POLICY – the contract of insurance CASH AND CARRY PROVISION immediate cause is, the insurer is still - Owner

e cause is, the insurer is still - Owner of the GOODS has

- no premium, no insurance liable. insurable interest with the goods
Cover notes – temporary insurance issued - except: themselves.
pending the issuance of insurance policy which 1. In life or in industrial life WARRANTIES - INSURABLE:
usually lasts for 60 days. It may be extended insurance – because there is a - These are promises written in the o Any peril during the
with the written approval of the commissioner grace period in which the insured insurance, wherein the insured voyage
if he determines that such extension is not has already been entitled to the and the insurer signed, and o Any peril for a certain
contrary to any provision of the insurance insurance without having paid appended the same in the policy. period
code. the premiums for the agreed - If there is breach, the insurer o Ay peril for a certain
period. may rescind the policy. voyage
(sec. 58) The mere transfer of a thing insured 2. In case of temporary receipt or - If there is insurer’s knowledge of - PERILS OF THE SHIP : ordinary
does not transfer the policy, but suspends it acknowledgment of premium by breach of contract by the wear and tear of the ship,
until the same person becomes the owner of the insurer (even if there is insured, and he did not take ordinary occurrences in the
both the policy and the thing insured. actually no payment yet) through action, and the insured still voyage
the principle of ESTOPPEL. received insurance money, the - PERILS OF THE SEA: unexpected
OPEN POLICY – a policy in which the value of However, the insured is not insurer is ESTOPPED from the and inevitable circumstances and
the thing insured is not agreed upon, but is left exempt from payment of the return of such money. casualties due to the violence of
to be ascertained in case of loss. proceeds of insurance. the sea (INCH MARIE CLAUSE)
(the value of the thing at the time of the loss) - if there is credit: for as long as FIRE INSURANCE
the insured paid within the - Proximate cause of loss should Implied warranty of sea worthiness – ship
VALUED POLICY – a policy which expresses on period stipulated, and the be fire is reasonably fit to perform service and
its face an agreement that the thing insured insured paid even after the loss, - May include fire caused by must be able to encounter the ordinary
shall be valued at a specific sum. the insurer is liable. natural disaster. perils of the voyage. It is not limited to the
(the value of the thing stated in the policy) - If the insurer willingly accepted - Property must be consumed by physical structure of the vessel, but must
the payment even after loss, the fire, or when the reason for loss be laden with the proper equipment,
RUNNING POLICY – a policy which contemplates insurer is lable. or damage is caused by trying to machinery, crew members, and food for
successive insurances, and which provides that 3. If the payment was given to the save the property (water passengers.
the object of the policy may be from time to agent of the insurer, the act of damages or theft), or when the
time defined by additional statements or the agent is the act of the wall of the house collapsed to Implied warranties of the ship:
indorsements. principal. The insurer is still another infrastructure because of 1. W. of seaworthiness
(insured shall make inventory of the properties liable. the fire… there is a right to claim 2. W. that the vessel will not
every now and then to the insurer) 4. The insurer is liable as long as from the insurer. deviate from the route
the check has sufficient funds. - If the proximate cause is 3. W. that the vessel will not
(sec 64) The commencement of an action excepted from the liabilities engage in illegal papers
under the insurance should not be less that Insurance by installment – If the insured stipulated in the policy, the 4. W. that the vessel has the proper
one year from the time when the cause of paid a part of the insurance, and the insurer is not liable for the loss documents
action accrues (refusal of the insurer to pay the property has been damaged or lost before (example: explosion)
insured), otherwise, the agreement as to the the completion of premium, the insurer - FRIENDLY FIRE: the fire is on that IN THE ABSENCE OF ANY STIPULATION,
time is void. should pay the insured, but the insured is place where it is supposed to ONLY THE PERILS OF THE SEA IS INSURED,
still liable to pay the proceeds of the burn. If the fire escapes from UNLESS “ALL-RISK POLICY” IS STIPULATED.
Grounds for RESCISSION of Policy: insurance. where it is supposed to burn, it
1. non-payment of premium CAN A POLICY BE TRANSFERRED? becomes HOSTILE fire. ALL-RISK POLICY – exempting clauses arte
2. conviction of a crime arising out of important; concealment will not vitiate the
acts increasing then hazard insured LIFE insurance – can always be transferred THE INSURERE IS STILL LIABLE EVEN IF contract except when such concealment is
against even without the consent of the insurer. THE IMMEDIATE CAUSE OF THE LOSS IS the cause of damage or loss.
3. discovery of fraud or material NOT THE PERIL INSURED, AS LONG AS THE
misrepresentation PROPERTY insurance – could only be PROXIMATE CAUSE IS THAT PERIL BAREBOAT or DEMISE charter
4. discovery of willful or reckless acts or transferred with the consent of the insurer. INSURED. - charterer: ship becomes common
omissions increasing the hazard - insurable interest must exist at carrier
insured against the time of execution and risk, MARINE INSURANCE - the real owner: becomes private
5. physical changes (material alteration) but may not exist in the mean - Covers all risks in the shipment carrier, tasked to observe
to the property insured which result in time; suspended until the or navigation of a vessel, diligence of a good father of a
the property becoming uninsurable insurable interest and the policy including the goods shipped, family
6. determination by the commissioner is vested in the same person. profits, and the ship itself.
that the continuation of the policy - CHARTERER (lessee) has VOYAGE OR TIME CHARTER-
would violate the code or would place PROXIMATE CAUSE – cause which was insurable interest with the AFREIGHTMENT
the insurer in violation of the code uninterrupted by any event, without freightage of the goods. - the owner of the vessel is the
7. Breach of warranty. which, the injury would not have occurred. - Owner of the VESSEL has common carrier (extraordinary
** As long as the activity does not change the insurable interest with the vessel diligence)
risk, the insurer is still liable. ** With FIRE INSURANCE – as ling as fire is itself and the goods - shipper is a private carrier
the proximate cause, whatever the
INSURABLE INTEREST IN MARINE INSURANCE: VEHICLE INSURANCE Authorized drivers clause – driver should
Shipper – cargo, expected profits be duly licensed or with permission, even
d. LIFE INSURANCE -
Charterer – the ship and the goods Comprehensive insurance for vehicles – all if the license is fake. within 60 days from
Ship-owner – the ship itself risk insurance - Expired license of the driver (not the filing of proof of death.
insured himself) is not authorized driver.
RESPONSIBILITY OF THE SHIPPER - should look No fault indemnity clause – right to claim DOUBLE INTEREST DOCTRINE – The insurer
for a seaworthy ship without proving fault or negligence; made Theft Clause – if there is theft clause and must pay immediately upon maturity,
on the vehicle within which the injured is the vehicle is unlawfully taken, insurer is otherwise, the insurer pays:
- INSURER should investigate first the
riding at the time of the accident; liable under the clause and authorized (12% interest per annum x 2) of the
seaworthiness of the ship before
indemnity not exceeding PhP 5,000; proof driver clause DOES NOT APPLY. Insured can principal + other damages at 6% per
paying the claimant.
for claim – medical cert, or death cert, or recover even if thief has no license. annum
CONCEALMENT IN MARINE INSURANCE police report of the accident.
OVER INSURANCE – same property insured WHEN DOES THE CAUSE OF ACTION
- opinion of 3rd persons are material
3 party suit against insurer – depends on for greater value; insured is entitled to ACCRUE?
and must be disclosed (example: Pag-
the policy (sometimes, the person at fault ratable return of premium proportioned to - upon final denial of the claim
asa report, Engineer of the ship
report on the machine of the ship) pays first, then the insurer pays the amount by which the aggregate sum - MR filed in the insurance
afterwards) insured exceeds the insurable value of the company does not affect the
- if due to concealment, there was loss
thing at risk. prescriptive period.
or damage, that us the only time that
the insurer may rescind the contract Compulsory 3rd party liability - the purpose
is to give financial assistance to victims of DOUBLE INSURANCE – 2 or more ** When the insurer pays, there is the right
- CANNOT RESCIND contract with the
motor vehicle accidents or their insurance, same property, not exceeding of subrogation. The insurer steps into the
following grounds:
dependents value of property shoes of the insured. Need not be
o National character of the
stipulated.
ship
o Falsified or simulated Compulsory motor vehicle liability RE-INSURANCE – taken by the original
insurance insurer to insure his liability ** Subrogation does not apply in:
documents
- contract of insurance against - LIFE insurance
o Illegal goods/contraband
liability for death or bodily SETTLEMENT OF CLAIMS: - or when the insurer released the
injuries of passengers or 3rd 1. Notice of loss given within wrong doer
GENERAL AVERAGE LOSS – damages and
parties arising from motor reasonable time: so that the - or when he pays for a risk which
expenses incurred for the salvation of the
vehicle accidents insurer will have ample time to is not covered by the policy
cargo or ship from a real or known risk 
investigate on the loss/ - or when he pays more than the
everybody benefits!
PROCESS UNDER COMPULSORY 3RD PARTY destruction/ death. value of the insurance.
PARTICULAR AVERAGE LOSS – damages and LIABILITY 2. Notice of claim to the insurer
expenses incurred not for the common benefit 1. File notice of claim within 6 should be given within 6 months
of all but only for particular or certain persons. months from date of accident. after notice of loss. Submission
Include cert. of physician. of evidence of loss.
CONSTRUCTIVE TOTAL LOSS 2. Prescriptive period- action should 3. Insurer should pay
– if the owner of the vessel would be filed in: a. NON-LIFE – 30 days
spend more than ¾ of the value of a. Insurance commission – after proof of loss is
the vessel to save it, or if the injury less than Php 100,000 received by the insurer,
reduced the value of the thing claim and the loss/ damage
insured for more than ¾. b. RTC – more that Php has been ascertained
– the owner should abandon everything 100,000 claim through agreement or
to the insurer, so the insurer would arbitration;
look for something to salvage from it. Within 1 year from denial of b. NON-LIFE – 90 days
The insurer will pay the value of the claim (with stipulation) or 10 after receipt of proof of
vessel. years (without stipulation) loss, and the
– Need to notify the insurer 3. If there is agreement, the insurer ascertainment had not
immediately, must be made within should make payment within 5 been made within 60
reasonable time after receipt of days of Compulsory 3rd party days after such receipt;
liability;
reliable information of the loss
4. If there is no agreement, insurer
c. LIFE INSURANCE –
immediately upon
HOW ABANDONMENT IS MADE: shall pay “no fault indemnity”
maturity of policy
1. notice (generally in writing) to the without prejudice to pursue claim
(except when payable
insurer further. The insurer has the right
in installments or as an
2. notice should be made explicitly of subrogation to sue for
annuity, they are
stating the cause of abandonment recovery against the vehicle at
payable as they
3. if oral notice is made, there should be fault.
become due);
a written notice within 7 days from
the oral notice
Title 6 the policy. Within sixty days after the will furnish the facts on which the
THE POLICY issue of the cover note, a policy shall be Sec. 60. An open policy is one in which the cancellation is based
issued in lieu thereof, including within its value of the thing insured is not agreed
Sec. 49. The written instrument in which a terms the identical insurance bound under upon, but is left to be ascertained in case Sec. 66. In case of insurance other than
contract of insurance is set forth, is called a the cover note and the premium therefor. of loss. life, unless the insurer at least forty-five
policy of insurance. Cover notes may be extended or renewed days in advance of the end of the policy
beyond such sixty days with the written Sec. 61. A valued policy is one which period mails or delivers to the named
Sec. 50. The policy shall be in printed form approval of the Commissioner if he expresses on its face an agreement that insured at the address shown in the policy
which may contain blank spaces; and any determines that such extension is not the thing insured shall be valued at a notice of its intention not to renew the
word, phrase, clause, mark, sign, symbol, contrary to and is not for the purpose of specific sum. policy or to condition its renewal upon
signature, number, or word necessary to violating any provisions of this Code. The reduction of limits or elimination of
complete the contract of insurance shall be Commissioner may promulgate rules and Sec. 62. A running policy is one which coverages, the named insured shall be
written on the blank spaces provided therein. regulations governing such extensions for contemplates successive insurances, and entitled to renew the policy upon payment
the purpose of preventing such violations which provides that the object of the of the premium due on the effective date
Any rider, clause, warranty or endorsement and may by such rules and regulations policy may be from time to time defined, of the renewal. Any policy written for a
purporting to be part of the contract of dispense with the requirement of written especially as to the subjects of insurance, term of less than one year shall be
insurance and which is pasted or attached to approval by him in the case of extension in by additional statements or indorsements. considered as if written for a term of one
said policy is not binding on the insured, unless compliance with such rules and year. Any policy written for a term longer
the descriptive title or name of the rider, regulations. Sec. 63. A condition, stipulation, or than one year or any policy with no fixed
clause, warranty or endorsement is also agreement in any policy of insurance, expiration date shall be considered as if
mentioned and written on the blank spaces Sec. 53. The insurance proceeds shall be limiting the time for commencing an written for successive policy periods or
provided in the policy. applied exclusively to the proper interest action thereunder to a period of less than terms of one year.
of the person in whose name or for whose one year from the time when the cause of
Unless applied for by the insured or owner, any benefit it is made unless otherwise action accrues, is void. Title 7
rider, clause, warranty or endorsement issued specified in the policy. WARRANTIES
after the original policy shall be countersigned Sec. 64. No policy of insurance other than
by the insured or owner, which Sec. 54. When an insurance contract is life shall be cancelled by the insurer Sec. 67. A warranty is either expressed or
countersignature shall be taken as his executed with an agent or trustee as the except upon prior notice thereof to the implied.
agreement to the contents of such rider, insured, the fact that his principal or insured, and no notice of cancellation shall Sec. 68. A warranty may relate to the past,
clause, warranty or endorsement. beneficiary is the real party in interest be effective unless it is based on the the present, the future, or to any or all of
may be indicated by describing the occurrence, after the effective date of the these.
Group insurance and group annuity policies, insured as agent or trustee, or by other policy, of one or more of the following
however, may be typewritten and need not be general words in the policy. Sec. 69. No particular form of words is
in printed form. (a) non-payment of premium; necessary to create a warranty.
Sec. 55. To render an insurance effected (b) conviction of a crime arising out of acts
Sec. 51. A policy of insurance must specify: by one partner or part-owner, applicable increasing the hazard insured against; Sec. 70. Without prejudice to section fifty-
to the interest of his co-partners or other one, every express warranty, made at or
(a) The parties between whom the contract is part-owners, it is necessary that the terms (c) discovery of fraud or material before the execution of a policy, must be
made; of the policy should be such as are misrepresentation; contained in the policy itself, or in another
(b) The amount to be insured except in the applicable to the joint or common interest. instrument signed by the insured and
cases of open or running policies; (d) discovery of willful or reckless acts or referred to in the policy as making a part
Sec. 56. When the description of the omissions increasing the hazard insured of it.
(c) The premium, or if the insurance is of a insured in a policy is so general that it may against;
character where the exact premium is only comprehend any person or any class of Sec. 71. A statement in a policy of matter
determinable upon the termination of the persons, only he who can show that it was (e) physical changes in the property relating to the person or thing insured, or
contract, a statement of the basis and rates intended to include him can claim the insured which result in the property to the risk, as a fact, is an express
upon which the final premium is to be benefit of the policy. becoming uninsurable; or warranty thereof.
determined;
Sec. 57. A policy may be so framed that it (f) a determination by the Commissioner Sec. 72. A statement in a policy which
(d) The property or life insured; will inure to the benefit of whomsoever, that the continuation of the policy would imparts that it is intended to do or not to
during the continuance of the risk, may violate or would place the insurer in do a thing which materially affects the
(e) The interest of the insured in property become the owner of the interest insured. violation of this Code. risk, is a warranty that such act or
insured, if he is not the absolute owner thereof; omission shall take place.
Sec. 58. The mere transfer of a thing Sec. 65. All notices of cancellation
(f) The risks insured against; and insured does not transfer the policy, but mentioned in the preceding section shall Sec. 73. When, before the time arrives for
suspends it until the same person be in writing, mailed or delivered to the the performance of a warranty relating to
(g) The period during which the insurance is to becomes the owner of both the policy and named insured at the address shown in the future, a loss insured against happens,
continue. the thing insured. the policy, and shall state (a) which of the or performance becomes unlawful at the
grounds set forth in section sixty-four is place of the contract, or impossible, the
Sec. 52. Cover notes may be issued to bind Sec. 59. A policy is either open, valued or relied upon and (b) that, upon written omission to fulfill the warranty does not
insurance temporarily pending the issuance of running. request of the named insured, the insurer avoid the policy.
 however short, the insured is not entitled
Sec. 74. The violation of a material warranty, or to return of premiums, so far as that
other material provision of a policy, on the part particular risk is concerned.
of either party thereto, entitles the other to
rescind. Sec. 81. A person insured is entitled to
return of the premium when the contract is
Sec. 75. A policy may declare that a violation of voidable, on account of fraud or
specified provisions thereof shall avoid it, misrepresentation of the insurer, or of his
otherwise the breach of an immaterial agent, or on account of facts, the
provision does not avoid the policy. existence of which the insured was
ignorant without his fault; or when by any
Sec. 76. A breach of warranty without fraud default of the insured other than actual
merely exonerates an insurer from the time fraud, the insurer never incurred any
that it occurs, or where it is broken in its liability under the policy.
inception, prevents the policy from attaching to
the risk. Sec. 82. In case of an over-insurance by
several insurers, the insured is entitled to
Title 8 a ratable return of the premium,
PREMIUM proportioned to the amount by which the
aggregate sum insured in all the policies
Sec. 77. An insurer is entitled to payment of exceeds the insurable value of the thing at
the premium as soon as the thing insured is risk.
exposed to the peril insured against.
Notwithstanding any agreement to the
contrary, no policy or contract of insurance
issued by an insurance company is valid and
binding unless and until the premium thereof
has been paid, except in the case of a life or an
industrial life policy whenever the grace period
provision applies.

Sec. 78. An acknowledgment in a policy or

contract of insurance or the receipt of premium
is conclusive evidence of its payment, so far as
to make the policy binding, notwithstanding
any stipulation therein that it shall not be
binding until the premium is actually paid.

Sec. 79. A person insured is entitled to a return

of premium, as follows:

(a) To the whole premium if no part of his

interest in the thing insured be exposed to any
of the perils insured against;
(b) Where the insurance is made for a definite
period of time and the insured surrenders his
policy, to such portion of the premium as
corresponds with the unexpired time, at a pro
rata rate, unless a short period rate has been
agreed upon and appears on the face of the
policy, after deducting from the whole premium
any claim for loss or damage under the policy
which has previously accrued; Provided, That
no holder of a life insurance policy may avail
himself of the privileges of this paragraph
without sufficient cause as otherwise provided
by law.

Sec. 80. If a peril insured against has existed,

and the insurer has been liable for any period,