Insurance

Atty. Zarah Villanueva-Castro Reason: By reason of the exclusive control of

the insurance company over the terms and
Governing Laws phraseology of the insurance contract

PD 612 as amended by RA 10607 3. Aleatory - both parties are reciprocally bound

NCC – supplemental to Insurance Code to give or do something for consideration upon
the happening of event which is uncertain or
Concept which is to occur at an indeterminate time.

Insurance is an aleatory contract whereby one

Insurance - contract of insurance as an agreement
undertakes for a consideration to indemnify
whereby one undertakes for a consideration to
another against loss, damage or liability arising
indemnify another against loss, damage or liability
from an unknown or contingent event. The
arising from an unknown or contingent event (Sec. 2
consideration is the premium, which must be
(1))
paid at the time and in the manner specified in
the policy, and if not so paid, the policy will
Doing an insurance business or transacting an
lapse and be forfeited by its own terms.
insurance business includes:
1. Making / proposing any insurance contract;
4. Contract of Indemnity - The insured who
2. Making / proposing as surety, any contract of
has insurable interest over the thing is only
suretyship;
entitled to recover the amount of actual loss
3. Reinsurance business
sustained and the burden is upon him to
4. Any business equivalent to the foregoing
establish the amount of such loss.
Note: The fact that no profit is derived from the making
XPN: Life Insurance – not strictly a contract of
of insurance contracts, agreements or transactions or
indemnity. A policy of life insurance is not a
that no separate or direct consideration is received
mere contract of indemnity, but is a contract to
therefor, shall not be deemed conclusive to show that
pay the beneficiary a certain sum of money in
the making thereof does not constitute the doing or
the event of death, provided certain conditions
transacting of an insurance business
are performed by the insured"
Test to determine if a contract is an insurance
Reason: Life is not subject to pecuniary estimation; Life
contract or not:
is precious.
1. nature of the promise;
2. the act required to be performed; and
5. Contract of utmost good faith (Uberrimae
3. the exact nature of the agreement in the light
Fides) - requires utmost/perfect good faith not
of the occurrence, contingency, or
for the insured alone but equally so for the
circumstances under which the performance
insurer; in fact, it is more so for the latter since
becomes requisite
its dominant bargaining position carries with it
stricter responsibility.
Characteristics of Insurance
Reason: *Since there was an assumption of risk on the
1. Risk Distributing Device - insurance serves part of the insurer, it is their duty to make intelligent
to distribute the risk of economic loss among estimates.
those who are subject to the same risk.
Material facts are facts needed by the insurer for the
Reason: Insurer has different policyholders determination of whether he will assume or not the risk.
that contribute to a common fund for the same
risk. Catch: not all policyholders will suffer the Distinguishing Elements
same risk at the same time.
An insurance contract exists where the following
2. Contract of Adhesion - the terms of the
elements concur:
contract do not result from mutual negotiations
1. The insured has an insurable interest;
between the parties as they are prescribed by
2. The insured is subject to a risk of loss by the
the insurer in printed form to which the insured
happening of the designated peril;
may "adhere" if he chooses but which he
3. The insurer assumes the risk;
cannot change the moment adherence is made.
4. Such assumption of risk is part of a general
scheme to distribute actual losses among a
Construction / Interpretation of
large group of persons bearing a similar risk;
Insurance Contracts: Any ambiguity therein
and
is resolved against the insurer, or construed
5. In consideration of the insurer's promise, the
liberally in favor of the insured.
insured pays a premium.
Katya Bringas
Faculty of Civil Law
University of Santo Tomas
 Classes of Insurance wage rate for nonagricultural workers
in Metro Manila; and
1. Life Insurance is an insurance on human lives b. The maximum sum of guaranteed
and insurance appertaining thereto or benefits is not more than 1,000 times
connected therewith. of the current daily minimum wage rate
for nonagricultural workers in Metro
Example: Retirement program – insurer Manila.
manages or acts as a trustee for such
retirement program. 8. Compulsory insurance coverage for
agency-hired workers – for OFWs
2. Fire Insurance - property insurance that
covers damage and losses caused by fire. Variable Contracts
Includes insurance against loss by fire,
lightning, windstorm, tornado or earthquake Insurance for group or on an individual basis for
and other allied risks benefits or other contractual payments or values
thereunder to vary so as to reflect investment results of
3. Casualty Insurance – covers loss or liability any segregated portfolio of investments or of a
arising from accident or mishap, excluding designated separate account in which amounts received
certain types of loos which by law or custom are in connection with such contracts shall have been
considered as falling exclusively within the placed and accounted for separately and apart from
scope of other types of insurance such as fire other investments and accounts. Variable contracts are
or marine. not considered as securities.

Includes: employer's liability insurance, motor Example: A life insurance policy with investment
vehicle liability insurance, plate glass insurance, component which has a cash value account, that is
burglary and theft insurance, personal accident invested in various accounts available in the policy.
and health insurance as written by non-life
insurance companies, and other substantially Perfection
similar kinds of insurance.
Consent; Cognition - An acceptance of an offer of
4. Suretyship - agreement whereby a party insurance not actually or constructively communicated
called the surety guarantees the performance to the proposer does not make a contract.
by another party called the principal or obliger
of an obligation or undertaking in favor of a Binding Deposit Receipt – Conditional; does not
third party called the obligee. insure outright. merely an acknowledgment, on behalf
of the company, that the latter's branch office had
Includes official recognizances, stipulations, received from the applicant the insurance premium and
bonds or undertakings. had accepted the application subject for processing by
the insurance company; and that the latter will either
5. Compulsory Motor Vehicle Liability approve or reject the same on the basis of whether or
Insurance - insurance on passenger and third- not the applicant is "insurable on standard rates.
party liability for death or bodily injuries and
damage to property arising from motor vehicle Parties to insurance contract - Insurer –
accidents. corporation, partnership, association authorized to
transact insurance business. Note: Anyone may be
6. Marine Insurance - losses incurred in insured except a public enemy.
connection with property, such as a ship,
goods, or other movables, involved in maritime Subject Matter of Insurance - Anything that has
transport. It covers vessels, aircraft, vehicle, value which is subject to loss or deterioration which
freight, cargo, and other property or persons in would may damnify a person having insurable interest
connection with or appertaining to marine, or cause liability against him may properly constitute the
inland marine, and air or land transportation. subject matter of insurance or thing insured. The law
provides that any contingent or unknown event,
7. Microinsurance - intended to cover low- whether past or future, which may damnify a person
income households or individuals that would having an insurable interest, or create a liability against
allow them to recover indemnity for illness, him, may be insured against, subject to the provisions
injury, or death. of this chapter.

Requisites: Insurance may be taken upon any property, life, health

a. The amount of contributions, or one's liability in which the insured has insurable
premiums, fees or charges, computed interest. However, the law does not authorize an
on a daily basis, does not exceed insurance for or against the drawing of any lottery, or
(7.5%) of the current daily minimum
Katya Bringas
Faculty of Civil Law
University of Santo Tomas
for or against any chance or ticket in a lottery drawing 3. A change of interest, by will or succession, on
a prize. the death of the insured, does not avoid an
insurance; and his interest in the insurance
Insurable Interest – will either derive benefit from its passes to the person taking his interest in the
preservation or suffer pecuniary loss from its thing insured (Sec. 23, IC).
destruction. Without insurable interest, the insured has
nothing to lose but everything to gain. 4. A transfer of interest by one of several partners,
joint owners, or owners in common, who are
Basis of insurable interest in life and health jointly insured, to the others, does not avoid an
insurance insurance even though it has been agreed that
Every person has an insurable interest in the life and the insurance shall cease upon an alienation of
health: the thing insured (Sec. 24, IC).

1. of himself, of his spouse and of his children; 5. A policy may be so framed that it will inure to
2. of any person on whom he depends wholly or in the benefit of whomsoever, during the
part for education or support, or in whom he has continuance of the risk, may become the owner
a pecuniary interest; of the interest insured (Sec. 57, IC).
3. of any person under a legal obligation to him for
the payment of money, respecting property or Distinctions between insurable interest in life
service, of which death or illness might delay or and in property:
prevent the performance; and
4. of any person upon whose life any estate or
interest vested in him depends.

Basis of insurable interest in property insurance

– real or personal interest in property of such nature
that a contemplated peril might directly damnify the
insured. Consists of:

1. Existing Interest -
2. Inchoate Interest –
3. An expectancy, coupled with an existing interest
in that out of which the expectancy arises

The mortgagor (full value of property) and the

mortgagee (debt) have each an independent insurable
interest therein and both interests may be covered by
one policy, or each may take out a separate policy.

When shall insurable interest exist?

a. Property - must exist when the insurance takes
effect, and when the loss occurs, but need not
exist in the meantime;
b. Life or health - must exist when the insurance
takes effect, but need not exist thereafter or
when the loss occurs.

Change of Insurable Interest - 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.

XPNs:

1. A change of interest in a thing insured, after the

occurrence of an injury which results in a loss,
does not affect the right of the insured to
indemnity for the loss (Sec. 21, IC).

2. A change of interest in one or more several

distinct things, separately insured by one
policy, does not avoid the insurance as to the
others (Sec. 22, IC).
Katya Bringas
Faculty of Civil Law
University of Santo Tomas
Other Pertinent Clauses:
1. Standard or union mortgage clause - acts 2. Representations - factual statements made
of the mortgagor do not affect the mortgagee. by the insured at the time of or prior to the
There is a separate and distinct contract of issuance of the policy to give information to the
insurance on the interest of the mortgagee. insurer and otherwise induce him to enter into
2. Open or loss payable clause - the acts of the the insurance contract.
mortgagor affects the mortgagee. The insurer
pays the loss, if any, to the mortgagee as his Representation as to future – promise
interest may appear.
May be withdrawn or altered BEFORE insurance
Devices on Estimation/Control of Risk or Loss takes effect.

1. Concealment - A neglect to communicate that Concealment, regardless of actual intent to defraud,

which a party knows and ought to "is equivalent to a false representation. The fraudulent
communicate. Remedy: rescission (whether intent on part of the insured must be established to
intentional or unintentional). Applies only to entitle the insurer to rescind the contract.
material facts. Misrepresentation as a defense of the insurer to avoid
liability is an affirmative defense and the duty to
But, neither party to a contract of insurance is establish such defense by satisfactory and convincing
bound to communicate information of the evidence rests upon the insurer.
matters following, except in answer to the
inquiries of the other: Rescission - When to exercise right of rescission -
previous to the commencement of an action on the
a. Those which the other knows; contract.
b. Those which, in the exercise of ordinary care,
the other ought to know, and of which the Requisites:
former has no reason to suppose him ignorant; 1. Prior notice of cancellation to the insured;
c. Those of which the other waives 2. Notice must be based on the occurrence after
communication; effective date of the policy of one or more of
d. Those which prove or tend to prove the the grounds mentioned;
existence of a risk excluded by a warranty, and 3. Must be in writing, mailed or delivered to the
which are not otherwise material; and insured at the address shown in the policy; and
e. Those which relate to a risk excepted from the 4. Must state the grounds relied upon
policy and which are not otherwise material.
2-Year Incontestability Period - After a policy of life
Material Facts - those facts which by their nature insurance made payable on the death of the insured
would clearly, unequivocally, and logically be known by shall have been in force during the lifetime of the
the insured as necessary for the insurer to calculate the insured for a period of two (2) years from the date of
proper risks. its issue or of its last reinstatement, the insurer cannot
prove that the policy is void ab initio or is rescindable
Where matters of opinion or judgment are called for, by reason of the fraudulent concealment or
answers made in good faith and without intent to misrepresentation of the insured or his agent.
deceive will not avoid a policy even though they are
Precludes the insurer from raising the defenses of false
untrue.
representations or concealment of material facts insofar
as health and previous diseases are concerned if the
Right to information of material facts may be waived
insurance has been in force for at least two years during
either by the terms of the insurance or by neglect to
the insured's lifetime.
make inquiry as to such facts. XPN: waiver of medical
examination in a non-medical insurance contract.
Purpose: It is not fair for the insurer to collect the
premiums as long as the insured is still alive, only to
Test of Materiality of Information - Materiality is to
raise the issue of fraudulent concealment or
be determined not by the event, but solely by the
misrepresentation when the insured dies in order to
probable and reasonable influence of the facts upon the
defeat the right of the beneficiary to recover under the
party to whom the communication is due, in forming his
policy. Insured who died cannot anymore rise from his
estimate of the disadvantages of the proposed contract,
grave and refute or explain his side, as to the allegation
or in making his inquiries.
of fraud.
The insured need not die of the disease he had failed to
Life Insurance Incontestability Requisites:
disclose to the insurer, as it is sufficient that his non-
a. The insurance is a life insurance policy payable
disclosure misled the insurer in forming his estimates of
on the death of the insured; and
the risks of the proposed insurance policy or in making
inquiries
Katya Bringas
Faculty of Civil Law
University of Santo Tomas
 b. It has been in force during the lifetime of the (Electronic Commerce Act) and to such rules and
insured for at least two (2) years from its date regulations as may be prescribed by the Commissioner.
of issue or of its last reinstatement.
Contents of Policy:
Defenses not barred by incontestability: a. The parties between whom the contract is
a. The person taking the insurance lacked made;
insurable interest as required by law. b. The amount to be insured except in the cases
b. The cause of the death of the insured is an of open or running policies
excepted risk. c. The premium, or if the insurance is of a
c. The premiums have not been paid. character where the exact premium is only
d. The conditions of the policy relating to military determinable upon the termination of the
or naval service have been violated. contract, a statement of the basis and rates
e. The fraud is of a particularly vicious type. upon which the final premium is to be
f. The beneficiary failed to furnish proof of death determined;
or to comply with any condition imposed by the d. The property or life insured;
policy after the loss has happened. e. The interest of the insured in property insured,
g. The action was not brought within the time if he is not the absolute owner thereof;
specified. f. The risks insured against; and
g. The period during which the insurance is to
3. Warranties - statement or promise set forth in continue.
the policy or by reference incorporated therein,
the untruth or non-fulfillment of which in any Kinds of Policy
respect, and without reference to whether
insurer was in fact prejudiced by such untruth 1. Open Policy - the value of the thing insured is
or non-fulfillment, renders the policy voidable. not agreed upon, and the amount of insurance
It may relate to the past, the present, the merely represents the insurer's maximum
future, or to any or all of these liability. The value of such thing insured shall be
ascertained at the time of loss.
4. Condition - provision wherein certain
acts/requirements are imposed in order for the 2. Valued Policy - expresses on its face an
insured to recover under the policy. Typical agreement that the thing insured shall be
conditions for an insurance claim to be valued at a specific sum. It is one in which the
processed are the sending of notice of loss and parties expressly agree on the value of the
provision of proof of loss which should be given subject matter of insurance thereby avoiding
to the insurer without unreasonable delay to the trouble of ascertaining the actual amount of
allow the insurer to timely validate the claim. loss when it happens.

Exceptions - excluding certain specified risks 3. Running Policy - contemplates successive

that otherwise would have been included under insurances & provides that the object of the
the general language describing the risks policy may be from time to time defined,
assumed. An example is when certain illnesses especially as to the subjects of insurance, by
are not covered in a health insurance policy or additional statements or indorsements. It may
when certain risks/properties are specially also cover cases where the risk is shifting or
carved out of the policy. Insurer had not varying or class of property instead of a specific
assumed such risk. or determinate thing. This thus avoids
underinsurance and over-insurance at any time
Policy of Insurance on the part of the insured. This could likewise
prevent frequent cancellations of the policy so
Written instrument in which a contract of insurance is as to be adjusted to the value of risk/exposure
set forth, is called a policy of insurance. of the insured.

Rider - not binding on the insured, unless the Cover Notes – issued to bind insurance temporarily
descriptive title or name of the rider, clause, warranty pending the issuance of the policy. Cover notes may be
or endorsement is also mentioned and written on the extended or renewed beyond such sixty (60) days with
blank spaces provided in the policy. the written approval of the Commissioner.

A contract of insurance (meeting of minds) may be Premium requirement - The fact that no separate
made in any form but the policy of insurance must be premium was paid on the Cover Note before the loss
in writing. insured against occurred, does not militate against the
validity of petitioner's contention, for no such premium
Electronic policy - policy may be in electronic form could have been paid, since by the nature of the Cover
subject to the pertinent provisions of RA 8792, Note, it did not contain, as all Cover Notes do not
contain particulars of the shipment that would serve as
Katya Bringas
Faculty of Civil Law
University of Santo Tomas
basis for the computation of the premiums. As a logical the existence of which the insured was ignorant
consequence, no separate premiums are intended without his fault; or when by any default of the
or required to be paid on a Cover Note. insured other than actual fraud, the insurer never
incurred any liability under the policy.
Premium
3. Overinsurance – ratable return of premium
Consideration paid to an insurer for undertaking to
indemnify the insured against the peril covered. Grounds for Cancellation of Policy
a. Non-payment of premium;
Cash and Carry Rule - general rule in insurance laws b. Conviction of a crime arising out of acts
is that unless the premium is paid the insurance policy increasing the hazard insured against;
is not valid and binding. Parties may not agree expressly c. Discovery of fraud or material
or impliedly on the extension of credit or time to pay the misrepresentation;
premium and consider the policy binding before actual d. Discovery of willful or reckless acts or
payment. omissions increasing the hazard insured
against;
Payment of Partial Premium – not considered e. Physical changes in the property insured
payment. Taken in the concept of deposit held in trust which result in the property becoming
by the insurer until such time that the full amount has uninsurable;
been tendered and duly receipted for. In other words, f. Discovery of other insurance coverage that
as expressly agreed upon in the contract, full payment makes the total insurance in excess of the
must be made before the risk occurs for the policy to be value of the property insured; or
considered effective and in force. g. A determination by the Commissioner that the
continuation of the policy would violate or
Exceptions to the Cash and Carry Rule would place the insurer in violation of this
a. In case of a life or industrial life policy whenever Code
the grace period provision applies;
b. When receipt of premium is acknowledged in Note: Cancellation must be done with written notice to
the policy; the insured and must be based on the grounds above.
c. When there is an agreement that premium will
be paid in installments; Prescriptive Period for Legal Action
d. In any case, when grace period is stipulated or
agreed upon; 10 Years
e. When the insurer is precluded from repudiating 1. Upon a written contract;
credit term established thru practice (estoppel); 2. Upon an obligation created by law;
f. Payment of premium through salary deduction 3. Upon a judgment
for government employees.
6 Years
Return of Premiums – 1. Oral contract;
2. Quasi-contract
1. A person insured is entitled to a return of premium,
as follows: Note: Parties may stipulate to change the period to
a. To the whole premium if no part of his institute legal action. However, a condition, stipulation,
interest in the thing insured be exposed to or agreement in any policy of insurance, limiting the
any of the perils insured against; time for commencing an action thereunder to a period
b. Where the insurance is made for a definite of less than one (1) year from the time when the cause
period of time and the insured surrenders his of action accrues, is void.
policy, to such portion of the premium as
corresponds with the unexpired time, at a The right of the insured to the payment of his loss
pro rata rate, unless a short period rate has accrues from the happening of the loss. However, the
been agreed upon and appears on the face cause of action in an insurance contract does not accrue
of the policy, after deducting from the whole until the insured's claim is finally rejected by the insurer.
premium any claim for loss or damage under This is because before such final rejection there is no
the policy which has previously accrued; real necessity for bringing suit.
Provided, that no holder of a life insurance
policy may avail himself of the privileges of Persons Entitled to Recover on the Policy –
this paragraph without sufficient cause as insurance is a personal contract. Insured.
otherwise provided by law.
Beneficiary - The insurance proceeds shall be applied
2. When the contract is voidable, and subsequently exclusively to the proper interest of the person in whose
annulled under the provisions of the Civil Code; or name or for whose benefit it is made unless otherwise
on account of the fraud or misrepresentation of the specified in the policy. Designation is presumed
insurer, or of his agent, or on account of facts, or revocable XPN: if the insured waived this right.
Katya Bringas
Faculty of Civil Law
University of Santo Tomas
 contemplated by the contract may have been a remote
Be that as it may, there are cases under the Family Code cause of the loss; but he is not liable for a loss of which
where revocation of beneficiary is allowed the peril insured against was only a remote cause
notwithstanding that his designation was explicitly
made irrevocable: Double Insurance

Art. 43. The termination of the subsequent marriage A double insurance exists where the same person is
referred to in the preceding Article (Art. 42 in relation insured by several insurers separately in respect of the
to Art. 41 of the Family Code/ shall produce the same subject and interest.
following effects:
Requisites:
(a) The innocent spouse may revoke the designation of 1. The person insured is the same;
the other spouse who acted in bad faith as beneficiary 2. Two or more insurers insuring separately;
in any insurance policy, even if such designation be 3. There is identity of subject matter;
stipulated as irrevocable. 4. There is identity of interest insured; and
5. There is identity of the risk or peril insured
In cases of legal separation, annulment or declaration against
of nullity of marriage and dissolution of marriage due to
reappearance of the former spouse, the fact that the Distinguished from Over-insurance
designation of the guilty spouse was expressly made
irrevocable will not prevent the innocent spouse from
revoking the same.

When beneficiary's interest is forfeited –

beneficiary willfully caused the death of the insured. In
the absence of beneficiary, proceeds shall be paid in
accordance with the policy contract. If policy contract is
silent, estate.

Limitations on the designation of beneficiary –

Insured will only be covered for the loss he suffered and
Art. 739, NCC (applies only to life insurance): Under
insurance should not be way for him to be enriched.
Article 739 of the New Civil Code, the following
donations shall be void:
Each insurer is only bound to contribute ratably to the
1. Those made between persons who were guilty
loss in proportion to the amount for which is supposed
of adultery or concubinage at the time of the
to be liable under the policy.
donation; - conviction is not necessary
2. Those made between persons found guilty of
Other insurance clause
the same criminal offense, in consideration
thereof;
1. Disclosure of existing co-insurers - Where
3. Those made to a public officer or his wife,
the insurance policy specifies as a condition the
descendants and ascendants, by reason of his
disclosure of existing co-insurers, non-disclosure
office.
thereof is violation that entitles the insurer to
avoid the policy. This condition is common in fire
Rule where insurance is made by an agent or
insurance policies and is known as the "other
trustee - the fact that his principal or beneficiary is the
insurance clause."
real party in interest may be indicated
Reason: To prevent an increase in moral hazard.
Rule where insurance if made by partner or part
owner - terms of the policy should be such as are
applicable to the joint or common interest. Reinsurance

Reinstatement of Policy One by which an insurer procures a third person to

insure him against loss or liability by reason of such
original insurance. It is presumed to be a contract of
To reinstate a policy means to restore the same to
indemnity against liability, and not merely against
premium-paying status after it has been permitted to
damage. Also, the original insured has no interest in a
lapse. Reckoned from the date when the same was
contract of reinsurance.
approved by the insurer.
2 Contracts
Loss a. Between the original insured and the original
insurer
An insurer is liable for a loss of which a peril insured b. Original insurer and the reinsured
against was the proximate cause, although a peril not
Katya Bringas
Faculty of Civil Law
University of Santo Tomas
GR: insured cannot directly recover from the reinsurer the entire contract, but merely exonerates the
nor is the latter directly liable to the former. insurer from a loss resulting from the risk
XPN: concealed:
1. Stipulation pour autrui - the reinsurance a. The national character of the insured;
was taken for the benefit of the insured under b. The liability of the thing insured to capture and
the first contract of insurance, the insured (as detention;
beneficiary) may directly pursue the reinsurer c. The liability to seizure from breach of foreign
2. Novation – reinsurance amounts to a novation laws of trade;
of the original insurance by virtue of which the d. The want of necessary documents; or
reinsurer undertakes to indemnify the insured, e. The use of false and simulated papers
then direct recourse against the reinsurer by
the insured is permissible. Implied warranties in marine insurance

Distinguished from double insurance: 1. Seaworthiness – reasonably fit to perform the

service and to encounter the ordinary perils of
the voyage contemplated by the parties to the
policy

GR: An implied warranty of seaworthiness is

complied with if the ship be seaworthy at the
time of the commencement of the risk.

XPNs:
a. Time Policy - when the insurance is made
for a specified length of time, the implied
warranty is not complied with unless the ship
be seaworthy at the commencement of
every voyage it undertakes during that time;

b. Cargo Policy - when the insurance is upon

the cargo which, by the terms of the policy,
Notes on Specific Types of Insurance description of the voyage, or established
custom of the trade, is to be transshipped at
A. Marine Insurance - policies that covers risks an intermediate port, the implied warranty is
connected with navigation, to which a ship, cargo, not complied with unless each vessel upon
freightage, profits or other insurable interest in which the cargo is shipped, or transshipped,
movable property, may be exposed during a certain be seaworthy at the commencement of each
voyage or a fixed period of time particular voyage;

Perils of the Sea - extends only to losses caused by c. Voyage Policy - where different portions of
sea damage, or by the violence of the elements, and the voyage contemplated by a policy differ
does not embrace all losses happening at sea. They in respect to the things requisite to make the
insure against losses from extraordinary occurrences ship seaworthy therefor, a warranty of
only, such as stress of weather, winds and waves, seaworthiness is complied with if, at the
lightning, tempests, rocks and the like. commencement of each portion, the ship is
seaworthy with reference to that portion.
"All Risks" marine insurance policy - means that all
risks are covered unless expressly excepted. The 2. Warranty that necessary documents are
burden rests on the insurer to prove that the loss is carried - Where the nationality or neutrality of
caused by a risk that is excluded. a ship or cargo is expressly warranted, it is
implied that the ship will carry the requisite
Shipowner has in all cases an insurable interest in it, documents to show such nationality or
even when it has been chartered by one who covenants neutrality and that it will not carry any
to pay him its value in case of loss documents which cast reasonable suspicion
thereon
Concealment - Due to the unpredictable risk and nature
of marine insurance, the rules relevant to concealment 3. Warranty against improper deviation -
are far stricter than those applied to ordinary insurance. When the voyage contemplated by a marine
insurance policy is described by the places of
However, A concealment in a marine insurance, in beginning and ending, the voyage insured is
respect to any of the following matters, does not vitiate one which conforms to the course of sailing
fixed by mercantile usage between those places

Katya Bringas
Faculty of Civil Law
University of Santo Tomas
Deviation - departure from the course of the voyage
insured, mentioned in the last two sections, or an
unreasonable delay in pursuing the voyage or the
commencement of an entirely different voyage.

Deviation is proper in the following:

a. When caused by circumstances over which
neither the master nor the owner of the ship has
any control;
b. When necessary to comply with a warranty, or to
avoid a peril, whether or not the peril is insured
against;
c. When made in good faith, and upon reasonable
grounds of belief in its necessity to avoid a peril;
or
d. When made in good faith, for the purpose of
saving human life or relieving another vessel in
distress.

Loss

Partial - Every loss which is not total

Total - may be either actual or constructive

a. Actual Loss - An actual total loss is caused by:
(a) A total destruction of the thing insured; (b)
The irretrievable loss of the thing by sinking, or
by being broken up; (c) Any damage to the
thing which renders it valueless to the owner
for the purpose for which he held it; or (d) Any
other event which effectively deprives the
owner of the possession, at the port of
destination, of the thing insured
b. Constructive Total Loss - one which gives to
a person insured a right to abandon. It is strictly
a case of partial loss but due to the substantial
damage caused to the insured, he is given the
option to claim for a total loss. Cases:
i. More than ¾ of value is
lost/injured

Katya Bringas
Faculty of Civil Law
University of Santo Tomas