Professional Documents
Culture Documents
The consent of the husband is not necessary for the validity of an insurance SEC 5. All kinds of insurance are subject to the provisions of this chapter so
policy taken out by a married woman on her life or that of her children. far as the provisions can apply.
Note: It applies to marine, fire, casualty, life and other kinds of insurance
SEC 11. The insured shall have the right: SEC 12. The interest of a beneficiary in a life insurance policy
9 to change the beneficiary he designated in the policy, 9 shall be forfeited when
9 UNLESS he has expressly waived this right in said policy o the beneficiary is the principal, accomplice, or accessory in
willfully bringing about the death of the insured;
Notes: in which event, the nearest relative of the insured:
Beneficiary: 9 shall receive the proceeds of said insurance if not otherwise disqualified.
9 person whether natural or juridical designated to receive proceeds
9 becomes exclusive owner of proceeds at the time of death of insured Notes (DeLeon)
Prohibited from becoming beneficiaries: (void donations) ART 739 NCC 9 Order of relatives: (Who will receive)
a. Between persons who were guilty of adultery/concubinage a. Legitimate children
" Insular v. Ebrado: No need for previous conviction b. Parents
" If the beneficiary is in GF he can still collect c. Grandparents/ascendants nearest in degree
b. Made between persons found guilty of the same criminal offense, d. Illegitimate children
in consideration thereof e. Surviving spouse
c. Made to a public officer or his wife, descendants and ascendants f. Collateral relatives
by reason of his office i. Brothers/sisters full blood
ii. Brothers/sisters half blood
iii. Nephews and Nieces
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9 Death in the provision covers death by legal execution 9 Examples:
9 Death by suicide not covered o Building contractor has an II in the building before payment of the
o Except: death when insane construction price
9 Section 12 does not apply: o Right to receive rentals is sufficient II to support a fire policy
o Self-defense o Consignee has insurable interest in said goods
o Accidental
o Insanity SEC 15. A carrier or depository of any kind:
9 The mere fact that insured dies while committing a felony does not warrant 9 has an insurable interest in a thing held by him as such,
denial of liability 9 to the extent of his liability but NOT to exceed the value thereof.
Notes:
SEC 31. Materiality is to be determined: 9 Right to info may be waived:
9 not by the event, o Expressly
9 but solely by the probable and reasonable influence of the facts o Impliedly
o upon the party to whom the communication is due,
o in forming his estimate of the disadvantages of the proposed SEC 34. Information of the nature or amount of the interest of one insured:
contract, OR in making his inquiries. 9 need not be communicated
9 UNLESS in answer to an inquiry,
Notes: 9 EXCEPT as prescribed by section 51
9 Test of materiality: the effect which the knowledge of the fact in question
would have on the making of the contract. It is sufficient that it would Notes:
influence the parties in making the contract 9 GR: Nature or amount of interest need not be communicated
9 Effect on insurer: a probable and reasonable influence upon the insurer in 9 EXC:
assessing the risk involved and in making or omitting further inquiries, and o 1. Sec 51: Policy must specify the interest of the insured in the
cause him to either reject the risk or to accept it only at a higher premium property only when he is not the absolute owner thereof.
or on different terms o 2. When the insurer makes inquiry from the insured
o It is sufficient that the non-disclosure misled the insurer in forming 9 Ex of no. 1: Trustee, mortgagee or building contractor must communicate
his estimates of the risk EVEN IF no inquiry is made by the insurer
o In case of avoided insurance, return premiums
9 If information acquired AFTER contract becomes binding and effective SEC 35. Neither party to a contract of insurance:
o No duty to disclose information even if the policy is yet to issue 9 is bound to communicate, EVEN upon inquiry,
o Concealment must take place at the time the contract is entered 9 information of his own judgment upon the matters in question
9 If information acquired BEFORE contract becomes effective
o There is a duty to disclose Notes:
9 Duty to disclose is confined to facts, opinions not covered
SEC 32. Each party to a contract of insurance is bound to know:
9 all the general causes Title 5. Representation
o which are open to his inquiry, equally with that of the other, and
o which may affect the political or material perils contemplated; and SEC 36. A representation may be oral or written
9 all general usages of trade
Notes: Notes:
9 May be done ONLY before the insurance is effected: 9 Unlike warranties, representation are not required to be literally true, only
o Since the insurer has not yet been induced be substantially true
o If done during such time policy is NOT rescissible anymore 9 Substantial AND material misrepresentation, avoids the contract
o EXC: marine insurance insurer is required to state the exact and
SEC 42. A representation must be presumed to refer to the date on which the whole truth
contract goes in effect. 9 The representation is substantially true and valid - EVEN if there are some
discrepancies which are minor or not material to the risk
9 A representation written in the policy which could be interpreted as a
Notes: promise will be construed as affirmative representation when possible to
9 There is no false representation if it is true at the time the contract goes save the policy
into effect but false at the time it was made
9 The contract is can be rescinded ONLY when it is false at the time when SEC 45. If a representation is false in a material point, whether affirmative or
the contract is effected promissory:
9 the injured party is entitled to rescind the contract
SEC 43. When a person insured has no personal knowledge of a fact,: 9 from the time when the representation becomes false.
9 he may nevertheless repeat information The right to rescind granted by this Code to the insurer is waived:
o which he has upon the subject, and which he believes to be true, 9 by the acceptance of premium payments
o with the explanation that he does so on the information of others; 9 DESPITE knowledge of the ground for rescission.
9 OR he may submit the information, in its whole extent,
to the insurer; Notes:
and in NEITHER case: 9 Fraud not essential for right to rescind
9 is he responsible for its truth, 9 Representation may be intentional or unintentional
9 UNLESS it proceeds from an agent of the insured, whose duty it is to give 9 Collusion between agent and insured will vitiate the policy
the information.
SEC 46. The materiality of a representation is determined by the same rules as
Notes: the materiality of concealment
9 The insured is given discretion to communicate what he knows of a matter
which he as no personal knowledge
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Notes: 9 When it becomes incontestable insurer cannot claim that policy is:
9 Materiality is a judicial question o Void abinito(means voidable) due to fraud in inducement;
9 Concealment and misrepresentation give right to rescind o Rescissible due to concealment or misrepresentation
9 Rules apply both to the insurer and insured 9 Defenses not barred by incontestability clause:
9 See discussion in SEC 31 (page 10) o Lack of insurable interest
o Cause of death is an excepted risk
SEC 47. The provisions of this chapter apply as well to a modification of a o Non-payment of premium
contract of insurance as to its original formation o Conditions relating to military or naval service violated
o Fraud is of a particularly vicious type (scheme to murder, insured
Notes: substitutes a person for exam, beneficiary kills insured)
9 The rules on concealment and misrepresentation applies to both the: o Beneficiary failed to furnish proof of death or to comply with any
o Original execution of the insurance policy condition imposed by policy after loss happened
o Any alteration or modification of the contract o Action not brought within time specified.
SEC 70. Without prejudice to section 51, every express warranty: Notes:
9 made at or before the execution of a policy, 9 3 exceptions to non-performance of warranty
must be contained: o Loss occurs before time specified
9 in the policy itself, or o Performance becomes unlawful before the time specified
9 in another instrument signed by the insured and referred to in the policy as o Performance becomes impossible before the time specified
making a part of it. 9 Non-performance may be barred by
o Waiver of insurer - needs a clear intent to waive
Notes: o Estoppel From insurers actions (May also apply to insureds
9 If contained in another instrument, must be signed by insured and referred representations)
to in the policy mere reference is not sufficient
9 Warranty may ALSO be contained in a RIDER: SEC 74. The violation of a:
o It need not be signed by the insured 9 material warranty, or
o UNLESS, such rider was issued after the original policy took 9 other material provision of a policy,
effect on the part of either party thereto, entitles the other to rescind.
SEC 76. Breach of warranty without fraud: Notwithstanding any agreement to the contrary, no policy or contract of insurance
9 merely exonerates an insurer from the time that it occurs, or issued by an insurance company is valid and binding:
9 where it is broken in its inception, prevents the policy from attaching to 9 unless and until the premium thereof has been paid,
the risk. 9 EXCEPT in the case of a life or an industrial life policy whenever the
grace period provision applies.
Notes:
9 GR: Fraud is not essential for breach of warranty Notes:
o mere violation entitles the other party to rescind. 9 Premium: is the agreed price or consideration paid by the insured for
o Falsity, not fraud is the basis of liability on a warranty undertaking to indemnify the former against a specified peril.
9 Payment of premium one of the essential elements of an ins contract
W/OUT Fraud With Fraud 9 Non-payment puts an end to the insurance contract and the insurer has no
9 Policy avoided only from the time of 9 Policy is VOID ab initio right to collect the premium
the breach 9 Insured is NOT entitled to Non-payment of 1 st premium Non-payment of subsequent premiums
Insured is entitled: premiums paid 9 Prevents the contract from 9 Does not affect the validity of the contract
(1) Return premiums at a pro rata rate becoming binding 9 UNLESS by express provision of law it
from time of breach 9 UNLESS waived suspends the policy
(2) When breach occurs during inception Note: in case of life insurance policyholder is
of contract, return all premiums entitled to a grace period of 30 days to pay the
9 Conditions on Insurance Policies: premium after the first
o Insurers may impose any condition so long as it is not contrary to
law, morals, good customs, public order, or public policy o GR: If no premium is paid contract is NOT effective
o One w/o the performance of which the contract does not become in o Exceptions: UCPB General Insurance Inc v. Masagana
existence. (1) Sec 77: in case of a life or industrial life policy whenever the grace
9 Exceptions in Insurance Policies: period provision applies
o Certain risks inserted in a policy which the insurer is unwilling to (2) Sec 78: Any acknowledgment in a policy or contract of insurance of
assume and used for the purpose of withdrawing from the coverage the receipt of premium is conclusive evidence of its payment
of the policy. (3) Makati Tuscany vs. CA, when the parties agree to the payment in
Effect of breach on Legal Relation of Parties installments and partial payment has been made at the time of loss.
9 Renders the contract voidable (4) Makati Tuscany vs. CA, insurer may grant credit extension
9 BUT the occurrence of the risk does not affect the validity of the contract (5) Estoppel
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9 No excuse for non-payment Sec. 79. A person insured is entitled to a return of premium, as follows:
o GR: Non-payment cannot be excused even for a fortuitous event (a) To the whole premium if no part of his interest in the thing insured be exposed
since the payment of a premium is of essence of a contract to any of the perils insured against;
o EXC: When the failure to pay was due to the wrongful act of the (b) Where the insurance is made for a definite period of time AND the insured
insurer or his agent (he is estopped) surrenders his policy:
9 There is a valid payment even if check is encashed after the occurrence of 9 to such portion of the premium as corresponds with the unexpired time, at
the risk insured against a pro rata rate,
9 On Partial Payments 9 UNLESS a short period rate has been agreed upon and appears on the face
o GR: Partial payment makes the policy effective during the whole of the policy,
period of the policy 9 after deducting from the whole premium any claim for loss or damage
o EXC: When the parties expressly stipulate that the policy will not under the policy which has previously accrued;
be in force UNTIL the full payment of premium 9 Provided, That no holder of a life insurance policy may avail himself of
" Partial payment considered as a deposit held in trust by the privileges of this paragraph without sufficient cause as otherwise
the insurer provided by law.
9 When there is not only a perfected contract but also a partially performed
one as far as the payment of the premium was concerned the obligation Sec. 80. If a peril insured against has existed,:
of the insurer to pay the amount of the policy became binding upon it. 9 and the insurer has been liable for any period, however short,
9 Payment of the premium to the insurance agent or broker is payment 9 the insured is not entitled to return of premiums, so far as that
to the insurance company particular risk is concerned.
o Misappropriation of the premiums paid by the agent is imputable
to the insurance company Sec. 81. A person insured is entitled to return of the premium when:
9 Premium vs. Assessment 9 the contract is voidable,
o Assessment: sum specifically levied upon a fixed and definite plan o on account of fraud or misrepresentation of the insurer, or of his
to pay losses and expenses agent, or
o Premium: paid to meet ANTICIPATED losses; NOT a debt o on account of facts, the existence of which the insured was
o Assessment: paid to meet ACTUAL losses; a debt ignorant without his fault; or
9 when by any default of the insured other than actual fraud, the insurer
Sec. 78. An acknowledgment in a policy or contract of insurance OR the receipt never incurred any liability under the policy.
of premium:
9 is conclusive evidence of its payment, so far as to make the policy binding, Sec. 82. In case of an over-insurance by several insurers, the insured:
9 notwithstanding any stipulation therein that it shall not be binding until the 9 is entitled to a ratable return of the premium,
premium is actually paid. 9 proportioned to the amount by which the aggregate sum insured in all
the policies exceeds the insurable value of the thing at risk.
Notes:
9 This section establishes a legal fiction of payment Notes:
9 There is a waiver of the condition of prepayment since it is declared by 9 If insurance is illegal premiums cannot be recovered
law to be conclusive evidence of payment o But if they are not in pari delicto innocent party may recover
9 Conclusive Presumption extends ONLY to the question of the binding
effect of the policy
o Insurer may still dispute it but ONLY for the purpose of
recovering the premium due and unpaid