Scribd
Upload
53 views4 pages

Title 5 Representation

This document outlines rules and definitions related to representations in insurance contracts. It discusses that representations can be oral or written, and can be made before or at the time a policy is issued. False representations in a material point allow the injured party to rescind the contract. For life insurance policies, the insurer cannot prove a policy is void due to misrepresentation after it has been in force for two years. The document also discusses the materiality of representations and how they differ from concealment. It provides details on when an insurer must exercise their right to rescind a policy.

Uploaded by

Makoy Molina
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
53 views4 pages

Title 5 Representation

This document outlines rules and definitions related to representations in insurance contracts. It discusses that representations can be oral or written, and can be made before or at the time a policy is issued. False representations in a material point allow the injured party to rescind the contract. For life insurance policies, the insurer cannot prove a policy is void due to misrepresentation after it has been in force for two years. The document also discusses the materiality of representations and how they differ from concealment. It provides details on when an insurer must exercise their right to rescind a policy.

Uploaded by

Makoy Molina
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

TITLE 5

REPRESENTATION

Section 36. A representation may be oral or written.

Section 37. A representation may be made at the time of, or before,


issuance of the policy.

Section 38. The language of a representation is to be interpreted by


the same rules as the language of contracts in general.

Section 39. A representation as to the future is to be deemed a


promise, unless it appears that it was merely a statement of belief or
expectation.

Section 40. A representation cannot qualify an express provision in a


contract of insurance, but it may qualify an implied warranty.

Section 41. A representation may be altered or withdrawn before the


insurance is effected, but not afterwards.

Section 42. A representation must be presumed to refer to the date


on which the contract goes into effect.

Section 43. When a person insured has no personal knowledge of a


fact, he may nevertheless repeat information which he has upon the
subject, and which he believes to be true, with the explanation that
he does so on the information of others; or he may submit the
information, in its whole extent, to the insurer; and in neither case is
he responsible for its truth, unless it proceeds from an agent of the
insured, whose duty it is to give the information.

Section 44. A representation is to be deemed false when the facts fail


to correspond with its assertions or stipulations.

Section 45. If a representation is false in a material point, whether


affirmative or promissory, the injured party is entitled to rescind the
contract from the time when the representation becomes false.

Section 46. The materiality of a representation is determined by the


same rules as the materiality of a concealment.

MATERIALITY OF REPRESENTATION

1.) Test of Materiality


- Determined solely by the probable and reasonable influence of the
facts upon party to whom the representation is made (For
estimates or in making inquiries)

2.) Materiality a Judicial question

- It is not left to the insurance company to say after the loss has
occurred that it would or would not have issued the policy had an
answer been truly given. The matter misrepresented must be of the
character which the court can say would reasonably affect the
insurer’s judgment.

CONCEALMENT AND MISREPRESENTATION COMPARED

CONCEALMENT MISREPRESENTATION

The insured withholds information of The insured makes erroneous


material facts. statements of facts with the intent of
inducing the insurer to enter into the
insurance contract.

Same determination of Materiality Same determination of Materiality

Gives the right of rescission as an Gives the right of rescission as an


effect of concealment. (whether effect of misrepresentation. (whether
intentional or not) intentional or not)

SAME RULES APPLY

Section 47. The provisions of this chapter apply as well to a


modification of a contract of insurance as to its original formation.

APPLICABILITY OF SECTIONS 26 to 48

- The provisions of Sections 26to 35 governing concealment and


Sections 36 to 48 governing representations apply not only to the
original formation of the contract but also a modification of the
same during the time it is in force.

Section 48. Whenever a right to rescind a contract of insurance is


given to the insurer by any provision of this chapter, such right must
be exercised previous to the commencement of an action on the
contract.
After a policy of life insurance made payable on the death of the
insured shall have been in force during the lifetime of the insured
for a period of two (2) years from the date of its issue or of its last
reinstatement, the insurer cannot prove that the policy is void ab
initio or is rescindable by reason of the fraudulent concealment or
misrepresentation of the insured or his agent.

WHEN AN INSURER MUST EXERCISE HIS RIGHT TO RESCIND

1.) In general
- A contrat of insurance may be rescinded on the ground of concealment,
or false representation, or breach of warranty. This action is founded
upon and presupposes the existence of the contract, which is rescinded.
2.) In non-life policy
- The insurer is no longer entitled to rescind a contract of insurance after
the insures has filed an action to collect the amount of the insurance.
- Where any of the material representations is false, the insurer’s tender of
the premiums and notice that the policy is cancelled before
commencement of the suit thereon, operates to rescind a contract of
insurance.
3.) In life policy
- The defenses mentioned are available only during the first 2 years of a
life insurance.

INCONTESTIBILITY OF LIFE POLICIES

Incontestability – after the requisites are shown to exist, the insurer is estopped
from contesting the policy or setting up any defense, except as is allowed, on the
ground of public policy.

OBJECT OF INCONTESTABILITY CLAUSE

- An insurer should have a reasonable opportunity to investigate the


statements which the applicant makes and that after a definite period,
the insurer should not be permitted to question the validity of the policy.
- As to the insured, it is to give the greatest possible assurance to a policy
holder that his beneficiaries would receive payment without question as
to the validity of the policy or the existence of the coverage once the
period of contestability passes.

REQUISITES FOR INCONTESTABILITY

1.) The policy is a life insurance


2.) Payable on the death of the insured
3.) Must be in force during the lifetime of the insured for at least 2 years from
the date of its issue or of its last reinstatement. (may be shortened, not
extended)
EFFECTS WHEN POLICY BECOMES INCONTESTABLE

The insurer may not claim

1.) That the policy is void ab initio


2.) That it is rescissible by reason of fraud
3.) That it is rescissible by reason of misrepresentation.

Note: in case of a reinstated policy, the period of contestability should be counted


from the date of reinstatement and not from the date of the issuance of the policy.

INCONTESTABIITY NOT ABSOLUTE

Incontestability only deprives the insurer of those defenses which arise in


connection with the formation and operation of the policy prior to loss.

The insurer may still contest the policy on any of the following grounds:

1.) That the person taking the insurance lacked insurable interest
2.) That the cause of death of the insured is an excepted risk.
3.) That the premiums have not been paid
4.) That the conditions of the policy have been violated
5.) That the fraud is of a particularly vicious type
6.) That the beneficiary failed to furnish proof of death or to comply with any
condition
7.) That the action was not brought within the specified time.

You might also like