Insurance Suretyship Reinsurance Co-insurance Double Insurance Over-insurance

an agreement whereby one Agreement whereby A contract by which The insured undertakes to It exists when same It exists when insured
undertakes for a consideration to a party called the an insurer procures assume the risk to the extent person is insured by obtains policy in an
indemnify another against loss, surety guarantees a third person to that is not covered by the several insurers separately amount exceeding the
damage or liability arising from an the performance by insure him against insurance in respect to the same value of insurable interest
unknown or contingent event. another called the loss or liability by subject and interest.
principal or obligor of reason of an original No over-insurance in life
Doing Business an obligation or insurance Examples: insurance
1. Making or proposing to make undertaking in favor 1. Marine Insurance (Sec GR: It is not prohibited by
as insurer any insurance of a third party called In every 159) law,
contract the obligee reinsurance, the  Partial loss
2. Making or proposing to make original contract of  Amount of insurance is EXN: But may be Double Insurance vs Over-
as surety, any contract of It is deemed an insurance and the less than the value of prohibited by “other insurance
suretyship as vocation, not as insurance contract if contract of the property insured insurance clause: 1. There may be no over
mere incident to any other surety is doing an reinsurance are 2. Fire Insurance insurance when sum
legitimate business insurance business. covered by separate  Need for express Requisites: total of the policies
3. Doing reinsurance business or policies stipulation to that effect 1. Person insured is the issued does not
similar acts
same exceed the insurable
4. Doing or proposing to any GR: No privity 2. 2/more insurers interest of the insured
business equivalent to the between original insuring separately 2. There must be at least
foregoing insured and 3. Subject matter is the two more insurers for
reinsurer same double insurance while
Characteristics 4. Interest insured is in over- insurance,
1. Risk-distributing device EXN: Original also the same there may a case
2. Contract of Adhesion/Fine insured may directly 5. Risk or peril insured where there is only
Print Rule sue reinsurer if in against is the same one insurer
3. Aleatory the reinsurance
4. Contract of indemnity policy there is a
(not a wagering contract) stipulation pour atrui
5. Personal in his favor
6. Uberrimae Fidae

Test:
Principal object and purpose
(assumption of risk and
indemnitication) and fact that no
profit/consideration is received is
not conclusive as proof of not
doing business

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RULES ON PAYMENT: Double Insurance and Over-Insurance

ILLUSTRATION: Fire insurance over a house valued at 600k. The three insurers are: X - 400k; Y - 200K; Z - 600k

1. Claim payment from insurers in such order as he may select, up to the Any of the ff:
amount for which insurers are severally liable under their respective Demand from Z – 600k
contracts Demand from all – 200k
Demand from X – 400k and recover balance form Y or Z or both of them
2. Open policy – actual value as basis Actual loss is 2.4 million but total insurance coverage is 1.2M only
Claim from each policies up to 1.2M

3. Valued Policy – any sum received by him under any policy shall be Each policies valued at 1M
deducted from the value of the policy without regard to the actual value of Y- 200K
the subject matter insured Z- 600K
X- 200K only
4. Receives in excess of valued policies or of the insurable value in unvalued Received 600k from Z and 200k from Y – cannot keep the excess of 200k since
policies – Hold such sum in trust for other insurers according to their right value of loss is only 600k representing value of house
of contribution
5. Each insurer is bound between himself and other insurers to contribute X= 200k (400k/ 1.2M x 600k)
ratably to the loss in proportion to the amount for which he is liable under Y= 100k ( 200k/ 1.2 M x 600 k)
his contract Z= 300k (600 k/ 1.2 M x 600k
6. Discovery of other insurance coverage in excess of the value of property
is ground for recission (Sec 64)

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 Parts Principles: Perfection Cancellation: Non-Life Types of Insurance Contracts and their respective kinds
1. Cover Note of Insurance Contract Insurance
 persons who wish to be 1. Life insurance
insured may get protection 1. Insured makes the a. Individual
before the perfection of offer by submitting 1. Prior notice to insured b. Group
insurance contract application to with grounds stated c. Industrial
 issued or renewed only upon insurer who 2. Written 2. Non-Life (Property, Marine, Fire, Casualty which includes third party
prior approval of Insurance thereafter accepts it 3. Based on grounds after liability)
Commission 2. Cognition theory – effective date of policy a. Open policy
 valid and binding not more acceptance of an a. Non-payment of b. Valued policy
than 60 days from date of its offer by letter does premium c. Running policy
issuance and policy must not bind the offeror b. Conviction of crime 3. Contract of Suretyship
thereafter be issued except the time it out of acts 4. Microinsurance – financial product or service that meets the risk
 no separate premium came to his increasing the protection needs of the poor where the amount of contributions,
 may be cancelled by either knowledge hazard premiums, fees or charges are computed on a daily basis, does not
party upon prior notice at least 3. Delivery pf policy is c. Fraud or material exceed 7.5% of the current daily minimum wage rate for non
days not necessary since misrepresentations agricultural workers in Metro Manila and the maximum sum of
 60-day period may be insurance contract d. Willful or reckless guaranteed benefits is not more that 1,000 times of the current daily
extended upon written is a consensual and acts or omission minimum wage rate for non-agricultural workers in Metro Manila
approval not a real contract increasing the risk 5. Variable Contracts – any policy or contract on either group or
2. Rider 4. Insured has the e. Physical changes in individual basis issued by an insurance company providing for
 Attachment that modifies right to demand the property making benefits or other contractual payments or values thereunder to vary
conditions of policy by delivery of policy it uninsurable so as to reflect investment results of any segregated portfolio of
expanding or restricting its 5. Mere delay in f. Discovery of other investments
benefits or excluding certain acceptance of insurance coverage 6. Compulsory insurance coverage for agency-hired workers - is
conditions from coverage insurance contract that makes total an insurance mechanism made available by the law to provide
 Not binding unless descriptive will not result in a insurance in excess insurance protection for OFWs.
title or name is mentioned and binding contract but of value of property  Each migrant worker to be deployed by a recruitment/manning
written on blank spaces in the the insurer may be insured agency shall be covered by a compulsory insurance contract
policy liable for tort g. Insurance which shall be secured at no cost to the said worker.
 Should be countersigned by Commissioner  To be qualified:
the insured or owner unless determines policy to 1. Be a reputable private life, non-life and composite insurance
he was the one who applied be voidable company
3. Policy 2. Be duly licensed by IC;
 Evidence of terms and 3. Be in existence and operational for at least five (5) years;
conditions 4. Have a net worth of at least Php 500,000,000 based on the
 Not necessary for perfection, audited financial statements for the immediately preceding
but once issued must conform year;
to required contents (parties, 5. Have a current year certificate of authority;
amount of insurance, rate of 6. Not disqualified: Insurance companies who have directors,
premium, property or life partners, officers, employees, or agents with relatives within
insured, interest in property if the fourth civil degree of consanguinity or affinity who work
he is not the absolute owner, or have interest in any of the licensed recruitment/manning
risk insured against, period) agencies or in any of the government agencies involved in
the overseas employment program shall be disqualified
from providing the migrant worker’s insurance coverage.

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 ELEMENTS OF INSURANCE CONTRACT
A. INSURABLE INTEREST
Life Property
 Both insured and beneficiary must insurable interest
GR: Every person has an insurable interest in his life and health and that of his  Limited to actual value only
spouse and children (unlimited)  Insurable interest must exist at the time insurance takes effect and when
loss occurs, but need not exist in between
EXN: Need for pecuniary interest (limited)  Expectation of benefit must always be with legal basis
1. Of any person on whom he depends wholly or in part for education or 1. Existing interest
support ( no need for legal basis), or in whom he has a pecuniary interest 2. Inchoate interest founded on an existing interest
2. Of any person under a legal obligation to him for the payment of money or 3. Expectancy coupled with an existing interest in that of which
respecting property or services of which death or illness might delay or expectancy arises
prevent performance Rules: Mortgagor and Mortgage Contracts
3. Of any person upon whose life any estate or interest vested in him depends  Separate and distinct insurable interest
1. Mortgagor – value of property, still the owner and loss of property
will not extinguish lien
GR: One may insure his life and designate any beneficiary who may not need to
2. Mortgage – value of debt, interest continues until debt is paid
have an insurable interest in the life of the insured
 May take policies separately at same or different time
EXN: One who insures the life of another and makes himself a beneficiary must have
 Mortgagee may be the beneficial payee
insurable interest in the life of the insured.
1. Assignee - with consent of insurer and must have insurable interest
but if paid prior loss, it can no longer recover
 Life insurance is not a contract of indemnity, no over-insurance if he insures 2. Pledgee - without consent of insurer
himself; no subrogation  Insurance contract procured by either of the two does not inure to either of
 Insurable interest must exist only at the time the policy takes effect them, unless there is stipulation in favor of third person. Absence of
 Friendship does not suffice for relationship as basis for persons other than par a stipulation nonetheless will entitle mortgagee a lien on the proceeds of the
of section 10; separation of spouse will not affect insurable interest which already policy. Any act of his, prior to the loss, which would otherwise avoid the
existed at the time policy took effect insurance, will have the same effect, although the property is in the hands of
 Designation of beneficiary is revocable during lifetime of insured, unless the mortgagee, but any act which, under the contract of insurance, is to be
expressly waived or insured dies without changing the beneficiary performed by the mortgagor, may be performed by the mortgagee therein
 Beneficiary who is irrevocably designated can pay premium if insured failed to named, with the same effect as if it had been performed by the mortgagor.
pay and his consent is needed if insured will add more beneficiaries  Standard Mortgage Clause – subsequent acts of mortgagor cannot affect
 Irrevocable beneficiary revoked if guilty spouse for grounds for legal separation the rights of mortgagee
and void marriage  Open/Loss payable mortgage clause (Secs 8 and 9)
 Assignee need not have insurable interest; notice prior assignment to insurer is a 1. mortgagor does not cease to be a party to the contract
valid provision 2. mortgagee is only a beneficiary and recognized as such by the
 Disqualified insured: Public enemy ( international, declaration of war needed, insurer but not a party to the contract
cessation of wars will not reinstate the policy) 3. covers interest mortgagee has at the issuance of policy
 Disqualified beneficiary (Art 739, CC) – both have liberality consideration 4. if there is loss, obligation is extinguished and no subrogation
1. between persons who were guilty of adultery or concubinage at the time of because proceeds are payable to mortgagee
donation
2. between persons found guilty of same criminal offense in consideration
thereof
3. made to public officer or his wife, descendants or ascendants by reason of
office
4. The interest of a beneficiary in a life insurance policy shall be forfeited
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 when the beneficiary is the principal, accomplice or accessory in willfully
bringing about the death of the insured.
 Invalid designation will not avoid policy; estate becomes recipient
 Insurer is liable in case of suicide after the policy has been in force for a period of
two years from the time policy is issued or reinstated, unless policy provides
shorter period
 Suicide in a state of insanity shall make the insurer liable regardless of date of
suicide
 Incontestability clause applies only in life insurance

Effect of Change of interest

GR: Change in interest in any part of a thing insured unaccompanied by a corresponding change of interest in the insurance suspends the insurance to an
equivalent extent, until the interest in the thing and the interest in the insurance are vested in the same person

EXN:
1. In life and health and accident insurance
2. Change of interest in the thing insured after the occurrence of an inquiry of which results in a loss
Ex. In motor vehicle insurance, car owner who was involved in an accident and subsequently sells the car can still recover. But if a second accident
happens without any transfer of policy to buyer, no one can claim

3. Change of interest in one or more of several distinct things, separately insured by one policy
Ex. In divisible contracts where a house in a compound may be insured under one policy and premium but separately valued.

4. Change of interest by will or succession on death of insured

5. Transfer of interest by one of several partners, joint owners, or owners in common, who are jointly insured to the others
6. When a policy is so framed that it will inure to the benefit of whomsoever, during the continuance of the risk, may become the owner of the interest of the
insured

Note: When there is an express prohibition against alienation in the policy, in case of alienation, the contract of insurance is not merely suspended but avoided

B. ASSUMPTION OF RISK
GR: A future even is the only event that can be covered by an insurance contract
EXN: Past event may be covered by a marine insurance if the loss of the vessel in the past could not have been known by ordinary means of communication
C. RISK OF LOSS (Insurer may undertake devices to ascertain and control risk and loss)
Concealment Representations Warranties Conditions Exceptions
Neglect to communicate that which a party knows Factual statements made by Statements or promises by the insured Conditions Insuree may exclude
or ought to know to communicate the insured at the time prior to set forth in the policy itself or precedent or certain specified
the issuance of the policy to incorporated in it by proper reference, subsequent which risks that would
Rules: give information to the insurer the untruth or nonfulfillment of which in insurer may otherwise be
 Matter concealed need not be the cause of and otherwise induce him to any respect and without reference to impose in the included under the
loss enter into the insurance whether the insurer was in fact policy to protect general language
 Refers to facts only occurring at or before the contract prejudiced by such untruth or himself against describing the risks
policy becomes effective nonfulfillment will render the policy fraudulent claims assumed
 Must be material such that its non-disclosure Rules: voidable. of loss and
misled the insurer in forming his estimates of  Written or oral attempts i.e.

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 the risks of the proposed insurance policy or  Affirmative or promissory Rules: requiring
in making inquiries  Must be material  May express, implied (marine immediate notice
 Good faith not a defense since it may be  Collateral inducement insurance), affirmative, of loss or injury
intentional or unintentional  VALID: false at the time promissory and detailed proofs
 Opinion or judgment in good faith is not made but true at the time  EFFECT: Rescission unless loss of loss within a
concealment i.e. medical history being asked of effectivity occurs before performance, limited period
from non-medical family member performance becomes unlawful or
 Waiver of medical examination in non- impossible or provision is
medical insurance makes matters on health immaterial
even more material  Liable even if breach is not the
 Insurer estopped when accepts premium cause of loss
despite facts or information has been  If stipulated, breach of immaterial
supplied which could be hardly overlooked, provisions is ground for rescission
unless there is connivance between the
insured, soliciting agent and medical
examiner Representation Warranty
 Duty to conceal is with insured. The fact that  Collateral inducement  Part of contract
the agent is aware is of no moment.  Oral or written  Written on the policy, or in
 Agent who connives with insured is  Should be established rider or attachment
personally liable since he no longer acts for to be material  Generally conclusively
the interest of the insurer and is bound by his  Requires to be presumed to be material
own acts substantially true  Fact warranted must be strictly
 in a marine insurance, concealment does not construed with
vitiate the entire contract, but merely EFFECT:
EFFECT:
exonerates the insurer from a loss resulting  To the return of the premium
 It renders the insurance
from the risk concealed. paid at a pro rata from the time
contract voidable at the
 Matter that need not be disclosed, except in of breach or if it occurs after
option of the insurer,
inquiries thereof the inception of the contract;
although the policy is
 Those which, in the exercise of ordinary or
not thereby rendered
care, the other ought to know and of  To all premiums if it is broken
void ab initio.
which, the former has no reason to during the inception of the
 The injured party
suppose him ignorant contract.
entitled to rescind from
 Those of which the other waives  Policy is avoided ab initio and
the time when the
communication; never became binding if there
representation
 Those which the other knows; was fraud and insured is not
becomes false.
 Those which prove or tend to prove the entitled to the return of the
 When the insurer
existence of a risk excluded by a premium
accepted the payment
warranty, and which are not otherwise
of premium with the
material;
knowledge of the
 Those which relate to a risk excepted
ground for rescission,
from the policy and which are not
there is waiver of right
otherwise material
of rescission.
 The nature or amount of the interest of
one insured, except if he is not the
owner of the property insured

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 INCONTESTABILITY CLAUSE : Concealment and Misrepresentation
GR: If concealment or misrepresentation is discovered before loss or death, insurer may cancel. If discovered after, insurer may refuse to pay
EXN: Incontestability clause
1. Insurance is a life insurance policy payable on death of insured
2. In force during the lifetime of the insured for at least 2 years from date of issue or last reinstatement. The period may be shortened but cannot be extended
EXN to the EXN:
1. Person taking the insurance lacked insurable interest
2. Cause of death is an excepted risk
3. Non-payment of premiums
4. Conditions of the policy relating to military or naval service have been violated
5. Fraud is of a particularly vicious type
6. Beneficiary failed to furnish proof of death or to comply with any condition imposed by policy after the loss has happened
7. Action was not brought within the time specified

D. PREMIUM
GR: No insurance policy issued or renewed is valid and binding until the actual payment of the premium. Any agreement to the contrary is void
EXN:
1. In case of life and industrial life wherever the grace period provision applies
2. Where there is an acknowledgement in the contract or policy of insurance that the premium had already been paid
3. Agreement to pay in installments and partial payment has been made at the time of loss
4. When a credit term was agreed upon like the agreement such as 60-90 day credit term
5. Parties are barred by estoppel
Note: Authorized acknowledgement of receipt of payment of premium binds the insurer

GR: Premium by a post-dated check at a stated maturity subsequent to the loss is insufficient to put the insurance into effect if there is no credit agreement

EXN: If there is no credit agreement, payment by means of check or note, accepted by the insurer, bearing a date prior to the loss, assuming an availability of the funds
thereof, would be sufficient even if it remains unencashed at the time of the loss. Subsequent effects of encashment would retroact to the date of instrument and its
acceptance by the creditor

Return of premiums
1. If the thing insured was never exposed to the risk insured against
2. When insurance is for a definite period and the insured surrenders his policy before the termination thereof
3. Contract is voidable and subsequently annulled under the provision of the Civil Code
4. Insurance contract is voidable due to the fraud or misrepresentation of insurer or of his agent
5. When the contract is annulled on account of the fraud or misrepresentation of the insurer or of his agent or on account of facts, or the existence of which he insured
was ignorant of without the fault
6. When by any default of the insured other than actual fraud
7. Over-insurance
8. Recission is granted due to the insurer’s breach of contract

Reinstatement – ONLY IN LIFE INSURANCE

GR: Policy holders in life insurance shall have the policy reinstated at any time within three years from the date of default of premium payment

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EXN: Cash surrender value has been duly paid to the insured or the extension period has expired, provided, there is proof of insurability and payment of overdue premiums
Note: Incontestability clause starts anew from date of reinstatement
E: SCHEME TO DISTRIBUTE LOSSES

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 Types of Property Insurance
MARINE INSURANCE
Insurable Interest
1. Shipowner
 Over the value of the vessel even if the chartered and the charterer agreed to pay the shipowner the value of the vessel in case of loss, provided
shipowner can recover only the amount not recoverable from the charterer
 If hypothecated by a bottomry loan, the insurable interest is only up to the excess of the vessel over the loan
 Over expected freightage
2. Cargo-owner/shipper
 Cargo and expected profits
3. Charterer
 Over the vessel up to the extent of the amount he is liable to the shipowner, if the ship is lost or damaged during the voyage
 Over his expected profits or freightage if he accepts cargoes from other persons for a fee
 Over his own cargo or his client’s cargo
Rules:
1. Implied warranties
 Ship is seaworthy at the inception of the insurance
 Ship will not deviate from the agreed voyage, unless proper
 If due to the circumstances outside the control of the ship captain or ship owner
 If done to comply with a warranty
 Made in good faith to avoid peril
 Save human life or another distressed vessel
 Ship will not engage in an illegal venture
 Warranty of possession of documents of neutrality or nationality of the ship or cargo where such nationality or neutrality is expressly warranted
 Presence of insurable interest
2. Perils of the sea vs peril of the ship
 In absence of stipulation, only risks insured against perils of the sea are covered, unless there is an all-risk policy
 Perils of the sea include losses as are of extraordinary nature or arise from some overwhelming power which cannot be guarded against by ordinary
exertion of human skill or prudence
 Perils of the ship is loss which in the ordinary course of events results from the ordinary, natural and inevitable action of the sea, from ordinary wear
and tear of the ship, and from the negligent failure of the ship’s owner to provided the vessel with the proper equipment to convey the cargo under
ordinary conditions
 Barratry may be expressly covered by the policy. It is willful misconduct on the part of the master or crew in pursuance of some fraudulent purpose
without consent of owners and to the prejudice of owner’s interest
3. Seaworthiness
 Ship is seaworthy when reasonably fit to perform the service, and to encounter the ordinary perils of the voyage contemplated by the parties
 Extends to the condition of the structure, that it is properly lades and provided with a competent master, a sufficient number of competent officers and
seamen and the requisite appurtenances and equipment
 Generally, it must be seaworthy at the time of commencement of risk
 Cargo covered by marine insurance carries the implied warranty of seaworthiness. It is immaterial that the unseaworthiness of the ship was unknown
since he has full control in the choice of common carrier
4. Concealment
 GR: Matters of belief, judgment or opinion of third persons are immaterial
EXN: Belief and expectation of third person in reference to a material fact is material and must be disclosed (Sec 109)
 GR: Matters concealed need not be the cause of loss
EXN: In marine insurance, there are instances when matters, although concealed, will not vitiate contract, except when they caused the loss (Sec 112)

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 5. Loss & Abandonment
 General average loss – insurer of the vessel or cargo saved will be liable
 Common danger to the vessel or cargo
 Part of the vessel was sacrificed deliberately
 Sacrifice must be for the common safety or for the benefit of all
 Made by the master or upon his authority
 Must be successful
 Particular average loss – did not inure to common benefit and profit of all persons interested in the vessel or her cargo, insurer of damaged goods will
be liable if covered by the policy
 Actual loss – complete physical destruction not required; uselessness suffices
 Total destruction
 Loss by sinking
 Damage rendering thing valueless
 Total deprivation of owner of possession of thing insured
 Constructive total loss – insured may abandon the goods or vessel to the insurer and claim for the whole insured value or may without abandoning,
claim for partial loss
 Actual loss of more than ¾ of the value of the object
 Damage reducing the value by more than ¾ of the value of the vessel and of cargo
 Expenses of shipment exceeds 3/4 of cargo
 Requisites for abandonment:
 Actual relinquishment by the person insured of his interest in the thing insured
 Constructive total loss
 Abandonment should neither be partial nor conditional
 Made within reasonable time after receipt of reliable information of the loss
 Must be factual
 Made by giving notice to insurer orally or written
 Notice of abandonment must be explicit and must specify the particular cause of the abandonment
Note:
1. Loan that is obtained for the value of the vessel on a voyage.
2. In a bottomry loan, the insurable interest of a ship owner on its bottomed boat is the difference between the amount of the loan and the value of the boat. Thus,
if the amount of the loan does not cover the total value of the boat, the owner can still insure the boat. Both loans depend upon the safe conclusion of the
voyage.
FIRE INSURANCE
 Coverage: lightning, windstorm, tornado or earthquake and other allied risks when such risks are covered by extension of fire insurance policies
 Extent of liability – Valued: policy :: Open: actual loss
 Alteration
1. Use or condition of the thing insured is specifically limited
2. Use or condition is altered
3. Without consent of insurer
4. Within control of insured
5. Increases the risk
6. Violation of material provision

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 CASUALTY INSURANCE
 Covers negligent acts of man
 May provide for stipulation pour autrui where the third party may directly sue the insurer upon happening of loss and that there is no final and executory
decision yet is not a defense
 Insurer is not solidarily liable with the insured or the tortfeaser; liability limited to insurance contract
 Compulsory Motor vehicle Liability Insurance
 Registration of any vehicle will not be made or renewed unless complied with
 No fault clause – no need to prove fault or negligence of any kind, provided the claim does not exceed 15k, proofs of loss under oath submitted
(police report, death certificate, medical report) and may be made against one motor vehicle only
 Notice of claim must be within 6 months form the date of the accident otherwise waived
 File action in court within 1 year from denial of claim
 Pay within 5 days if there is agreement; if no agreement reached, the insurance company shall pay no-fault indemnity only without prejudice to
pursuing his claim further in which case no quitclaim should be compelled from the claimant by insurance company
 Third person can sue directly if it is an indemnity against liability but has no cause of action if it provides for reimbursement after actual payment
by the insured or for the indemnity against loss
 Proceeds of a third party liability insurance may be garnished
 Authorized driver clause – driver other than insured must be licensed otherwise no liability
 Theft clause – applies even if driver is not duly licensed
 Third person must not be member of household or family member within the 2 nd degree of consanguinity or affinity or employee

Loss and Claims Settlement

When insurer is liable When insurer not Claim Settlement (best evidence; substantial compliance)
liable
1. Loss, the immediate 1. Insured’s willful Fire Insurance  Without unnecessary delay otherwise exonerated
cause of which is the act or gross  Substantial compliance of proof required
peril insured against negligence  Stipulation that consent of insurer needed before payment by responsible person for the
except where the 2. Loss due to loss is valid to prevent collusion between insured and claimant
proximate cause is an connivance of Life Insurance  Proceeds must be paid immediately upon maturity of policy if maturity date is provided
excepted peril the insured  If policy matures by death of insured, within 60 days after presentation of claim and filing
2. Loss, the proximate 3. Loss where the of proof of death
cause of which is the excepted peril Property Insurance  Within 30 days after proof of loss is received by insurer and ascertainment of loss or
peril insured against is the damage is made by agreement or by arbitration
3. Loss through proximate  If no ascertainment is made within 60 days after receipt of proof of loss, the loss shall be
negligence of insured cause paid within 90 days after such receipt
except where there is
gross negligence Compulsory Motor  Notice of claim must be within 6 months form the date of the accident otherwise waived
amounting to willful act Vehicle Liability
4. Loss caused by efforts Note:
to rescue the thing from GR: COLLATERAL SOURCE RULE - If an injured person receives compensation for his injuries from a source wholly
peril insured against if independent of the tortfeaser i.e. health insurer of victim , the payment should not be deducted from the damages he
during the rescue, the would otherwise collect from the tortfeaser
thing is exposed to a EXN: NO-FAULT INSURANCE – Insured is indemnified for losses regardless of who was at fault (no fault insurer will
peril not insured not pay for medical expenses if already paid by separate health insurance)
against, which

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 permanently deprives Prescription
the insured of its GR: Stipulation for period as long as not less than 1 year from time of cause of action (denial of claim regardless of
possession, in whole or any subsequent motion for reconsideration filed)
in part EXN: 10 Years if no stipulation or if period stipulated is void and 1 year for CMVL

Jurisdiction:
1. RTC/ IC – 5M or below for a single claim
2. RTC – above 5M
UNFAIR CLAIMS SETTLEMENT:

No insurance company doing business in the Philippines shall refuse, without just cause, to pay or settle claims arising under coverages provided by its policies,
nor shall any such company engage in unfair claim settlement practices. Any of the following acts by an insurance company, if committed without just cause and
performed with such frequency as to indicate a general business practice, shall constitute unfair claim settlement practices:

1. Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverage at issue
2. Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;
3. Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under its policies;
4. Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear; or
5. Compelling policyholders to institute suits to recover amounts due under its policies by offering without justifiable reason substantially less than the
amounts ultimately recovered in suits brought by them.
6. Evidence as to numbers and types of valid and justifiable complaints to the Commissioner against an insurance company, and the Commissioner’s
complaint experience with other insurance companies writing similar lines of insurance shall be admissible in evidence in an administrative or judicial
proceeding brought under this section.
7. If it is found, after notice and an opportunity to be heard, that an insurance company has violated this section, each instance of noncompliance with
paragraph (a) may be treated as a separate violation of this section and shall be considered sufficient cause for the suspension or revocation of the
company’s certificate of authority.

SUBROGATION:

1. By operation of law upon payment to insured and no need for formal assignment or express provision (assignee in equity)
2. Insured merely steps into the shoes of insured thus bound by the remaining prescriptive period
3. No subrogation:
a. Insured by his own act releases the third person liable for the loss
b. Insurer pays for loss not covered by policy
c. Life insurance
d. Recovery of loss in excess of insurance coverage

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