually lost, or would have to be expended to recover it from the peril 2. If it is injured to such an extent as to reduce its value more than threefourths 3. 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 threefourths the value of the thing abandoned or a risk which a prudent man would not take under the circumstances; or 4. If the thing insured is 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 subparagraph. (Sec. 139) Note: Freightage cannot in any case be abandoned, unless the ship is also abandoned. Q: What is the threefourth rule? A: What is contemplated as under the law must be more than . When what was lost was exactly , the rule cannot be applied.