LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers!
| Atty Villegas | 3B 2009-2010 1 | P a t i n o , E r i c a
Title I MARINE INSURANCE
Sub-Title 1- A DEFINITION
Sec. 99. Marine Insurance includes:
(1) Insurance against loss of or damage to:
(a) Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, securities, choses in action, evidences of debts, valuable papers, bottomry, and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to or in connection with - any and all risks or perils of navigation, transit or transportation, or - while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or - while awaiting shipment, or during any delays, storage, transhipment, or reshipment incident thereto, - including war risks, marine builder's risks, and all personal property floater risks; (b) Person or property in connection with or appertaining to: - a marine, inland marine, transit or transportation insurance, - INC liability for loss of or damage arising out of or in connection with the construction, repair, operation, maintenance or use of the subject matter of such insurance o but NOT including life insurance or surety bonds o NOR insurance against loss by reason of bodily injury to any person arising out of ownership, maintenance, or use of automobiles; (c) Precious stones, jewels, jewelry, precious metals: - whether in course of transportation or otherwise; (d) Bridges, tunnels and other instrumentalities of transportation and communication - EXCLUDING buildings, their furniture and furnishings, fixed contents and supplies held in storage; piers, wharves, docks and slips, and other aids to navigation and transportation: - INC dry docks and marine railways, dams and appurtenant facilities for the control of waterways.
(2) "Marine protection and indemnity insurance," meaning insurance against: - legal liability of the insured for loss, damage, or expense o incident to ownership, operation, chartering, maintenance, use, repair, or construction of any vessel, craft or instrumentality in use of ocean or inland waterways, - including liability of the insured for personal injury, illness or death or for loss of or damage to the property of another person.
Notes:
Major Divisions of Transportation Insurance 1. Ocean Marine Insurance - Defined: An insurance against risk connected with navigation, to which a ship cargo, freightage, profits or other insurable interest in movable property, may be exposed during a certain voyage or a fixed period of time - Covers primarily insurance of sea perils 2. Inland Marine Insurance - Covers primarily land transportation perils shipped by railroads, trucks, airplanes, etc. - Also risks of lake, river or other inland waterway transportation outside those risks that fall w/in the ocean marine ins category. Scope of Ocean Marine Insurance: Provides protection for: 1. Ships of hulls 2. Goods or cargoes 3. Earnings such as freight, passage money, commissions, or profits 4. Liability of the owner or any party interested in the property insured Risks of Losses Covered in Ocean Marine Insurance - All risks or losses EXC those repugnant to public policy or positively prohibited - A general marine ins which does not specify the risks assured is valid and covers the usual risks - All other perils extends only to marine damage of like kind enumerated - To sustain recovery on a marine policy loss must have resulted from a risk insured against Underwriters: - Cannot assume risk of goods IF not given special notice, and will be released from their contract if the subject insured is loaded LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 2 | P a t i n o , E r i c a
Marine Insurance COVERS: - Not only property exposed to risks of marine navigation - BUT ALSO those which are exposed to risks not connected with marine navigation such as loss of or damage to: o Aircraft, which has nothing to do with marine navigation o Goods while being assembled, packed, crated, baled, compressed or similarly prepared hence, NOT yet in the course of transportation. o Precious stones, jewels, jewelry, precious metals whether in the course of transportation o Bridges, tunnels, and other instrumentalities of transportation and communication which have nothing to do with marine aviation. Property Covered - May cover any property or interest enumerated in the section may cover property exposed to risk of marine navigation or not - Terms and merchandise includes all articles which are carried on the ship for commercial purposes. o They do NOT include the ! clothing of passengers UNLESS shipped as part of the cargo ! NOR food or provisions intended for consumption UNLESS included in the policy - Freightage means all the benefits derived by the owner: o From chartering of the ship for its employment for the carriage o EITHER of his own goods or those of others o It will NOT be covered by a marine policy UNLESS expressly indicated. Risks Insured Against - Insured is liable for: - All losses proximately caused by the perils covered by the marine policy - These risks are usually enumerated and may cover not only perils of the sea but also fire, theft, jettison, detainments, or others that will injure the goods insured - Fire may not be considered a natural disaster since it almost always arises.
Perils of the Sea - Embraces those casualties due to the violent action of the winds or waves - Includes: o shipwreck, foundering, stranding, collision, jettison o Rusting of a cargo of steel pipes in the course of a voyage. o Extraordinary causes connected with navigation o Extends to barratry - Perils include not only arrests caused by political acts of a seizing state but also by ordinary legal processes such as lawsuit. - Perils NOT Covered: o Ordinary wear and tear or other damage usually incident to the voyage ex. Violence of a tempest o To be liable: the violence must be due to unusual violence in the elements, and is not ordinarily to be expected as incident to navigation. Ex. Violence by a mast or by a storm - Perils of the sea is a RELATIVE TERM, its meaning may vary with the circumstances
Perils of the Sea Perils of the Ship Covers ONLY losses as are of extraordinary nature or arise from some overwhelming power which cannot be guarded against by the ordinary exertion of human skill of prudence A loss in the ordinary course of events results FROM the a. natural and inevitable action of the sea b. ordinary wear and tear c. negligence of the ship owner GR: Everything which happens thru the: - inherent vice of the thing or - by the act of the owner, master or shipper shall not be reputed a peril IF NOT otherwise borne in the policy
Perils of the Ship - losses or damages resulting from: 1. Natural and inevitable action of the sea 2. The ordinary wear and tear of a ship 3. Negligent failure of the ships owner to provide the vessel with proper equipment to convey cargo under ordinary conditions - Perils of the sea and perils of the ship are two different things - Perils of the ship must be expressly included in the policy in order to for the insurer to be liable. LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 3 | P a t i n o , E r i c a
Inchmaree Clause - Definition: Provision in the policy that the insurance shall cover loss or damage to the hull or machinery: o Through the negligence of the master, charter, mariners, engineers, or pilots o Through explosions, bursting of boilers, breakage of shafts o Through any latent defect in the hull or machinery not resulting form want of due diligence All Risks Clause - Insures against all causes of conceivable loss or damage EXCEPT: o Those excluded from the policy o Those caused by willful and fraudulent act of the insured - Creates a special type of insurance which extends coverage to risks not usually contemplated and avoids putting upon the insured the burden of proof that the loss was due to the peril falling within the policys coverage - Includes: all losses during the voyage WHETHER arising from marine peril or not (even pilferage losses during war) - Burden of proof on covered peril o In other types of policies: Initial burden is on the INSURED to show that the loss arose from a covered peril o BUT in an all risk policy: Burden is on the INSURER to prove that the peril was an excluded peril ! Insured has no obligation to prove the precise cause of loss or damage - Burden of proof on condition of the cargo o Initial Burden: INSURED to prove: ! That the cargo was in good condition when the policy attached AND ! That the cargo was damaged when unloaded from the vessel. o Thereafter: Burden shifts to the INSURER to show the exception to the coverage. Other Risks - Barratry: A willful act of the master or crew in pursuance of some fraudulent or unlawful purpose without the consent of the owner and to the prejudice of his interest. (Must be willful and intentional) Ex: burning the ship, violation of revenue laws, unlawful selling of the cargo - Extraordinary acts of a sovereign authority in times of war: restraining, detaining by kings - All other perils, losses, and misfortunes risks which are of like kinds with the particular risk which are enumerated in the preceding part of the same clause of the contact
Perils MUST be the PROXIMATE CAUSE of the loss in order for the insurer to be liable.
Classes/Scope of Inland Marine Insurance - The risk must involve an element of transportation - Either the property is actually in transit held by persons who are not its owners, or at a fixed location but an important instrument of transportation, or is a movable type of goods which is often at different locations
4 Classes of Inland Marine Insurance 1. Property in transit o Provides protection for property frequently exposed to loss while it is in transportation from one location to another 2. Bailee liability o Provides protection to persons who have temporary custody of goods or personal property of others 3. Fixed Transportation Property o Covers bridges, tunnels, and other instrumentalities of transportation and communication o They are insured because they are held to be an essential part of the transportation system 4. Floater o It provides insurance to follow the insured property wherever it may be located subject always to the territorial limits of the contract. (jewelry, works of art, equipment)
LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 4 | P a t i n o , E r i c a
Sub-Title 1-B INSURABLE INTEREST
Sec. 100. The owner of a ship has in all cases: - an insurable interest in it, o EVEN when it has been chartered by one who covenants to pay him its value in case of loss: o Provided, That in this case the insurer shall be liable for ONLY that part of the loss which the insured cannot recover from the charterer.
Notes:
Insurable Interest (II) of Ship-owner (SO) - Owner has the II on the VESSEL to the extent of its value - II continues EVEN IF: o Vessel has been chartered (see codal) o Owner has mortgaged the vessel to another
Insurable Interest of the Charterer - Has an II in the vessel TO the extent that he is liable to be damnified by its loss.
Insurable Interest and Sales Contracts - In the case of a vessel o II possessed: ! by owner ! If money has been borrowed by one who holds the mortgage on the vessel (mortgagee) ! By the lessee of the vessel - In the case of cargo o The II is in the shipper or the consignee depending upon the terms of sale o FOB factory: the Buyer assumes responsibility when the goods leave the factory o FOB point of destination: Buyer does not assume responsibility until the goods are received from the carrier o CIF (cost, insurance, and freight): Seller assumes complete responsibility for securing all necessary insurance o C&F (cost and freight): The buyer procures his own insurance - In case of a vendee/consignee of goods in transit o Vendee/consignee has such existing interest as may be the subject of a valid contract of insurance o II is based on a perfected contract of sale between him and the shipper of the goods o Contract whether FOB, CIF, C&F is immaterial and II exists even w/o delivery since it VESTS in the vendee an equitable title over the goods sufficient to be the subject of insurance.
Sec. 101. The insurable interest of the owner of the ship hypothecated by bottomry is: - ONLY the excess of its value over the amount secured by bottomry.
Notes:
Loan on Bottomry: is one which is payable only if the vessel given as security for the loan completes in safety the contemplated voyage Respondentia Loan: is a loan which is payable ONLY upon the safe arrival in a port of the goods given as security - Lender in Bottomry: is entitled to receive a high rate of interest to compensate him for the risk of losing his loan - Owner of the vessel: receives in case of loss no indemnity for his loss, but does secure immunity from payment of the loan Insurable Interest - Owner: ONLY in the excess of the vessels value over the amount of the bottomry o BEC: when the bottomry is lost, the owner need not pay the loan and is therefore benefited to the extent of the amount of the loan o Loss he suffers is ONLY: the difference between the actual value of the vessel and the bottomry loan - Lender on bottomry: to the extent of the loan.
Sec. 102. Freightage, in the sense of a policy of marine insurance, signifies: - all the benefits derived by the owner, either from: o the chartering of the ship or o its employment for the carriage of his own goods or those of others.
LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 5 | P a t i n o , E r i c a
Notes:
Freightage defined: benefit which is to accrue to the owner of the vessel from its use in the voyage contemplated or the benefit derived from the employment of the ship
Sources of Freightage - Chartering of the ship - Employment for the carriage of his own goods - Employment for the carriage of the goods of others
Sec. 103. The owner of a ship has an insurable interest in expected freightage: - which according to the ordinary and probable course of things he would have earned - but for the intervention of a peril insured against or other peril incident to the voyage.
Notes:
II in Expected or Anticipated Freightage - Owner of the ship contemplates: o the legal owner and o the charterer who expects to earn in the transportation of goods The freight money assured to the ship owner may be: a. freight to be earned and payable upon the completion of the voyage b. the hire of the vessel, payable by the charterer or c. the benefit accruing to the owner from the use of his vessel in the way of profits upon carriage of his own goods SO has an II in the expected freightage - Has an II if there is a risk of not being able to collect the same by the happening of the peril insured against - EVEN if the freight has been paid in advance - BUT when agreement is that the freight is payable in any event (lost or is not lost) o The ship owner has NO II in such freight o SHIPPER who has prepaid the freightage under the same situation HAS an II on the same
II in Passage Money - Passage Money: unlike freightage, is customarily payable in advance and cannot be recovered if the vessel is lost before the completion of the passage - Passenger: has II in his advances of passage money - Ship owner: Has NO II unless it is payable only upon the completion of the voyage.
Sec. 104. The interest mentioned in the last section exists, - in case of a charter party, - when the ship has broken ground on the chartered voyage. IF a price is to be paid for the carriage of goods, it exists when: - they are actually on board, OR there is some contract for putting them on board, AND - both ship and goods are ready for the specified voyage.
Notes:
When it exists in expected freightage - Insured MUST have an inchoate right to freight (the peril insured against is the only cause that could prevent him from ultimately having a perfect right to it)
Where freight is the price to be paid for the hire of the ship under a charter party SO has an inchoate right to freight as soon as there is an inception of performance by the ship under the charter party Where the inchoate right to freight accrues as soon as the goods are actually put on board and where part of the goods has been loaded and the balance is ready There is an II in the whole freight Where the ship owner has made a binding contract for freight and the ship is in readiness to receive the goods SO has an II
- There is NO II in freight: o When there is no contract and no part of the goods expected to be carried are on board o Where the vessel is a mere seeking ship or a vessel looking for cargo to be transported S.O. has no II in the freight to be earned on goods not loaded.
LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 6 | P a t i n o , E r i c a
Sec. 105. One who has an interest in the thing - from which profits are expected to proceed - has an insurable interest in the profits.
Notes: - One having a reasonable expectation of profits from a marine adventure may take out insurance to protect such profits. - HOWEVER: the interest must be a LEGAL INTEREST although such interest may be contingent - Owner of a Cargo: has an II not only on the cargo but also on the expected profit from the sale of the cargo - Interest in the thing involved should be based on Valuable Consideration paid.
Sec. 106 The charterer of a ship: - has an insurable interest in it, - to the extent that he is liable to be damnified by its loss.
Notes:
- Ex. X charters a vessel of Y. Y will pay X 1M in case of loss. Y can insure 1M. Charterer has an II: - To the extent of the value stipulated and - In the profits he expects to earn by carrying the goods IN EXCESS of the amount he agreed to pay for the charter of the vessel. Charter Party: A contract by which an entire ship or some principal part is lent by the owner to another person for a specified time or use 2 Types of Charter Parties 1. A Bareboat or Demise Charter o The SO turns over full possession and control of his vessel to the charterer who then provides a crew and the supplies during the terms of the charter. o SO is not required to provide a crew, so the charterer gets the bareboat i.e. w/o a crew o The charterer becomes in effect the owner for the voyage or service stipulated SUBJECT to liability caused by damages. o When the charter requires the SO to provide a crew and master under the charterers direction the employees become agents of the charterer 2. Contract of Affreightment o The owner of the vessel leases part or all of its space to haul goods for others o A contract of special service to be rendered by the owner of the vessel who retains the possession, command and navigation of the ship, the charterer or freighter merely having use of the space of the vessel. Types: Voyage Charter or Trip Charter Time Charter - Contract for the carriage of goods from one or more ports of loading to other ports of unloading, on one or on a series of voyages - Employees remain in the employ of the SO - Contract for the use of a vessel for a specified period of time or for the duration of one or more specified voyages. - The owner of the time chartered vessel also retains the employees
Sub-Title 1-C CONCEALMENT
Sec. 107. In marine insurance each party is bound to communicate, in addition to what is required by sec 28: - all the information which he possesses, - material to the risk, - EXCEPT such as is mentioned in Section 30, and - to state the exact and whole truth in relation to all matters that he represents, or upon inquiry discloses or assumes to disclose.
Notes:
Concealment: The failure to disclose any material fact or circumstance which in fact or law is within or which ought to be within the knowledge of one party and of which the other has no actual or presumptive knowledge. - Rule applies to BOTH the assured and underwriter - The rule of misrepresentations and concealments are more strict in cases of marine than of fire insurance because: o Of the difference of the character of the property o Of the greater facility the insurer possesses in obtaining information as to its conditions
To constitute concealment it is sufficient that: - The insured is in possession of the material fact concealed - Although he may not be aware of it LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 7 | P a t i n o , E r i c a
Sec. 108. In marine insurance,: - information of the belief or expectation of a third person, in reference to a material fact, is material.
Notes: - Further illustrates the stricter rules on concealment for marine ins. Insured is bound to communicate the following: 1. beliefs of opinions of third persons or 2. expectations of third persons ONLY requirement: information is in reference to a MATERIAL FACT
Sec. 109. A person insured by a contract of marine insurance: - is presumed to have knowledge, at the time of insuring, - of a prior loss, - IF the information might possibly have reached him: o in the usual mode of transmission and o at the usual rate of communication.
Notes: - Provision creates a rebuttable presumption on the part of the insured of knowledge of a prior loss - Reason for presumption: the quickness in the transmission of news by means of modern communications. - Rule is NOT applicable: o The insured is NOT bound to use all accessible means of information at the very last instant of time to ascertain the condition of the property insured o When there is no cause to expect information - insured will not be liable.
Sec. 110. A concealment in a marine insurance, in respect to any of the following matters,: - does not vitiate the entire contract, - but merely exonerates the insurer from a loss resulting from the risk concealed: (a) The national character of the insured; (b) The liability of the thing insured to capture and detention; (c) The liability to seizure from breach of foreign laws of trade; (d) The want of necessary documents; (e) The use of false and simulated papers. Notes: - GR: Concealment entitles the injured party to rescind the contract - EXC: Concealment of facts under Sec 110 does not avoid the policy IF the vessel be lost due to any of the cases in Section 110 which was concealed: - The insurer is NOT liable IF the vessel be lost due to other perils of the sea (storm, etc) - Insurer is liable. He is not exonerated from liability.
Sub-Title 1-D REPRESENTATION
Sec. 111. IF a representation by a person insured by a contract of marine insurance is intentionally false: - in any material respect, or - in respect of any fact on which the character and nature of the risk depends, the insurer may rescind the entire contract.
Notes: - The rules governing representations with respect to insurance policies generally have been held to apply to marine insurance
Representation is MATERIAL: where it would influence the judgment of a prudent insurer in fixing the premium or in determining whether he would take the risk
Effects of False Representation by Insured: - Intentional: Misrepresentation of a material fact made with fraudulent intent AVOIDS the policy - Not Intentional : The insurer may ALSO rescind the contract but ONLY from the time the representation becomes false. Materiality of Representations - Material: o Age, equipment, earnings, condition or rating of a vessel o That the vessel has to be repaired, that it arrived at the port of destination, that it is at a certain time at a certain place o Anything that concerns the state of the vessel at any period of the vessel - Immaterial: o Nature and the amount of the cargo. LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 8 | P a t i n o , E r i c a
Sec. 112. The eventual falsity of a representation as to expectation: - does NOT, in the absence of fraud, avoid a contract of marine insurance.
Notes: - Contemplates the eventual falsity of a representation as to expectation of belief and NOT of positive facts - Mere statements of belief: o Statements of future facts or events which are in their nature contingent and which the insurer is bound to know that the insured could not have intended to state as known facts but as to expectations or intentions. o Time the vessel will sail, the nature of cargo, amount of profits expected, designation of the vessel. - UNLESS made with fraudulent intent their failure of fulfillment is not ground for rescission
Sub-Title 1-E IMPLIED WARRANTIES
Sec. 113. In every marine insurance: - upon a ship or freight, or freightage, or - upon any thing which is the subject of marine insurance, a warranty is implied that the ship is seaworthy.
Notes: - Warranty under Marine Insurance: A stipulation either expressed or implied forming part of the policy as to some fact, condition or circumstance related to the risk. Implied warranty - The warranties are implied as they exist by the mere fact that a contract of insurance is entered into. - Coverage of Warranty: 1. Vessel should not be unSW at the inception of the insurance 2. Voyage should not deviate from the agreed voyage 3. Should not be engaging in an illegal venture 4. That the ship will carry the requisite documents of nationality or neutrality of the ship or cargo where such is expressly warranted. 5. That the insured has II Admission of seaworthiness by the insurer may mean: 1. The warranty of seaworthiness is to be taken as fulfilled or 2. That the risk of unseaworthiness is assumed by the insurer Implied warranty of seaworthiness (SW): - Reason: The realistic fact that cargo owners cannot control the state of the vessel - This implied warranty attaches to whoever is insuring the cargo, whether he be the SO or not. - The fact that the unSWness of the ship was unknown to insured is immaterial in ordinary marine insurance and may not be used as a defense to recover of the policy. - It is the obligation of the cargo owner to look for a reliable common carrier - The duty of SWness rests upon the common carrier simply for being engaged in public services
Sec. 114. A ship is seaworthy when reasonably fit: - to perform the service and - to encounter the ordinary perils of the voyage contemplated by the parties to the policy.
Notes: - SWness is a relative term: depending on the nature of the ship, voyage, service, etc. - Vessel must be adequately equipped for the voyage and manned with a sufficient number of competent officers.
Nature of Ship Vessel must be in a fit state as to repair, equipment, crew and able to carry the cargo and in all other respects to perform the voyage and to encounter ordinary perils. Nature of Voyage Reasonable fitness to encounter the perils expected to arise in the course of the voyage, vary naturally with the character of the particular voyage. Nature of Service Reasonably capable of safely carrying the cargo to its port of destination.
Criterion of Seaworthiness - Quality of its officers and crew - Adaptability of the service in which they are employed - Sufficient physical and mechanical condition
LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 9 | P a t i n o , E r i c a
Sec. 115. An implied warranty of seaworthiness is complied with; - IF the ship be seaworthy at the time of the of commencement of the risk, EXCEPT in the following cases: (a) 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) When the insurance is upon the cargo which, by the terms of the policy, description of the voyage, or established custom of the trade, is to be transhipped at an intermediate port: - the implied warranty is not complied with - UNLESS each vessel upon which the cargo is shipped, or transhipped, be seaworthy at the commencement of each particular voyage. Notes: - GR: SWness is required only at the commencement of the risk - EXC: The following must be SW at the commencement of every voyage or commencement of each portion of such voyage o Time Policy: When made for a specified length of time o Cargo Policy: When insurance is upon cargo required to be transshipped o Voyage Policy: Where different portions of the voyage contemplated differ in respect to the things required to make the ship seaworthy - SW relates to the vessels actual condition at the time of the commencement of the voyage - Time voyage o provides coverage for a stipulated fixed period of time o insured avoids the necessity of continually describing separate voyages many of which are over similar routes - Voyage policy - covers the subject matter
Sec. 116. A warranty of seaworthiness extends: - NOT only to the condition of the structure of the ship itself, BUT requires that - it be properly laden, AND provided with - a competent master, a sufficient number of competent officers and seamen, and - the requisite appurtenances and equipment, such as: >ballasts, cables and anchors, cordage and sails, food, water, fuel and lights, and >other necessary or proper stores and implements for the voyage.
Notes: - The ship is not unseaworthy because of some defect in loading or storage which is easily curable by those on board and was cured before the loss - Carrying a cargo on deck raises a presumption of unSWness o Can be overcome only by showing affirmatively that it did not interfere with the due management of the vessel o Reason: a ship may not be designed to carry substantial amount of cargo on deck making it unstable.
Sec. 117. Where different portions of the voyage contemplated by a policy differ in respect to the things requisite to make the ship seaworthy therefor, - a warranty of seaworthiness is complied with - IF, at the commencement of each portion, the ship is seaworthy with reference to that portion.
Notes: - This is an exception to the rule that SWness should only exist only at the time of the commencement of the risk - Here the SWness is required at the commencement of each portion of the voyage. - The stages must be separate and distinct in order to have a different degree of SWness for particular parts.
Sec. 118. When the ship becomes unseaworthy during the voyage to which an insurance relates: - an unreasonable delay in repairing the defect - exonerates the insurer on ship or shipowner's interest from liability from any loss arising therefrom.
Notes:
- If the vessel is SW at the start of the voyage and unSW during the voyage such situation does not avoid the policy - There is no implied warranty that the vessel will remain in a SW condition throughout the life of the policy LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 10 | P a t i n o , E r i c a
- HOWEVER: o When the vessel becomes unSW it is the duty of the master as the SOs agent to exercise due diligence to make it SW again o an unreasonable delay in repairing the defect causing the unSWness exonerates the insurer on ship - Benefit of exoneration is given only to an insurer on ship or SOs interest
Sec. 119. A ship which is seaworthy for the purpose of an insurance upon the ship: - may, nevertheless, by reason of being unfitted to receive the cargo, - be unseaworthy for the purpose of the insurance upon the cargo.
Notes: - SWness of a vessel is also to be determined with regard to the nature of the cargo that the vessel is reasonably capable of safely conveying the cargo to its port of destination. - A ship which is unSW for the purpose of insurance upon the ship may be unSW for the purpose of insurance upon the cargo
Sec. 120. Where the nationality or neutrality of a ship or cargo is expressly warranted, it is implied that: - the ship will carry the requisite documents to show such nationality or neutrality and - that it will not carry any documents which cast reasonable suspicion thereon.
Notes: - Implied warranty under this section arises ONLY when the nationality of the vessel or cargo is EXPRESSLY WARRANTED.
- Warranty of Nationality: does not mean that the vessel was built in such country, but that the property belongs to a subject. It refers to the beneficial ownership rather than legal title. o Also requires that the vessel be conducted and documented as of such nation. Breach will avoid the policy.
- Warranty of Neutrality: imports that the property insured is neutral in fact, and shall be so in appearance and conduct; that the property shall belongs to neutrals and that no act the insured shall be done which can legally compromise its neutrality. Only covers the insureds interest NOT of third persons. o Requires that the insured property shall be accompanied by documentary evidence of its neutral character. o Submission when required, is not excused when lost by fault of the master.
Sub-Title 1-F THE VOYAGE AND DEVIATION
Sec. 121 When the voyage contemplated by a marine insurance policy is described by the places of beginning and ending,: - the voyage insured is one which conforms to the course of sailing - fixed by mercantile usage between those places.
Sec. 122 IF the course of sailing is not fixed by mercantile usage, the voyage insured by a marine insurance policy is: - that way between the places specified, - which to a master of ordinary skill and discretion, would mean the most natural, direct and advantageous.
Sec. 123 Deviation: - is a 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.
Notes: Deviation, defined: - Any unexcused departure from the regular course or route of the insured voyage or any other act which substantially alters the risk. 4 Cases of Deviation in marine insurance 1. Departure from the course of sailing fixed by mercantile usage (SEC 121) 2. Departure from the most natural, direct, and advantageous route between the places specified (SEC 122) 3. Unreasonable delay in pursuing the voyage (SEC 123) 4. The commencement of an entirely different voyage (SEC 123) LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 11 | P a t i n o , E r i c a
Sec. 124. A deviation is proper: (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.
Sec. 125. Every deviation NOT specified in the last section is improper.
Notes: - Deviation may be proper or improper - PROPER: cases enumerate in Sec 124 - IMPROPER: those not enumerated in Sec 124 - Insurer us not exonerated from liability for loss after proper deviation since the effect is that there is no deviation made When deviation is proper - Justified deviation will not vitiate the policy, examples: o When compelled to head for another port by stress of weather o When necessary to the safety of the adventure or to escape a capture o When the water to the river to port is too shallow for his vessel to enter. - Such compulsory deviations are risks impliedly assumed by the underwriter - A deviation to save property is NOT justified unless in distress - A deviation to save life is justified and is not a breach of warranty rests on the ground of humanity
Sec. 126. An insurer is not liable for any loss - happening to the thing insured subsequent to an improper deviation.
Notes: - Where there has been any deviation or charge of the risk w/o just cause (improper deviation) the insurer becomes immediately absolved from further liability - The fact that the deviation did not increase the risk, or in any way contribute to the loss suffered is wholly IMMATERIAL
Sub-Title 1-G LOSS
Sec. 127. A loss may be either total OR partial.
Sec. 128. Every loss which is not total is partial.
Sec. 129. A total loss may be either actual OR constructive.
Sec. 130. 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.
Sec. 131. A constructive total loss is: - one which gives to a person insured a right to abandon, - under Section 139.
Sec. 132. An actual loss may be presumed: - from the continued absence of a ship without being heard of. The length of time which is sufficient to raise this presumption: - depends on the circumstances of the case.
Notes: Kinds of loss in Marine Insurance o Total OR partial o Total loss may be: actual OR constructive
Actual loss: exists when the subject matter of the insurance is wholly destroyed or lost or when it is damaged as no longer to exist in its original character - Complete physical destruction is NOT essential Examples of actual total loss: - Where the ship is so badly damaged that it no longer exists as a ship but is only a mass of material - Where the vessel is completely burned or sinks deep in water and is broken to pieces LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 12 | P a t i n o , E r i c a
- Where the cargo of machinery insured sank with the vessel even if part was recovered but was so damaged that it has no value - When the insured is effectively deprived of the use and possession of the property Rules on Actual Loss: - Actual loss may be presumed from the continued absence of the ship w/o being heard of o length of time depends on the circumstances o only thing to prove is that the vessel left the port - When the cargo by decomposition or other chemical agency no longer remains the same kind if thing as before actual loss Constructive Total Loss - Also known as technical total loss - Loss although not total is of such character that the insured is entitled if he thinks fit, to treat it as total by abandonment - Gives the insured the right to abandon the thing by relinquishing to the insurer his interest in such thing. - Insurer then acquires all the rights over the thing insured. Partial Loss - When only part of the cargo or vessel is lost or damaged. Importance of distinction between actual and constructive total loss - Total loss: abandonment is NOT necessary to recover total loss - Constructive Loss: abandonment is necessary to recover total loss
Sec. 133. When a ship is prevented, at an intermediate port,: - from completing the voyage, by the perils insured against, the liability of a marine insurer on the cargo: - continues after they are thus reshipped. Nothing in this section shall prevent an insurer: - from requiring an additional premium - if the hazard be increased by this extension of liability.
Notes: - Contemplates insurance upon cargo - If the original ship is disabled and the cargo is transferred to another ship the change of ship will NOT discharge the underwriter - This rule will not be obligatory where resort must be had to distant places to procure a vessel and there are serious impediments in the way of putting the cargo on board.
Sec. 134. In addition to the liability mentioned in the last section, a marine insurer is bound: - for damages, expenses of discharging, storage, reshipment, extra freightage, and all other expenses - incurred in saving cargo reshipped pursuant to the last section, - up to the amount insured. Nothing in this or in the preceding section shall render a marine insurer liable - for any amount in excess of the insured value OR, - IF there be none, of the insurable value.
Notes - The expenses enumerated are those necessary to complete the transportation of cargo reshipped. - NOTE: liability CANNOT exceed the amount of the insurance
In addition to the original liability(loss of damage of the goods) of the insurer of the cargo reshipped, he is also liable for the ff: - Damages - Expenses of discharging - Storage reshipment - Extra freightage - All other expenses in saving the cargo up to the amount insured
Sec. 135. Upon an actual total loss, a person insured is: - entitled to payment w/o notice of abandonment.
Notes:
Constructive total loss - Abandonment of the insured is necessary to recover total loss in the absence of the provision to the contrary (notice is essential) Actual total loss - The right of the insured to claim the whole insurance is ABSOLUTE - He need not give notice nor formally abandon anything to recover total loss
LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 13 | P a t i n o , E r i c a
Sec. 136. Where it has been agreed that: - an insurance upon a particular thing, or class of things, shall be free from particular average, a marine insurer is NOT liable: - for any particular average loss not depriving the insured of the possession, - at the port of destination, - of the whole of such thing, or class of things, - EVEN though it becomes entirely worthless; but such insurer is liable for: - his proportion of all general average loss assessed upon the thing insured.
Notes:
Average defined under the Code of Commerce - Any extraordinary or accidental expense incurred during the voyage for the preservation of the vessel, cargo, or both and all damages to the vessel and cargo from the time it is loaded and the voyage commenced until it ends and the cargo is unloaded - Gives owner the right to contribution from those benefitted thereby o IF he is insured: he has the alternative of seeking indemnity form his insurer o IF the owner neglects or waives his right to contribution: he loses his alternative Kinds of Averages 1. Gross or General Averages (GA) o Damages and expenses which are deliberately caused by the master of the vessel in order to save the vessel, the cargo or both from a real and known risk o GA loss must be borne equally by all the interests involved 2. Simple or Particular Averages o Damages and expenses caused to the vessel or to her cargo which have not inured to the common benefit and profit of all the persons interested in the vessel and her cargo o Losses which do not entitle the owners to receive contribution from other owners o Loss is suffered by and borne alone by the owner of the cargo or the vessel
Principle of General Average Contribution - When it is decided by the master of a vessel acting for all the interests concerned, to sacrifice any part of a venture exposed to a common and imminent peril in order to save the rest - The interest so saved are compelled to contribute proportionately to the owner of the interest sacrificed. - A device for a limited distribution of loss Right of a party to claim general average contribution Requisites: 1. There must be a common danger to the vessel or cargo 2. Part of the vessel or cargo was sacrificed deliberately 3. The sacrifice must be for the common safety or for the benefit of all 4. It must not be caused by any fault of the party asking the contribution 5. It must be successful (resulted in the saving of the vessel/cargo) 6. It must be necessary
Formalities prescribed under Art 813 and 814 of the Code of Commerce must be complied with in order to incur the expenses and cause the damages corresponding to gross average.
Liability of insurer for General Average: - Section 136 Insurance Code: liable for his proportion of all general average loss assessed upon the thing insured - Article 859 Code of Commerce: obliged to pay for the indemnity of the gross average in so far as is required of each one of these objects respectively - It simply places the insurer on the same footing as other persons who have an interest in the vessel or cargo
Formula for computing the liability:
Amount of insurance X General Average = Proportion of GAL for Total amount or value Loss (GAL) which insurer is liable
Liability of Insurer for Particular Average - Means any partial loss caused by the peril insured against which is not the GA - The insurer is liable for a particular average UNLESS the policy excludes it BUT such insurer is liable for the GA loss even in the absence of any agreement LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 14 | P a t i n o , E r i c a
- It may be agreed that parties are free from payment of particular average in such case, insurer is liable only for the general average Other Rules: - General Average is never allowed UNLESS the loss or damage has been incurred for the common safety of both vessel and cargo - Refloating of the vessel which has accidentally run aground was solely for the benefit of the vessel no common safety
Sec. 137. An insurance confined in terms to an actual loss: - does NOT cover a constructive total loss, - but covers any loss: o which necessarily results in depriving the insured of the possession, at the port of destination, o of the entire thing insured.
Notes: - An insurance confined to Actual total loss or absolute total loss o Does NOT cover constructive total loss - If against total loss only o It covers any total loss whether actual or constructive
Sub-Title 1-H ABANDONMENT
Sec. 138. Abandonment, in marine insurance, is the act of the insured: - by which, after a constructive total loss, - he declares the relinquishment to the insurer of his interest in the thing insured.
Abandonment, defined: - The right given by law to the insured in case of constructive total loss to relinquish to the insurer his interest in the thing insured. Requisites for Valid Abandonment 1. There must be an actual relinquishment by the person insured of his interest in the thing insured (SEC 138) 2. There must be a constructive total loss (SEC 139) 3. The abandonment be neither partial nor conditional (SEC 140) 4. It must be made within a reasonable time after receipt of reliable information of the loss (SEC 141) 5. It must be factual (SEC 142) 6. It must be made by giving notice thereof to the insurer which may be done orally or in writing (SEC 143) 7. The notice of abandonment must be explicit and must specify the particular cause of the abandonment (SEC 144) Right of Abandonment does NOT apply: - In cases where the injury or average was occasioned by the SOs own fault - ART 587 of Code of Commerce which speaks also of this right of abandonment speaks only of situations where the fault or negligence is committed solely by the captain Necessity for Abandonment - When the loss is only technically total insured cannot claim the whole insurance w/o showing due regard to the interest which the underwriter may take in the abandoned property - When the underwriter by prompt action might be able to save some portion of the property o he is entitled to timely notice of abandonment and he cannot be held liable w/o it - ABANDONMENT IS DISCRETIONARY: the insured may do so in his own election o IF he omits to abandon: he MAY nevertheless recover his actual loss (SEC 155) LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 15 | P a t i n o , E r i c a
Sec. 139. A person insured by a contract of marine insurance may abandon: - the thing insured, or - any particular portion thereof separately valued by the policy, or otherwise separately insured, and recover for a total loss thereof, when the cause of the loss is a peril insured against: (a) If more than three-fourths thereof in value is actually lost, or would have to be expended to recover it from the peril; (b) If it is injured to such an extent as to reduce its value more than three- fourths; (c) If the thing insured is a ship, AND the contemplated voyage: - cannot be lawfully performed - without incurring either: o an expense to the insured of more than three-fourths the value of the thing abandoned OR o a risk which a prudent man would not take under the circumstances; or (d) IF the thing insured, being cargo or freightage, and the voyage: - cannot be performed, - nor another ship procured by the master, o within a reasonable time and with reasonable diligence, o to forward the cargo, o without incurring the like expense or risk mentioned in the preceding sub-paragraph. But freightage cannot in any case be abandoned: - UNLESS the ship is also abandoned.
Notes:
3 Rules on when Constructive Total Loss - English Rule: When the subject matter of the insurance is so damaged as not to be worth when repaired, the cost of the repairs - American Rule: When it is so damaged that the cost of repairs would exceed ! of the value of thing. (Fifty Per Cent Rule) - Philippine Rule: Insured may not abandon the thing insured UNLESS The loss or damage is more than " of its value (SEC 139)
Abandonment where insurance divisible and where indivisible - W/N a contract is entire OR severable: a question of intention to be determined by the language employed by the parties - Only that portion of the thing which is separately valued by the policy may be separately abandoned as it is deemed separately insured - When the insurance is indivisible: the basis for determining constructive total loss is the ENTIRE SHIPMENT
Criterion as to Extent of Loss - The extent of injury to the vessel: considered with reference to its general market value immediately before the disaster - HOWEVER, if it involves a VALUED POLICY: the value stipulated shall be taken as the basis of the estimate - ALSO: the expenses incurred or to be incurred by the insured in recovering the thing are taken into account
Sec. 140. An abandonment must be NEITHER partial NOR conditional.
Notes: - Abandonment MUST be total and absolute covers the whole interest - IF only a part of a thing is covered by the insurance the insured need ONLY abandon that part.
Sec. 141. An abandonment must be made: - w/in a reasonable time after receipt of reliable information of the loss - BUT where the information is of a doubtful character o the insured is entitled to a reasonable time to make inquiry.
Notes:
Abandonment Must be Made within Reasonable Time (RT) - Once the insured receives a notice of loss he must elect whether he will abandon and give notice of such abandonment w/in RT - Further RT to make inquiry: in order that the insurer may not be prejudice with the delay and may take immediate steps for the preservation of such property - RT is relative: it is based on the facts and circumstances of each case - After the property passes beyond the control of the insured an abandonment is too late
LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 16 | P a t i n o , E r i c a
Sec. 142. Where: - the information upon which an abandonment has been made proves incorrect, OR - the thing insured was so far restored when the abandonment was made that there was then in fact no total loss, the abandonment becomes ineffectual.
Notes:
Existence of loss at time of abandonment - The right of the insured to abandon depends upon the state of facts at the TIME OF THE OFFER TO ABANDON and NOT upon o The state disclosed by the information received o NOR upon the state of loss at a prior or subsequent time Effect of Subsequent Events: - IF the abandonment is made good : o The rights of the parties are fixed and o Do not become changed by subsequent events - IF the abandonment is NOT made good: o Subsequent circumstance will not affect it so as retroactively, to impart to it a validity which it has not at its origin (whaaatt!! labo see p359 de leon) Insured CANNOT abandon: - When the thing insured is safe - When he knew at the time of his offer to abandon that the vessel has been repaired - In such cases the invalidity of the abandonment is NOT cured by the subsequent loss of the thing IF the abandonment is valid: - A subsequent recovery of the property will not entitle the insured to withdraw the abandonment Instances justifying abandonment: - in cases of capture, seizure, detention, restraint by blockade or embargo - funds cannot be raised with no fault of the owner - where the voyage is absolutely lost - where under urgent necessity the master makes a sale of the insured property
Information which authorized the insured to abandon need NOT be direct or positive: - The information must be of such facts and circumstances as to render it highly probable that a constructive total loss has occurred - Protest of the master, a newspaper report, report of pilot is sufficient
Sec. 143. Abandonment is made by: - giving notice thereof to the insurer, - which may be done orally, or in writing; Provided, That IF the notice be done orally: - a written notice of such abandonment shall be submitted - within 7 days from such oral notice.
Notes:
Form of Notice of Abandonment - law requires no particular form for giving notice - notice may be made orally UNLESS the policy requires it to be in writing By whom and to whom notice made - Notice may be made BY: o The insured or his authorized agent o Note: An agent having authority to insure has prima facie authority to abandon - Notice may be made TO: o The underwriter or his authorized agent
Sec. 144. A notice of abandonment must be: - explicit, and - must specify the particular cause of the abandonment, - BUT need state ONLY enough to show that there is probable cause therefor, and - need NOT be accompanied with proof of interest or of loss.
Notes: - Notice of abandonment must be explicit and not left as a matter of inference from some equivocal acts - There must be intention to abandon - The use of the word abandon is not necessary - BUT there is no abandonment even when notice has been given: IF the insured continues to claim and use the property as his own LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 17 | P a t i n o , E r i c a
Sec. 145. An abandonment can be sustained: - ONLY upon the cause specified in the notice thereof.
Notes: - The insured must state sufficient grounds for the abandonment to make it valid - He cannot avail himself of any ground other than that stated - If the grounds is proved to be unfounded and the information upon which it was made is proved to be incorrect abandonment is ineffective - If he assigns an insufficient cause proof of other causes will not be admitted
Sec. 146. An abandonment is equivalent to: - a transfer by the insured of his interest to the insurer, - with all the chances of recovery and indemnity.
Notes: - Effect of abandonment: insurer acquires all the rights(which includes rights of action against 3 rd person) which the insured possessed - The rights acquired is also SUBJECT to prior rights of third persons - The execution of a formal instrument is not necessary to effect an abandonment an accepted abandonment produces all the effects
Sec. 147. IF a marine insurer pays for a loss as if it were an actual total loss, he is entitled to: - whatever may remain of the thing insured, or - its proceeds or salvage, as if there had been a formal abandonment.
Notes: - GR: An election and notice of abandonment is a condition precedent to a claim for constructive total loss - HOWEVER In this section: The interest of the insured over the thing will be transferred to the insurer notwithstanding the lack of abandonment as if a formal abandonment has been made - The acceptance by the insured of the payment is deemed an offer of abandonment on his part
Sec. 148. Upon an abandonment,: - acts done in good faith o by those who were agents of the insured in respect to the thing insured, - subsequent to the loss, are at the risk of the insurer and for his benefit.
Notes: - Upon abandonment, agents of the insured become the agents of the insurer - The abandonment when made relates back to the time of the loss the title of the insurer becomes vested as of that date and is responsible for the reasonable expenses incurred in an attempt to save the vessel and the wages of the seamen
Sec. 149. Where notice of abandonment is properly given,: - the rights of the insured are not prejudiced - by the fact that the insurer refuses to accept the abandonment.
Notes: - Acceptance is not necessary if the abandonment is proper - The insureds right to abandon is ABSOLUTE when justified by circumstances
Sec. 150. The acceptance of an abandonment may be either: - express or - implied from the conduct of the insurer. The mere silence of the insurer for an unreasonable length of time AFTER notice: - shall be construed as an acceptance.
Notes: Form of Acceptance of Abandonment - May be express or implied - IMPLIED: By conduct o Mere silence and acts to preserve property after notice ! GR: NOT implied acceptance ! UNLESS if made for an unreasonable length of time o Example: when the insurer refused the abandonment but takes possession of the same for the purpose of making repairs AND retained for an unreasonable time LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 18 | P a t i n o , E r i c a
Sec. 151. The acceptance of an abandonment, whether express or implied: - is conclusive upon the parties, and - admits the loss and the sufficiency of the abandonment.
Sec. 152. An abandonment once made and accepted is irrevocable: - UNLESS the ground upon which it was made proves to be unfounded.
Notes:
Acceptance of Abandonment has the Following Effects: 1. Acceptance is conclusive upon the parties 2. Loss is admitted 3. The sufficiency of the abandonment is admitted 4. It is irrevocable unless the ground upon which it was made proved to be unfounded - Acceptance stops the insurer from questioning the form or right of abandonment - W/N the insured has a right to abandon is IMMATERIAL when it is accepted and there is no fraud
Sec. 153. On an accepted abandonment of a ship: - freightage earned previous to the loss o belongs to the insurer of said freightage; - but freightage subsequently earned o belongs to the insurer of the ship.
Note: Title becomes vested at the TIME OF THE LOSS
Sec. 154. If an insurer refuses to accept a valid abandonment: - he is liable as upon actual total loss, - deducting from the amount any proceeds of the thing insured which may have come to the hands of the insured.
Notes: - The insureds right to abandon is absolute when justified by the circumstances and no acceptance is necessary When an insurer declines to accept: - A Proper Abandonment: Insurer is liable for the total loss LESS any proceeds received on account of the damaged property (ex. Sale) - An Improper Abandonment: Insured may nevertheless recover to the extent of the damage proved
Sec. 155. If a person insured omits to abandon, he may nevertheless recover his actual loss.
Notes: - Abandonment is discretionary: failure to do so would still entitle the insured to recover his actual loss
Sub-Title 1-I MEASURE OF INDEMNITY
Sec. 156. A valuation in a policy of marine insurance is conclusive between the parties thereto in the adjustment of either a partial or total loss IF: - the insured has some interest at risk, and - there is no fraud on his part; EXCEPT that when a thing has been: - hypothecated by bottomry or respondentia, - before its insurance, and - without the knowledge of the person actually procuring the insurance, he may show the real value. BUT a valuation fraudulent in fact, entitles the insurer to rescind the contract.
Notes: - SEC 156 refers to VALUED marine policies - The insured value must be taken to be that stated in the policy - When there is no insurable interest or when there is fraud on the part of the insured o Valuation is NOT conclusive o The insurer has the right to rescind - When the thing insured is hypothecated by bottomry or respondentia: o Right to rescind is available ONLY if the violation is fraudulent in fact
LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 19 | P a t i n o , E r i c a
Sec. 157. A marine insurer is liable upon a partial loss: - ONLY for such proportion of the amount insured by him - as the loss bears to the value of the whole interest of the insured in the property insured.
Notes: - IF the value of the property or interest of the insured EXCEEDS the amount of the insurance: he is considered the co-insurer for the amount determined by the [difference between the value of the insurance and the value of the property] - In Fire Insurance: rule is different: o No co-insurance: insurer is liable for the FULL amount o UNLESS policy expressly provides for co-insurance
FORMULA:
(Partial) Loss X Amount of = Amount of Value of Thing Insured Insurance Recovery
Sec. 158. Where profits are separately insured in a contract of marine insurance the insured is entitled to recover, in case of loss: - a proportion of such profits equivalent to - the proportion which the value of the property lost bears to the value of the whole.
Notes: - The profits to be realized must be separately insured from the vessel or cargo
FORMULA:
Value of Property Lost X Amount of = Amount of Value of Whole Property Profit Recovery Insured
Sec. 159. In case of a valued policy of marine insurance on freightage or cargo: - IF a part only of the subject is exposed to the risk, - the evaluation applies only in proportion to such part.
Notes: - In case only a portion of the cargo was insured under a valued policy the valuation applies only in proportion of such part - Under a valued policy, when a portion only of the cargo is carried by the vessel: valuation will be reduced proportionally - Insurer is bound to return such portion of the premium as corresponds with the portion of the cargo which had been exposed to the risk - Franchise Clause: stipulation that unless the damage reaches a designated percentage of the value of such cargo no amount will be paid by the insurer
Sec. 160. When profits are valued and insured by a contract of marine insurance: - a loss of them is conclusively presumed FROM a loss of the property out of which they are expected to arise, and - the valuation fixes their amount.
Notes: - Where the profits are separately insured from the property: the insured is entitled: o IF partial loss: merely to partial indemnity for the profits lost o IF total loss: nothing total profits are also lost - Loss of the Profits is conclusively presumed from the Loss of the Property - In such case, the valuation agreed upon in the policy fixes the amount of recovery
LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 20 | P a t i n o , E r i c a
Sec. 161. In estimating a loss under an open policy of marine insurance the following rules are to be observed: (a) The value of a ship is: - its value at the beginning of the risk, - including all articles or charges: o which add to its permanent value or o which are necessary to prepare it for the voyage insured; (b) The value of the cargo is: - its actual cost to the insured, when laden on board, or - where the cost cannot be ascertained: o its market value at the time and place of lading, - adding the charges incurred in purchasing and placing it on board, but - without reference o to any loss incurred in raising money for its purchase, or o to any drawback on its exportation, or o to the fluctuation of the market at the port of destination, or o to expenses incurred on the way or on arrival; (c) The value of freightage is: - the gross freightage, EXCLUSIVE of primage, - without reference to the cost of earning it; and (d) The cost of insurance is in each case to be added to the value thus estimated.
Notes: - Provision contemplates an OPEN marine policy - Drawback in par B: refers to the allowance made by the govt upon the duties on imported merchandise when the importer, instead of selling here, re-exports it or the refunding of such duties is already paid ( it is excluded in determining the value of the cargo) - Primage in par C: refers to a small allowance or compensation payable o to the master or owner of the vessel for the use of his cables and ropes to discharge, and for his care and trouble bestowed on the shippers goods o to the mariners for lading and unlading in any port In Determining the loss under an open policy of marine insurance the REAL VALUE of the thing insured must be proved in each case - Value of Vessel: value is to be taken as of the commencement of the risk (NOT at the time it was built) - Value of Cargo: either the actual cost when laden on board OR the market value (see codal for distinction) o Expected profits are NOT considered since they can be covered by a separate insurance - Value of Freightage: Gross freightage (NOT net freightage) o Reason: Gross freightage can be easily and exactly determined
Sec. 162. IF cargo insured against partial loss: - arrives at the port of destination in a damaged condition, the loss of the insured is deemed to be the same proportion: - of the value which the market price at that port, of the thing so damaged, - bears to the market price it would have brought if sound.
Notes: - The provision applies: if the cargo is insured against partial loss + it suffers damage + its market value at the port of destination is reduced
FORMULAS:
Market Price (MP) MP in Damaged State = Reduction in Value in Sound State (Depreciation)
Reduction in Value X Amount of = Amount of Market Price in Sound State Insurance Recovery
Sec. 163. A marine insurer is liable for: - all the expenses attendant upon a loss - which forces the ship into port to be repaired; and where it is stipulated in the policy that the insured shall labor for the recovery of the property, the insurer is liable: - for the expense incurred thereby, - such expense, in either case, being in addition to a total loss, if that afterwards occurs.
LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 21 | P a t i n o , E r i c a
Notes: GR: Marine Insurer is NOT liable for more than the amount of the policy EXC: Expenses that are borne by the insurer in addition to total loss: - Port of Refuge Expenses sec163- when the ship has to make port o for the repairs of the damages suffered by the vessel o for saving the vessel - Sue and Labor Clause: expenses for the recovery of the property if the policy stipulated and imposes upon the insured the duty to make such recover
Sec. 164. A marine insurer is liable for a loss falling upon the insured: - through a contribution in respect to the thing insured, - required to be made by him towards a general average loss called for by a peril insured against; provided, that the liability of the insurer shall be limited: - to the proportion of contribution attaching to his policy value - where this is less than the contributing value of the thing insured.
Sec. 165. When a person insured by a contract of marine insurance has a demand against others for contribution, he may: - claim the whole loss from the insurer, - subrogating him to his own right to contribution. But no such claim can be made upon the insurer: - after the separation of the interests liable to the contribution, - nor when the insured, having the right and opportunity to enforce the contribution from others, has neglected or waived the exercise of that right.
Notes: - When the person liable to contribute to a general average is insured: o He may hold the insurer liable for his contribution o Up to the value of the policy
- GR: Insurer is Liable for any general average (GA) loss o The insured may either: ! hold the insurer directly liable for the insured value of the property sacrificed or ! demand contribution from the other interested parties as soon as the vessel arrives at her destination o in other words: the insured need not wait for an adjustment of the average
- EXC: No recovery of GA loss against insurer o After the separation of the interests (cargo) liable to contribution has been removed from the vessel o When the insured has neglected or waived his right to contribution Liability of Marine Insurer for any GA loss is LIMITED - Limited to the proportion of contribution attaching to his policy value where this is less than the contributing value of the thing insured. - It shall be less than the proportion of the GA loss assessed upon the thing insured where its contributing value is more than the amount of the insurance. - In such case the INSURER is liable to contribute ratably with the INSURED to the indemnity of the GA
FORMULA:
Amount of Insurance X Proportion of GA loss assessed = Limit of Value of the Thing upon the thing insured Liability of Insurer
Sec. 166. In the case of a partial loss of ship or its equipment: - the old materials are to be applied towards payment for the new. UNLESS otherwise stipulated in the policy, a marine insurer is liable: - for ONLY two-thirds of the remaining cost of repairs after such deduction, - EXCEPT that anchors must be paid in full.
Notes: - Here, there is a deduction from the cost of repairs one-third new for old on the theory that new materials render the vessel much more valuable than it was before the loss - The 1/3 therefore is upon the burden of the insured - The 2/3 then shall be upon the burden of the insurer - This section qualifies the rule in Sec 157 (page 19)
LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 22 | P a t i n o , E r i c a
Title 2 FIRE INSURANCE
Sec. 167. As used in this Code, the term "fire insurance" shall include insurance against loss by: - fire, - lightning, windstorm, tornado or earthquake and other allied risks, o when such risks are covered by: ! extension to fire insurance policies or ! under separate policies.
Notes:
Fire Insurance, defined: A contract of indemnity by which the insurer for a consideration, agrees to indemnify the insured against loss of, or damage to, a property by hostile fire. - Indemnity is its sole purpose
What Fire Insurance Includes - By stipulation, the policy may extend not only to loss due to fire but also due to allied lines (lightning, windstorm, etc.) - To include Allied Risks Extended Coverage: o A fire policy does NOT automatically cover all other risks, it must be stipulated o Covered by extension to fire insurance policies OR under separate policies o SUBJECT to the payment of premiums under separate policies (SEC 167) o MAY also be attached by endorsements (SEC 50) - May also include Indirect or Consequential Losses o GR: A standard fire contract is an agreement to indemnify for DIRECT loss o EXC: The consequences of direct loss may be greater than the damage itself and the policy may be extended to cover such consequential losses o Special coverage also known as loss of profits insurance or business interruption insurance
- Kinds of Indirect Losses o Physical Damage: ex. As a result of the fire, goods are spoiled, papers cannot be recopied o Loss of Earnings: Interruption of business o Extra Expense: additional expenditure or charges incurred by the insured following the damage or destruction of the property by an insured peril (ex. Cost doing business at another location) Fire, defined - The active principle of burning, characterized by the heat and light combustion. (Fire is always caused by combustion) - Combustion or spontaneous combustion may be so rapid as to produce fire, but until it does so, combustion cannot be said to be fire. it MUST produce a flame, a glow, or incandescence - Combustion which produces heat but no visible glow or light is NOT fire - Heat, steam, smoke evidence of fire but unless it is accompanied by ignition, it is not fire - Fire is NOT: o A natural disaster or calamity since it always arises. o An act of God unless caused by lightning or natural disaster not attributed by human agency Rules in Order to Recover under the Fire Policy - Fire must be the PROXIMATE CAUSE of loss in order to recover under the fire policy - Fire MUST be HOSTILE and NOT friendly o Friendly Fire, defined: One which burns in a place where it is intended to burn and employed for the ordinary purpose of lighting, heating or manufacturing ! Examples: Fire burning in a stove or lamp, gas lamp o Hostile Fire is when: 1. Burns at a place where it is NOT intended to burn 2. Starts as a friendly fire but becomes hostile if it should escape from the place where it is intended to be (proper place) and becomes uncontrollable OR 3. Starts as a friendly fire but becomes hostile because of the unsuitable material used to light it and it becomes inherently dangerous and uncontrollable. (Ex. Fire in the furnace caused by the heat from the fire to the walls by cracking and blisters)
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Fire due to Abnormal Conditions or Extraordinary Circumstances - A fire insurance policy MAY o RESTRICT its coverage to losses under ordinary circumstances and o EXCLUDE those due to extraordinary circumstance or abnormal conditions (ex. War, invasion, rebellion) - HOWEVER, if the fire is completely unrelated to the extraordinary circumstance insurer is STILL LIABLE
Ocean Marine Insurance Fire Policy Insurance on a vessel engaged in navigation is a marine policy although it insures against fire risks only BUT where the hazard is fire alone and the vessel is an unfinished vessel, never afloat, especially in the absence of an express agreement that it shall have the incidents of marine policy Rules on constructive loss AND abandonment applies Does NOT apply
In case of partial loss the thing insured for less than its actual value the insured is a co-insurer of the uninsured portion The insured may ONLY become a co-insurer in fire insurance when it is EXPRESSLY agreed upon
Sec. 168. An alteration in the use or condition of a thing insured: - from that to which it is limited by the policy - made without the consent of the insurer, - by means within the control of the insured, and - increasing the risks, entitles an insurer to rescind a contract of fire insurance.
Sec. 169. An alteration in the use or condition of a thing insured: - from that to which it is limited by the policy, - which does not increase the risk, does not affect a contract of fire insurance.
Notes:
Alteration in thing insured entitles insurer to RESCIND provided: 1. The use or condition of the thing is specifically limited or stipulated in the policy 2. Such use or condition as limited by the policy is altered 3. The alteration is made without the consent of the insurer 4. The alteration is made by means within the control of the insured 5. The alteration increases the risks
When alteration does NOT avoid the insurance contract: 1. Where Risk of Loss is NOT increased o GR: does not affect the insurance contract o EXC: when the policy provides that a violation of specified provisions shall avoid it increase of risk is NOT necessary to enable the insurer to escape 2. Where questioned articles required by insureds business: Even if the policy prohibits certain materials to be kept in the premises - when these are necessary or ordinarily used in the business conducted policy is not avoided 3. Where insured property would be useless if questioned acts were prohibited: Repairs and similar acts although it may expose the property to additional risk will not avoid the policy Increase of risk of hazard in general - Implied undertaking of insured: Every contract of insurance is made with reference to the conditions surrounding the subject matter of the risk and the premium is fixed with reference thereto. There is thus an implied promise on the part of the insured not to change these conditions. - Character of the increase in risk: There is an increase of risk when the insured property is put to some new use, and the new use increases the chance of loss. o Mere negligent acts temporarily endangering the property nor the temporary acts or conditions which have ceased prior to the occurrence of the loss will not violate the policy o Increase must be of a SUBSTANTIAL CHARACTER Alterations Avoiding the Policy - Where risk of loss increased: Policy is avoided by any alteration in the use or condition of the property insured increasing the risk. o Ex. Firecrackers placed in a liquor store - Where the increase in risk no longer exists at the time of loss: The insurer would STILL be liable UNLESS there is a breach of warranty LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 24 | P a t i n o , E r i c a
Where insured has no Control or Knowledge of Alteration - The insurer is NOT exonerated when alteration is occasioned by accident or which he has no control of - Every act of the insureds tenant substantially and permanently affecting the conditions of the property as to increase the risk is PRESUMED to be known by the insured.
Sec. 170. A contract of fire insurance is NOT affected by any act of the insured - subsequent to the execution of the policy, - which does not violate its provisions, - EVEN though it increases the risk and is the cause of the loss.
Notes: - An exception to the rule in Section 168 - An act of the insured EVEN if it increases the risk does NOT affect the contract UNLESS there is a corresponding violation of the provisions of the policy
Sec. 171. If there is no valuation in the policy, the measure of indemnity in an insurance against fire is: - the expense it would be to the insured at the time of the commencement of the fire - to replace the thing lost or injured in the condition in which it was at the time of the injury; but IF there is a valuation in a policy of fire insurance,: - the effect shall be the same as in a policy of marine insurance.
Notes: Open Fire Policy [Measure of Indemnity]: - The expense it would be to the insured at the time of the commencement of the fire to replace the thing lost or injured in the condition in which it was at the time of the injury - The insured is ONLY entitled to recover the amount of actual loss - Limit to amount: Indemnity shall NOT EXCEED the cost to repair, or to replace the thing insured with materials of like kind and quality with proper deduction for depreciation considering the age or condition of the thing before the loss - For personal property: MARKET VALUE is the actual loss - If the actual loss is MORE than the face value of the policy: o The face value is the limit of insurers liability - Burden of Proof: on the INSURED to establish the amount of such loss by preponderance of evidence
Valued Fire Policy - The valuation is CONCLUSIVE between them in the adjustment of partial or total loss in the absence of fraud
In LIFE INSURANCE: the sum fixed is the amount to the paid: Principle of Indemnity does NOT apply
Sec. 172. Whenever the insured desires to have a valuation named in his policy, insuring any building or structure against fire, he may require: - such building or structure to be examined by an independent appraiser and - the value of the insured's interest therein may then be fixed as between the insurer and the insured. The cost of such examination shall be paid for by the insured. A clause shall be inserted in such policy stating substantially that: - the value of the insured's interest in such building or structure has been thus fixed. In the absence of any change increasing the risk without: o the consent of the insurer or o of fraud on the part of the insured, - then in case of a total loss under such policy, o the whole amount so insured upon the insured's interest in such building or structure, as stated in the policy upon which the insurers have received a premium, shall be paid, - and in case of a partial loss: o the full amount of the partial loss shall be so paid, - and in case there are two or more policies covering the insured's interest therein: o each policy shall contribute pro rata to the payment of such whole or partial loss. - But in no case shall the insurer be required to pay more than the amount thus stated in such policy. This section shall not prevent the parties from: - stipulating in such policies concerning the repairing, rebuilding or replacing of buildings or structures wholly or partially damaged or destroyed.
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Notes:
How Valuation is Made - Valuation of insureds interest in the thing - may be made by an independent appraiser and therefore confirmed by the parties
Insurers Liability in Valued Policy - In the absence of any change increasing the risk, w/o the insurers consent or of fraud on the part of the insured. The LIABILITY OF THE INSURER is: In case of TOTAL loss The whole amount so insured and stated in the policy In case of PARTIAL loss The full amount of the partial loss UNLESS there is a co-insurance clause - In case there are 2 or more policies: each policy shall contribute PRO RATA - Total loss of the insured building exists: when the result of the fire is such as to render the property wholly unfit for use as a building however valuable it may be as mere material
Option to Rebuild or Repair Clause - The parties may stipulate that instead of paying the amount of the loss insurer has an option to repair or rebuild the property insured - In order to protect the insurer from unfairness in the appraisal - Must be exercised: (1) w/in the time specified OR (2) w/in reasonable time if no time specified - Choice made to exercise right has NO effect UNLESS communicated to the insured - UNLESS there is a stipulation limiting the cost insurer may be compelled to perform his undertaking to rebuild even though the cost may exceed the amount of insurance
Arbitration Clause - Policy may provide that in case of dispute arbitration may be resorted to as a condition precedent to court litigation
Insured NOT a co-insurer under a fire policy in the absence of stipulation - The insurer in case of partial loss is required to give full indemnity for such loss up to the amount written in the policy even though the property be very inadequately insured (diff. rule in marine) - Co-Insurance Clause: Clause requiring the insured to maintain insurance to an amount equal to the value or specified percentage of the insured property under penalty of becoming co-insurer to the extent of such deficiency - This results in reducing in case of partial loss to the portion of the sum named in the policy.
Sec. 173. No policy of fire insurance shall: - be pledged, hypothecated, or transferred - to any person, firm or company who acts as agent for or otherwise represents the issuing company, and any such pledge, hypothecation, or transfer hereafter made: - shall be void and of no effect - insofar as it may affect other creditors of the insured.
Notes: - After the loss the insured has the right to assign his rights - The right to pledge, hypothecate or transfer a fire insurance policy may be done EVEN without the consent of, or notice to, the insurer - What is being assigned is NOT the contract BUT the claim under or a right of action on the policy under the insurer - Limitation: (see bold words in codal)
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Title 3 CASUALTY INSURANCE
Sec. 174. Casualty insurance is insurance: - covering loss or liability arising from accident or mishap, - EXCLUDING certain types of loss which: o by law or custom are o considered as falling exclusively within the scope of other types of insurance such as fire or marine. It INCLUDES, but is not limited to: - employer's liability insurance, - motor vehicle liability insurance, - plate glass insurance, - burglary and theft insurance, - personal accident and - health insurance as written by non-life insurance companies, and - other substantially similar kinds of insurance.
Notes:
Casualty Insurance; defined: (1 st paragraph of codal) Includes all forms of insurance against loss or liability arising from accident or mishap excluding certain types of loss or liability which are not within the scope of other types of insurance: marine, fire, suretyship, and life. - Casualty insurance shall be governed: o by the terms of the contract not violative of the laws and o by the general provisions applicable to all types of insurance - Casualty to mean Accident: A violent mishap proceeding from an unknown or unexpected cause 2 General Divisions of Casualty Insurance 1. Insurance against perils which affect the person or property: (Ex. accident, health, motor vehicle, theft, etc.) 2. Insurance against perils which give rise to liability for claims for injuries to others or for damage to their property (Ex. Workmens compensation)
Liability Insurance - Definition: A contract of indemnity for the benefit of the insured and those in privity with him or those to whom the law upon the grounds of public policy extends (policy refers to legal liability damages)
- Liability Insurable o Quasi-delict or non-fulfillment of contract o Criminal Negligence ! Deliberate criminal acts are not insurable - Insurable Interest in Liability Insurance o Liability Insurance must be supported by an II o II: safety of persons, freedom from damage or property o Does NOT depend on whether there is legal or equitable interest in property o BUT whether he may be charged by law with the liability against which insurance is taken out - When liability insurance in policy payable
Insurance Against Liability Insurance Against Actual Loss Liability attaches when liability of the insured to the injured 3 rd party attaches REGARDLESS of actual loss Liability attaches ONLY when actual loss is sustained by the insured
- Right of Injured Person to Sue Insurer of Party at Fault o Depends on whether the contract intended to benefit the 3 rd
persons OR only the insured o Purpose for allowing injured to sue: to protect him for the insolvency of the insured o Rule applies ONLY to 3 rd party Liability o DOES NOT APPLY to Insurance against Actual Loss ! The contract being solely to reimburse the insured for liability actually discharged ! In this case, the 3 rd partys recourse is limited to the insured alone ! Prior payment of the insured is necessary for that the obligation of the insurer may arise - Basis and Extent of Insurers Liability o The liability of insurer is not solidary with the insured o His liability of insurer to 3 rd persons is based on contract o Liability of insured is based on tort. - Effect of No action clause in policy of liability o Requires that suit and final judgment must first be obtained against the insured before recovery on the policy may be made LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 27 | P a t i n o , E r i c a
o It expressly disallows suing the insurer as a co-defendant of the insured HOWEVER the rules of court allows this and the rules of court prevails over any insurance contract
Employers Liability Insurance - Employers Liability, Defined: Liability for damages caused to workers arising from injuries by reason of defective conditions of machinery, etc, IF the defect is ATTRIBUTABLE TO: o Negligence of the employer of his agents o Negligence of the employers superintendent or one having authority over the workmen o Some act or omission by a fellow workman in obedience to the employers by-laws, or instructions from authority
Workmens Compensation Insurance - Workmens Compensation, defined: Compensation for loss resulting from injuries, disablement or death of workmen through industrial accident, casualty or disease - Act, injury or sickness is COMPENSABLE: 1. As personal injury from accident arising out of and in the course of employment 2. Illness directly caused by employment 3. As sickness which is the result of the nature of the employment 4. As sickness aggravated by the nature of employment - Under the Labor Code: employer is required to make monthly contribution to the State Insurance Fund from which the State guarantees payments of benefits for death or injuries of his employees
Public Liability Insurance - Insurance which indemnifies against liabilities on account of injuries to the person or property of another
Motor Vehicle Liability Insurance - Insurance against passenger and 3 rd party liability for death or bodily injuries and damage to property arising from motor vehicle accidents - Motor vehicle liability is different from insurance for loss or damage on the motor vehicle itself - Authorized Driver Clause: o The insurer is NOT liable if at the time of the collision, the driver did not have a valid license o The insurance of a driver w/o previous examination does not necessarily imply that the license issued is invalid Insurer is STILL liable o An alien being in the RP for more than 90 days needs a Philippine drivers license in order to drive a motor vehicle it is needed to be considered an authorized driver o Expiration of a temporary operators permit negates one from being an authorized driver Insurer NOT liable
Plate Glass Insurance - Insurance against loss from accidental breaking of plate-glass windows, doors, show cases, etc
Burglary and Theft Insurance - Insurance to cover loss of property through burglary, robbery of theft - Theft under the Insurance Code is NOT the same as theft under the RPC Policy covers only what is commonly thought of as theft - In robbery policies the policy sometimes provides that: o entry must be by violence in order to prevent in the insured from setting up an apparent robbery o that for a store it must be in the presence of a specified number of employees - The opportunity to defraud the insurer is so great thats why insurers fill their policies with restrictions
Personal Accident and health Insurance as Written by Non Life Insurance - Personal Accident: Insurance to indemnify the insured against expense , loss of time and suffering from accidents causing him physical injury o Burden of Proof: The Insureds beneficiary has the burden to prove that the cause is a covered peril. THEN the burden shifts to the insurer to prove that it is an excepted peril. - Health Insurance: Indemnifies expenses and losses occasioned by disease - Accident and Health are often combined in the same policy - Major Medical: The expanded coverage for catastrophic medical expense - If both is issued by a life insurance company or it is in addition to a life policy or one of the risks insured is death it may be considered a life insurance LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 28 | P a t i n o , E r i c a
- Accident: used not in its technical meaning but in its common acceptation that which happens by chance w/o intention or design o It happens from known or unknown cause unusual and unexpected w/o foresight or expectation (w/o human agency; if w/ human agency it must be unusual to and not expected) o May be attributable to fault or negligence - Accident and Accidental means (A&AM): essentially the same o GR: death or injury does not result from A&AM if it is the natural result of the insureds voluntary act, unaccompanied by anything unforeseen except the death or injury o EXC: There is no accident when a deliberate act is performed UNLESS ! Some additional, unexpected, independent and unforeseen cause occurs the death or injury is NOT the natural and probable result of the insureds voluntary act - Suicide and Willful Exposure to Needless Peril o Both are in pari matere since both signify disregard for ones life o Voluntary exposure to a known danger is held to negate the accidental character o But the mere act of pointing the gun to his temple believing that the gun was not loaded is still accidental - Meaning of Intentional as used in accident policy o Implies the exercise of reasoning faculties, consciousness, volition o If the injury is caused by an intentional act of a 3 rd person - Insurer is RELIEVED
Title 4 SURETYSHIP
Sec. 175. A contract of suretyship is an agreement: - whereby a party called the surety guarantees the performance by another party called the principal or obligor - of an obligation or undertaking in favor of a third party called the obligee. It includes official recognizances, stipulations, bonds or undertakings issued by any company by virtue of and under the provisions of Act No. 536, as amended by Act No. 2206. Notes:
Suretyship, defined: An agreement whereby one undertakes to answer under specified terms and conditions, for the debt, default or miscarriage or another - A suretyship contract is deemed an insurance contract ONLY when the surety is engaged in business as such and not merely an isolated transaction (As a vocation & Not incidental)
Scope - It also includes recognizances, stipulations, bonds or undertakings under Act No. 536 - Execution of such shall be sufficient when executed or guaranteed by any corporation organized under the laws of the Philippines and authorized to become a surety - The Act also requires that such be approved by the head of Department, court, judge, officer, board or body required to approve accept the same
Sec. 176. The liability of the surety or sureties: - shall be joint and several with the obligor and - shall be limited to the amount of the bond. It is determined strictly by the terms of the contract of suretyship: - in relation to the principal contract between the obligor and the obligee. (As amended by Presidential Decree No. 1455).
Notes: - Liability in suretyship is SOLIDARY (joint and several) between the surety and the obligor (surety is also primarily liable) - HOWEVER, it is LIMITED to the amount of the bond - It is a collateral contract and its basis is the principal contract - Any misrepresentation made by the applicant cannot defeat the rights of the oblige - The bond is contractual in nature and is ordinarily restricted only to the obligation expressly assumed - Liability under a surety bond is determined by the terms set out in the bond and not by it abstract nature or its title of caption - Indemnity Agreement: To indemnify the surety against loss this agreement is executed in favor of the surety
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Suretyship Property Insurance An accessory contract A principal contract There are 3 parties (surety, obligor, oblige) There are only 2 parties (insured, insurer) A credit accommodation assuming primary liability A contract of Indemnity Surety is entitled to reimbursement from the principal No right of recovery unless the insurer is subrogated Bond can only be cancelled by or with the consent of the obligee or by the commissioner or by a court May be unilaterally cancelled either by the insured or by the insurer on the grounds in Sec 64 Requires the acceptance of the obligee to be valid and enforceable No need for any acceptance Risk-Shifting device the premium paid like a service fee Risk Distributing device the premium paid as a ratable contribution to a common fund Guaranty: When a person called a guarantor binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. Suretyship Guaranty Surety assumes liability as a regular party Liability of the guarantor depends upon an independent agreement to pay if the primary debtor fails to do so Surety is primarily liable Guarantor is secondarily liable Surety is not entitled to the benefit of exhaustion of the debtors assets pays when the debtor does not pay Guarantor has the right
pays when the debtor cannot pay
Sec. 177. The surety is entitled to payment of the premium: - as soon as the contract of suretyship or bond - is perfected and delivered to the obligor. No contract of suretyship or bonding shall be valid and binding: - unless and until the premium therefor has been paid, - except where the obligee has accepted the bond, in which case o the bond becomes valid and enforceable o irrespective of whether or not the premium has been paid by the obligor to the surety:
- Provided, That if the contract of suretyship or bond is not accepted by, or filed with the oblige: o the surety shall collect only reasonable amount, o not exceeding 50% of the premium due thereon as service fee o plus the cost of stamps or other taxes imposed for the issuance of the contract or bond: - Provided, however, That if the non-acceptance of the bond be due to the fault or negligence of the surety o no such service fee, stamps or taxes shall be collected.
In the case of a continuing bond: - the obligor shall pay the subsequent annual premium as it falls due - until the contract of suretyship is cancelled: o by the obligee or o by the Commissioner or o by a court of competent jurisdiction, as the case may be.
Notes: Premium Payment in Suretyship - GR: Unless the premium is paid, the insurance contract is not valid - EXC: 1. When the bond or suretyship contract is issued and accepted by the creditor or obligee bond is valid regardless of whether the premium is paid 2. In cases of a continuing bond - Premium becomes a debt as soon as the contract is perfected and delivered to the obligor
IF the contract is not accepted or filed with the obligee
The surety can STILL collect a reasonable amount NOT EXCEEDING 50% of the premium + service fee, stamps or taxes If the non-acceptance is due to the suretys fault NO service fee, stamps or taxes shall be collected premium refunded IF the bond is continuing Obligor shall pay the subsequent annual premium as it falls due until it is cancelled IF premium is already paid Obligor cannot recover it on the ground that the surety was not able to pay the indebtedness secured by him
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Types of Surety Bonds Contract Bonds - Bonds connected with construction and supply contracts Performance Bond covering faithful performance on a contract Payment Bond covering payment of laborers Fidelity Bonds - Pays the employer for loss growing out of dishonest acts of his employees Industrial Bond required by employers to cover loss through dishonesty of employees Public Official Bond required of public officers for faithful performance of their duties condition for entering upon their office Judicial Bonds Those required in judicial proceedings
Sec. 178. Pertinent provisions of the Civil Code of the Philippines: - shall be applied in a suppletory character whenever necessary in interpreting the provisions of a contract of suretyship.
Title 5 LIFE INSURANCE
Sec. 179. Life insurance is insurance on human lives AND insurance appertaining thereto or connected therewith.
Sec. 180. An insurance upon life may be made payable: - on the death of the person, or - on his surviving a specified period, or - otherwise contingently on the continuance or cessation of life. Every contract or pledge for the payment of endowments or annuities shall - be considered a life insurance contract for purpose of this Code. In the absence of a judicial guardian: - the father, or - in the latter's absence or incapacity, the mother, or - any minor, who is an insured or a beneficiary under a contract of life, health or accident insurance, may exercise, in behalf of said minor: - any right under the policy, - without necessity of court authority or the giving of a bond, where the interest of the minor in the particular act involved does not EXCEED P 20,000.
Such right may include, but shall not be limited to: - obtaining a policy loan, surrendering the policy, receiving the proceeds of the policy, and giving the minor's consent to any transaction on the policy.
Notes:
Life Insurance, Defined (see codal definition) - Mutual agreement where a party agrees to pay a given sum on the happening of a particular event contingent on the duration of human life - A contract to make specific payments upon the death of a person whose life has been insured.
When Payable: 1. On the death of the person 2. On his surviving a specified period or 3. Otherwise contingently on the continuation or cessation of life
Nature of Life Insurance Not a contract of Indemnity - Liability absolutely certain: it contemplates certain payment of a specified sum at a uncertain time o Premiums are calculated in accordance with the assureds life expectancy under a specified mortality table ! In fire and marine insurance there is merely a risk of loss (NOT certain) ! In Life insurance the event upon which payment is to be made is absolutely certain o Insured merely gets what he paid in premiums plus interest less expenses (what insurer holds in quasi trust for the insured) o Therefore only in premature death does the payment embrace the element of indemnity - Amount of Insurance Generally Without Limit: There is no limit as to the amount of insurance since there is difficulty in fixing any sort of pecuniary value upon life - Life Policy is a Valued Policy: Life insurance is treated substantially as a valued policy, death being the loss - Direct Pecuniary Loss Not Required: There is no obligation to show as a condition precedent to recovery, a direct pecuniary loss as a result of the death LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 31 | P a t i n o , E r i c a
o Life insurance is a form of investment o The measure of recovery is therefore the face value and not the value of the insureds life o There is no way of showing whether the loss of life resulted in an equivalent economic loss
Life Insurance vs. Fire and Marine Insurance LIFE INSURANCE MARINE and FIRE Insurance Not a contract of indemnity BUT a contract of Investment Contract of Indemnity A Valued Policy May be open or valued May be transferred or assigned to any person EVEN if he has NO II The transferee must have an II on the thing insured Consent of insurer is not essential in the validity of the assignment, UNLESS expressly required Consent (in the absence of waiver) is essential in assigning the policy II in the life and death of a person must ONLY exist - AT the time the insurance takes effect No need to exist at the time of loss (EXC. That effected by the creditor on the life of debtor) II on property must exits NOT ONLY - At the time the insurance takes effect BUT ALSO - At the time of the loss II need not have any legal basis II must have a legal basis (Sec 19) Liability to make payment is certain ONLY the time to pay is not (UNLESS written for a term) Contingency: may or may not happen May not be cancelled by the insurer May be cancelled by either party and usually for a 1 year term (Sec 65,66) Loss cannot be determined by any cash value Beneficiary has no obligation to prove actual financial loss Can be determined Beneficiary is required to submit proof of actual pecuniary loss as a condition precedent to collection
Art 2012 NCC: a person who is forbidden from receiving any donation cannot be named a beneficiary of a life insurance policy
Exemption of Life Insurance Policies From Execution - All benefits, privileges or annuities out of any life insurance are exempt from execution REGARDLESS of the amount of the premiums paid Application of Exemption to Accident Insurance - GR: Life Insurance is distinct and different from an accident insurance - BUT when one of the risks insured is death by accident it can be regarded as life insurance - Health insurance may also be regarded as life insurance in certain instances it may be issued by a life or non life ins. Company - Burden of Proof: o In an accident insurance: the insureds beneficiary has the burden of proving that the cause of death is due to the covered peril o Then the burden shifts to the insurer to show whether it falls under an excepted peril
Kinds of Life Insurance Policies 1. Whole life or Ordinary Life Policies: (regular life or straight life) o The insured agrees to pay annual, semi-annual or quarterly premiums while he lives o The insurer agrees to pay the face value of the policy upon the death of the insured. o Alternative form of payment: Cash Surrender Value ! In case it is cancelled by the owner or it lapses through nonpayment - The insured is entitled to receive to the cash surrender value AFTER 3 full annual premiums have been paid. 2. Limited Payment Life Policy: o Insured agrees to pay premiums ONLY for a specified number of years (10,15, or 20yrs). o Insurance payable upon the death of the insured. o If he survives such period, he stops paying any further premium. o If the insured should die within the specified period his beneficiary is entitled to all the proceeds of the policy w/o any liability for the unpaid premiums 3. Term Insurance Policy: o Insurers liability arises ONLY upon the death of the insured within the agreed term or period. o IF he survives the period the contract terminates and the insurer is NOT liable o Premium is usually lower (since there is a possibility that the insurer will not be liable) LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 32 | P a t i n o , E r i c a
4. Endowment Policy: o Insurer agrees to pay a certain sum to the insured if he outlives a designated period or if he dies w/in such period, to some other person indicated o IF he dies before that time the proceeds are paid to the beneficiary o Premium is higher since the cash value of the policy grow more rapidly 5. Life Annuity: o The debtor binds himself to pay an annual pension or income during the life of one or more persons in consideration of capital consisting of money or property whose ownership is transferred to him at once with the burden of the income o Upside-down application of the life insurance principle ! Life insurance: estate is created at death (insurer starts paying upon death) ! Annuity: Estate is liquidated at death (insurer stops paying upon death)
ANNUITY CONTRACTS ORDINARY LIFE POLICIES Insures against economic problems resulting from a long life rather than an early death
Looks at transiency Looks at longevity Lump sum is paid to the insurer immediately and the annuitant receives the payments as long as he lives The insured pays to the insurer an annuity and his beneficiary receives the lump sum payment.
Scope of Life Insurance: Risks Covered: - GR: All causes of death would be covered - EXC: When expressly excluded by law, the policy, or public policy o Ex. When the beneficiary is a principal, accessory or accomplice in bringing about the death of the insured - Losses which results from the death of the insured death includes: o Actual Death casket death o Living Death permanent disability o Retirement Death - living beyond the limit of earning capacity
Group Life Insurance Mortgage Redemption Insurance - Device for the protection of both the mortgagee and mortgagor
Sec. 180-A. The insurer in a life insurance contract shall be liable in case of suicides: - ONLY when it is committed AFTER the policy has been in force for o a period of 2 years from the date of its issue OR of its last reinstatement, o UNLESS the policy provides a shorter period: Provided, however, That suicide committed in the state of insanity: - shall be compensable regardless of the date of commission.
Notes:
Insurer is LIABLE in case of suicide in the following cases: 1. Suicide is committed after the policy has been in force for a period of 2 years from the date of its issue of last reinstatement o Policy CANNOT provide for a period of more than 2 years 2. Suicide is committed after a shorter period provided in the policy 3. When the suicide is committed in the state of insanity regardless of the date of commission (UNLESS suicide is an excepted risk) Insurer is NOT liable in the following cases 1. Suicide is not by reason of insanity and is committed within the 2 year period 2. Suicide is by reason of insanity but is not among the risks assumed by the insurer regardless of the date of commission (excepted risk) 3. The insurer can show that the policy was obtained with the intention to commit suicide even in the absence of any suicide exclusion in the policy
Sec. 181. A policy of insurance upon life or health may pass: - by transfer, will or succession to any person, - whether he has an insurable interest or not, and - such person may recover upon it whatever the insured might have recovered.
Notes:
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II of Assignee is NOT required in Life Insurance - All life insurance policies are declared by law to be assignable - A provision in this policy denying the right to assign w/o the consent of the insurer is VOID - The contract not being one of indemnity does not require II - HOWEVER, the courts will not permit the process of assignment to be used as a cloak to hide an illegal intent to make contracts on human life. Necessity of Consent of Beneficiary in Assignment depends on whether there is a waiver of the Right to Change the Beneficiary ! IF NOT waived: beneficiary has no vested right over the interest in the policy. The heirs of the beneficiaries cannot collect the proceeds o It goes to the estate of the insured o Policy can be assigned EVEN W/O the consent of the beneficiary ! IF waived: the beneficiary has a vested right on the policy. o The heirs are entitled BUT UPON the death of the insured. o Policy CANNOT be assigned w/o the consent of the beneficiary
Sec. 182. Notice to an insurer of a transfer or bequest thereof: - is NOT necessary to preserve the validity of a policy of insurance upon life or health, - UNLESS thereby expressly required.
Notes:
- If notice NOT required by policy: such is NOT essential to the validity of the assignment - If notice is required by policy: An assignment w/o such notice shall have no effect in so far as the insurer is concerned o The insurer shall be relieved from liability o Payment to the old beneficiary he will hold it in trust for the new one o EXC: when such notice is waived by the insurer o Note: the Assignment is still binding upon the assignor (insured) and the assignee - Whether or not required by the policy: IF the assignment is done with the consent of the insurer The consent creates a NOVATION o The assignee takes the new contract free of defenses available to the insurer
Sec. 183. UNLESS the interest of a person insured is susceptible of exact pecuniary measurement, - the measure of indemnity under a policy of insurance upon life or health - is the sum fixed in the policy.
Notes: - The measure of indemnity in a life policy: is the amount specified in the policy - Life policies are valued policies - This is so since life cannot be given any exact pecuniary estimation - EXC: The II of a creditor in the life of the debtor is susceptible of exact pecuniary estimation.
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Chapter VI COMPULSORY MOTOR VEHICLE LIABILITY INSURANCE
Sec. 373. For purposes of this chapter:
(a) "Motor Vehicle" is any vehicle as defined in section 3, paragraph (a) of R.A.No. 4136 Otherwise known as the "Land Transportation and Traffic Code." [Any vehicle propelled by any power other than muscular power using the public highways, with certain exceptions.] (b) "Passenger" is any fare paying person being transported and conveyed in and by a motor vehicle for transportation of passengers for compensation, including persons expressly authorized by law or by the vehicle's operator or his agents to ride without fare. (c) "Third-Party" is any person other than a passenger as defined in this section and shall also exclude a member of the household, or a member of the family within the second degree of consanguinity or affinity, of a motor vehicle owner or land transportation operator, as likewise defined herein, or his employee in respect of death, bodily injury, or damage to property arising out of and in the course of employment. (d) "Owner" or "motor vehicle owner" means the actual legal owner of a motor vehicle, in whose name such vehicle is duly registered with the Land Transportation Commission; (e) "Land transportation operator" means the owner or owners of motor vehicles for transportation of passengers for compensation, including school buses; (f) "Insurance policy" or "Policy" refers to a contract of insurance against passenger and thirty-party liability for death or bodily injuries and damaged to property arising from motor vehicle accidents.
Sec. 374. It shall be UNLAWFUL for any land transportation operator or owner of a motor vehicle: - to operate the same in the public highways - UNLESS there is in force in relation thereto o a policy of insurance or o guaranty in cash or o surety bond issued in accordance with the provisions of this chapter to indemnify the death, bodily injury, and/or damage to property - of a third-party or passenger, as the case may be, - arising from the use thereof.
Sec. 375. The Commissioner shall furnish the Land Transportation Commissioner with: - a list of insurance companies authorized to issue the policy of insurance or surety bond required by this chapter.
Sec. 376. The Land Transportation Commission shall NOT allow the registration or renewal of registration of any motor vehicle: - without first requiring from the land transportation operator or motor vehicle owner concerned o the presentation and filing of a substantiating documentation o in a form approved by the Commissioner o evidencing that the policy of insurance or guaranty in cash or surety bond required by this chapter is in effect.
Sec. 377. Every land transportation operator and every owner of a motor vehicle shall: - before applying for the registration or renewal of registration of any motor vehicle, - at his option, either: o secure an insurance policy or surety bond ! issued by any insurance company authorized by the Commissioner or o make a cash deposit in such amount as herein required as limit of liability for purposes specified in section 374
(1) In the case of a land transportation operator, the insurance guaranty in cash or surety bond shall cover - liability for death or bodily injuries of third-parties and/or passengers - arising out of the use of such vehicle - in the amount NOT less than P12,000 per passenger or third party - and an amount, for each of such categories, in any one accident of NOT less than that set forth in the following scale:
Motor Vehicle Authorized Capacity Amount To be Paid 26 or more passengers P 50,000 12 to 25 passengers P 40,000 6 to 11 passengers P 30,000 5 or less passengers P5,000 X authorized capacity.
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Provided, however, That such cash deposit made to, or surety bond posted with, the Commissioner shall be resorted to by him in cases of accidents: - the indemnities for which to third-parties and/or passengers are not settled accordingly by the land transportation operator and, in that event, the: - said cash deposit shall be replenished or such surety bond shall be restored - with 60 days after impairment or expiry, as the case may be, - by such land transportation operator, - OTHERWISE, he shall secure the insurance policy required by this chapter. The aforesaid cash deposit may: - be invested by the Commissioner - in readily marketable government bonds and/or securities.
(2) In the case of an owner of a motor vehicle,: - the insurance or guaranty in cash or surety bond - shall cover liability for death or injury to third parties - in an amount NOT LESS than that set forth in the following scale in any one accident:
The Commissioner may, if warranted - set forth schedule of indemnities for the payment of claims for death or bodily injuries with the coverages set forth herein.
Sec. 378. Any claim for death or injury to any passenger or third party pursuant to the provisions of this chapter shall: - be paid WITHOUT the necessity of proving fault or negligence of any kind; Provided, That for purposes of this section: (i) The total indemnity in respect of any person shall NOT exceed P 5,000 (NOTE: Now 15K - Mem Circular 4-2006 july 26, 2006) (ii) The following proofs of loss, when submitted under oath, shall be sufficient evidence to substantiate the claim: (a) Police report of accident; and (b) Death certificate and evidence sufficient to establish the proper payee; or (c) Medical report and evidence of medical or hospital disbursement in respect of which refund is claimed (iii) Claim may be made against one motor vehicle ONLY.
In the case of an occupant of a vehicle, claim shall lie: - against the insurer of the vehicle in which the occupant is riding, mounting or dismounting from. In any other case, claim shall lie: - against the insurer of the directly offending vehicle. In all cases, the right of the party paying the claim: - to recover against the owner of the vehicle responsible for the accident shall be maintained.
Sec. 379. NO land transportation operator or owner of motor vehicle shall: - be unreasonably denied the policy of insurance or surety bond required by this chapter by the insurance companies authorized to issue the same, - otherwise, the Land Transportation Commission shall require from said land transportation operator or owner of the vehicle, o in lieu of a policy of insurance or surety bond, o a certificate that a cash deposit has been made with the Commissioner o in such amount required as limits of indemnity in SEC 377 o to answer for the passenger and/or third-party liability of such land transportation operator or owner of the vehicle. No insurance company may issue the policy of insurance or surety bond required under this chapter: - unless so authorized under existing laws. I. Private Cars II. Other Private Vehicles
1. Bantam P 20,000 1. Tricycles, motorcyles, and scooters P20,000 2. Light P 20,000 2. Vehicles with an unladen weight of 2,600 kilos or less P 20,000 3. Heavy P 30,000 3. Vehicles with an unladen weight of between 2,601 kilos and 3,930 kilos P 30,000 4. Vehicles with an unladen weight over 3,930 kilos P 50,000 LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 36 | P a t i n o , E r i c a
The authority to engage in the casualty and/or surety lines of business of an insurance company: - that refuses to issue or renew, - without just cause, the insurance policy or surety bond therein required shall be withdrawn immediately.
Sec. 380. No cancellation of the policy shall be valid: - UNLESS written notice thereof is given to o the land transportation operator or owner of the vehicle and o to the Land Transportation Commission - at least 15 days prior to the intended effective date thereof. Upon receipt of such notice, the Land Transportation Commission: - unless it receives evidence of a o new valid insurance or guaranty in cash or surety bond as prescribed in this chapter, or o an endorsement of revival of the cancelled one, - shall order the immediate confiscation of the plates of the motor vehicle covered by such cancelled policy. The same may be re-issued ONLY upon: - presentation of a new insurance policy or that a guaranty in cash or surety bond o has been made or posted with the Commissioner and o which meets the requirements of this chapter, - or an endorsement or revival of the cancelled one.
Sec. 381. IF the cancellation of the policy or surety bond is contemplated by the land transportation operator or owner of the vehicle, he shall: BEFORE the policy or surety bond ceases to be effective, - secure a similar policy of insurance or surety bond to replace the policy or surety bond to be cancelled OR - make a cash deposit in sufficient amount with the Commissioner and without any gap, - file the required documentation with the Land Transportation Commission, and - notify the insurance company concerned of the cancellation of its policy or surety bond.
Sec. 382. In case of change of ownership of a motor vehicle, OR change of the engine of an insured vehicle: - there shall be no need of issuing a new policy UNTIL the next date of registration or renewal of registration of such vehicle, and - provided that the insurance company shall agree to continue the policy, such change of ownership or such change of the engine shall: - be indicated in a corresponding endorsement by the insurance company concerned, and - a signed duplicate of such endorsement shall, within a reasonable time, be filed with the Land Transportation Commission.
Sec. 383. In the settlement and payment of claims, the indemnity shall: - NOT be availed of by any accident victim or claimant AS an instrument of enrichment by reason of an accident, - BUT AS an assistance or restitution insofar as can fairly be ascertained.
Sec. 384. Any person having any claim upon the policy issued pursuant to this Chapter shall: - without any unnecessary delay, - present to the insurance company concerned a written notice of claim setting forth: o the nature, extent and duration of the injuries sustained as certified by a duly licensed physician. Notice of claim must be filed: - within 6 months from date of accident, - OTHERWISE, the claim shall be deemed WAIVED. Action or suit for recovery of damage due to loss or injury must be brought, in proper cases: - with the Commissioner OR the Courts - within 1 year from denial of the claim, - otherwise, the claimant's right of action shall prescribe.
Sec. 385. The insurance company concerned shall forthwith: - ascertain the truth and extent of the claim and - make payment within 5 working days AFTER reaching an agreement. If no agreement is reached, the insurance company shall: - pay only the "no-fault" indemnity provided in SEC 378
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- without prejudice to the claimant from pursuing his claim further, - in which case, he shall not be required or compelled by the insurance company to execute any quit claim or document releasing it from liability under the policy of insurance or surety bond issued. In case of any dispute in the enforcement of the provisions of any policy issued pursuant to this chapter: - the adjudication of such dispute shall be within the original and exclusive jurisdiction of the Commissioner - subject to the limitations provided in section 416.
Sec. 386. It shall be unlawful for a land transportation operator or owner of motor vehicle: - to require his or its drivers or other employees to contribute in the payment of premiums.
Sec. 387. No government office or agency having the duty of implementing the provisions of this chapter nor any official or employee thereof: - shall act as agent in procuring the insurance policy or surety bond provided for herein. The commission of an agent procuring the said policy or bond: - shall in NO case exceed 10% of the amount of the premiums therefor.
Sec. 388. Any land transportation operator or owner of motor vehicle or any other person violating any of the provisions of the preceding sections: - shall be punished by a o fine of NOT LESS than P 500 but NOT MORE than P 1,000 o and/or imprisonment for NOT MORE than 6 months. The violation of SEC 377 by a land transportation operator shall be: - a sufficient cause for the revocation of the certificate of public convenience issued by the Board of Transportation covering the vehicle concerned.
Sec. 389. Whenever any violation of the provisions of this chapter is committed by a corporation or association, or by a government office or entity: - the executive officer or officers of said corporation, association or government office or entity - who shall have knowingly permitted, OR failed to prevent, said violation shall be held liable as principals.
NOTES:
Meaning of Motor Vehicle (Section 3(a) of RA 4136, a motor vehicle shall mean) ! Any vehicle propelled by any power other than muscular power using the public highways ! BUT excepting: road rollers, trolley cars, street sweepers, sprinklers, lawn mowers, bull dozers, graders, forklifts, amphibian trucks, cranes not used in public highways, vehicles which run only on rails or tracks and tractors trailers and traction engines of all kinds used exclusively for agricultural purposes ! Trailers when propelled, intended to be propelled by attachment to a motor vehicle shall be classified as separate motor vehicle with no power rating Meaning of Motor Vehicle Liability Insurance ! A protection coverage that will answer for legal liability for losses and damages for bodily injuries or property damage that may be sustained by another arising from the use and operation of a motor vehicle by its owner ! It is obtained to a certain extent on compulsory basis by a motor vehicle owner Prerequisite Regarding the Operation and Registration of Motor Vehicles ! Sec 374 enjoins a land transportation operator (LTO) or a motor vehicle owner (MVO) NOT to operate his vehicle in public highways UNLESS there is in force a policy or guaranty in cash or surety bond to indemnify the death or bodily injury of the third party or passenger ! The LTO will register or renew the registration of a motor vehicle ONLY if there is such policy or guarantee. Spirit Behind or Need for Compulsory Third Party Liability Insurance ! To assure victims of motor vehicle accidents and or their dependents, especially when they are poor, immediate financial assistance of indemnity regardless of the financial capability of motor vehicle owners or operators ! The insurers liability immediately accrues UPON the occurrence of the injury or event upon which the liability depends ! It does NOT depend upon in the recovery of judgment by the insured party against the insured. ! The victim may directly sue the insurer (BUT ONLY to the extent provided by the third party liability insurance) LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 38 | P a t i n o , E r i c a
! PD No 1814: deleted property damage from compulsory coverage o insurance only covers death of or bodily injury involved in vehicular accidents o Own damage : Means that the insurer had assumed to reimburse the costs of repairing the damage to the insured vehicle ! coverage to the insured motor vehicle is not required by law. o The parties however, may agree upon a separate insurance to cover damage to property Effect of Insureds Violation of Policy Condition on Insurers Liability to Third-party Claim ! The insurers liability attaches during the effectivity of the policy in the absence of any showing that the same has been cancelled with proper notice to all parties ! The insurer may NOT raise as a defense that the owner of the motor vehicle has violated the contract to escape liability This would defeat the very purpose of the contract. Persons Subject to the CMVLI Requirement 1. Motor Vehicle Owner (MVO) the actual legal owner of the vehicle under whose the name the vehicle is registered 2. Land Transportation Operator (LTO) the owner of the motor vehicle being used for conveying passengers for compensation Substitutes for CMVLI Policy MVOs and LTOs may either: 1. Post a surety bond with the Insurance Commissioner who shall be made the obligee or creditor in the bond 2. Make a cash deposit with the Insurance Commissioner in the amount required as limits of indemnity ! After they have been proceeded against by the Commissioner such deposit should be replenished or surety bond restored by the MVO or LTO in the right amount w/in 60 days after impairment or expiry
Scope and Coverage Required ! For Owners of Private Motor Vehicles: Coverage must be comprehensive against third party liability for death or bodily injuries. ! For Operators of Land Transportation: Coverage must also be comprehensive against BOTH passenger and third party liabilities. (Insurer may insure other risks at his option) ! Sec 377 prescribes the minimum limits of indemnity of the comprehensive coverage o P12,000 for any one accident for all damages arising out of death or bodily injury (MINIMUM amount) o For Private cars: amount of the CMVLI depends upon the weight of the motor vehicle o Since that enumerated are only the minimum amounts the operator or owner may add other risks o Any excess: deemed to have been taken out voluntarily ! Comprehensive Motor Vehicle Insurance Policy: would cover o Death or bodily injury of a third party or passenger (mandatory under CMVLI) o Property damage to third parties o Own damage to or theft of the vehicle insured Duty of MVO or LTO contemplating cancellation of his cover 1. Give to the insurance or surety company concerned a written notice of his intention to cancel 2. Secure, before the insurance or bond ceases to be effective, another similar bond or insurance to replace that one cancelled 3. W/o making such replacement in no. 2, make a cash deposit and secure a certification from the Insurance Commissioner regarding the deposit made and filing such certificate with the LTO Effect of Cancellation of Cover ! Upon receipt of the notice of cancellation, the LTO shall order the confiscation of the plates of the vehicle concerned ! UNLESS it received any of the following: 1. Evidence or proof of a new CMVLI cover (policy, cash deposit or surety bond) 2. Signed duplicate of an endorsement of addendum issued by the insurer to show revival or continuance of the CMVLI 3. Certification issued by the Insurance Commissioner that a cash deposit has been made to him
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No-fault Indemnity Claim ! No fault connotes that the victim of a tort can recover his loss from his insurer w/o regard to his own contributory fault ! It will guarantee the compensation or indemnity ! Under this, the insurer may be held liable without the necessity of proving fault PROVIDED: 1. The claim is for death or injury to a third party or passenger 2. The total indemnity in respect to any one person does NOT exceed P5,000 3. Proofs required by law are submitted (police reports, death certificate, medical report) ! Claim Subject to Certain Conditions: The insurer shall pay w/o the necessity of proving fault or negligence o No-fault claim does NOT apply to property damage o IF the claim EXCEEDS 5k the finding of fault may be availed by the insurer as to the EXCESS ! Claim Against Insurer of Vehicle in which Victim is an Occupant: claim shall lie against the insurer in which the occupant is riding, mounting or dismounting from o Victim may claim pending the determination of who is responsible for the accident o Law makes it mandatory that the claim shall be made from the insurer of the vehicle o Occupant includes both passenger and 3 rd party ! Claim Against Insure of Vehicle Responsible for Accident: In any other case (if victim is not an occupant) the claim shall lie against the insurer of the directly offending vehicle.
Notice of claim within 6 months by insured from date of accident is an indispensable pre-requisite to sue under the insurance contract (Art 384) ! Any delay in reporting the loss must be promptly raised by the insurer Certificate of Cover ! The MVO or LTO procuring a CMVLI cover shall also be issued in addition to the policy, a certificate of cover ! It will serve as the substantiating documentation as proof of the insurance upon such motor vehicle
Limitations with Respect to CMVLI Cover Solicitation 1. No govt officer or agency having the duty of implementing the provisions of the insurance code on CMVLI shall act as agent in procuring the insurance policy/surety bond/cash deposit 2. No official or employee of such office shall similarly act as such agent 3. The commission of an agent shall in NO case EXCEED 10% of the amount of the premiums
Limitations as to the Use of Insured Vehicle
It does NOT cover: Master Private Vehicle Policy Master Commercial Vehicle Policy Master Land Transportation Operators Policy Master Motorcycle Policy Use for hauling and or carrying of logs, lumber, sand, gravel, bottled beverages, gasoline products and other inflammable materials
x
x
x
x Use for racing, pacemaking, reliability trial or speed testing or for any purpose in connection with the motor trace
x
x
x
x Use for the carriage of passengers or for hire or reward x x
x Use for any purpose in connection with the motor trade
x
x
Malus System Unser CMVLI ! The vehicle owner who suffered an accident resulting in a loss is required to pay a SURCHARGE upon renewal of his coverage in addition to the basic premium ! Equivalent to the product of the amount of the loss paid multiplied by the rate of premium for the vehicle LIFTED from the Book of De Leon and Rodriguez not plagiarized you fuckers! | Atty Villegas | 3B 2009-2010 40 | P a t i n o , E r i c a
! Surcharge shall no case be less than P30
FORMULA: Surcharge = Amount of loss paid X Rate of Premium for the Vehicle
Standard Authorized Driver Clause ! Motor vehicle policy contains a Standard Authorized Driver Clause that the person driving the insureds vehicle is an authorized driver ! The vehicle is limited to be used by 2 persons o The insured himself o Any person on his permission (required to have a drivers license) ! The main purpose of the Authorize Driver Clause is that a person other than the insured owner, who drives the vehicle on the insureds order or with his permission must be a duly licensed driver and has no disqualification to drive a vehicle ! The requirement DOES NOT APPLY: when the person driving is the insured himself ! If the driver is NOT an authorized driver (no license) on the part of the insured is a bar to recovery under the insurance contract Theft Clause ! When the car is unlawfully and wrongfully taken without the owners consent or knowledge such taking constitutes theft and it is the theft clause and not authorized driver clause
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