Quiz #3

Matters which a Party is not bound to Communicate

Sec 30 ICP: Neither party to a contract of insurance is bound to
communicate information of the matters following, except in answer to the
inquiries of the other:
(a) Those which the other knows
(b) Those which, in the exercise of ordinary care, the other ought to
know, and of which the former has no reason to suppose him
ignorant
(c) Those of which the other waives communication
(d) Those which prove or tend to prove the existence of a risk
excluded by a warranty, and which are not otherwise material; and
(e) Those which relate to a risk excepted from the policy and which
are not otherwise material.
Requisites for Incontestability
(1) The policy is a life insurance policy
(2) It is payable on the death of the insured; and
(3) It has been in force during the lifetime of the insured for at least 2
years from the date of issue or of its last reinstatement
Effect When Policy becomes Incontestable
The insurer may not refuse to pay the insured by claiming that:
(1) The policy is void ab initio
(2) It is rescissible by reason of fraudulent concealment of the insured
or his agent, no matter how patent or well-founded
(3) It is rescissible by reason of the fraudulent misrepresentations of
the insured or his agent
Defenses not Barred by Incontestable Clause
(1) That the person taking the insurance lacked insurable interest as
required by law (lack of insurable interest)
(2) That the cause of the death of the insured is an excepted risk
(death or loss is not covered by the policy)
(3) That the premiums have not been paid (nonpayment of premiums)
(4) That the conditions relating to military or naval services have been
violated
(violation of conditions regarding military or naval
services)
(5) That the fraud is of a particularly vicious type, as where the policy
was taken out in furtherance of a scheme to murder the insured,
or where the insured substitutes another person for the medical
examination, or where the beneficiary feloniously kills the insured
(fraud of a particularly vicious type)
(6) That the beneficiary failed to furnish proof of death or to comply
with any condition imposed by the policy after the loss has
happened (non-compliance with requirements to prove loss)
(7) That the action was not brought within the time specified
(prescription)

Definition of Policy
Sec 49: The written instrument in which a contract of insurance is set forth,
is called a policy of insurance.
Form of Insurance Policy
Sec 50: The policy shall be in printed form which may contain blank
spaces; and any word, phrase, clause, mark, sign, symbol, signature,
number, or word necessary to complete the contract of insurance shall be
written on the blank space provided therein.
Any rider, clause, warranty, or endorsement purporting to be part of the
contract of insurance and which is pasted or attached to said policy is not
binding on the insured, unless the descriptive title or name of the rider,
clause, warranty or endorsement is also mentioned and written on the
blank spaces provided in the policy.
Unless applied for by the insured or owner, any rider, clause, warranty, or
endorsement issued after the original policy shall be countersigned by the
insured or owner, which countersignature shall be taken as his agreement
to the contents of such rider, clause, warranty, or endorsement.
Notwithstanding the foregoing, the policy may be in electronic form subject
to the pertinent provisions of Republic Act 8792, otherwise known as the
Electronic Commerce Act and to such rules and regulations as may be
prescribed by the Commissioner.
Kinds of Insurable Risks
(1) Personal risks those involving the person
(2) Property risks those involving loss or damage to property
(a) Direct losses -- fire, lightning, windstorm. Flood, and other
forces of nature offer a constant threat of loss to real and
personal property
(b) Indirect losses including loss of profits, rents, or favorable
leases
(3) Liability risks those involving liability for the injury to the person
or property of others
Cancellation of Non-life Insurance Policy
Sec 64. No policy of insurance other than life shall be cancelled by the
insurer except upon prior notice thereof to the insured, and no notice of
cancellation shall be effective unless it is based on the occurrence, after the
effective date of the policy, of one or more of the following:
(a) Nonpayment of premium;
(b) Conviction of a crime arising out of acts increasing the hazard
insured against;
(c) Discovery of fraud or material misrepresentation;
(d) Discovery of willful or reckless acts or omissions increasing the
hazard insured against;
(e) Physical changes in the property insured which result in the
property becoming uninsurable;

(f)

Discovery of other insurance coverage that makes the total

insurance in excess of the value of the property insured; or
(g) A determination by the Commissioner that the continuation of the
policy would violate or would place the insurer in violation of this
Code
Form and Sufficiency of Notice of Cancellation by the Insurer
(1) There must be prior notice of cancellation to the insured
(2) The notice must be based on the occurrence, after the effective
date of the policy, of one or more of the grounds mentioned (Sec
64)
(3) It must be in writing, mailed or delivered to the named insured at
the address shown in the policy, or to his authorized broker; and
(4) It must state which of the grounds set fort is relied upon
Valued Policy
Sec 61. A valued policy is one which expresses on its face an agreement
that the thing insured shall be valued at a specific sum.
MARINE INSURANCE

Abandonment
Sec 140. Abandonment, in marine insurance, is the act of the insured by
which, after a constructive total loss, he declares the relinquishment to the
insurer of his interest in the thing insured.
Requisites for Valid Abandonment
(1) There must be actual relinquishment by the person insured of his
interest in the thing insured (Sec 140)
(2) There must be constructive total loss (Sec 141)
(3) The abandonment be neither partial nor conditional (Sec 142)
(4) It must be made within a reasonable time after receipt of reliable
information of the loss (Sec 143)
(5) It must be factual (Sec 144)
(6) It must be made by giving notice thereof to the insurer which may
be done orally or in writing (Sec 145); and
(7) The notice of abandonment must be explicit and must specify the
particular cause of the abandonment (Sec 146)