Insurance Ch. 7 - Risks and Coverages - Coggle Diagram
Insurance Ch. 7 - Risks and Coverages
A. In general : Risk and Causation
1. Insurable Risks (IC Sec. 3)
2. Specified Risks & All-risks Policies
Specified Risk Policy
- Covers losses caused by a designated peril.
- any perils designated by the parties to not be covered by the policy
Burden of Proof
- Insured MUST show that the cause of the loss was a covered peril in order to recover under the policy
4. Causes mentioned in the Code
5. Meaning of proximate cause
- that cause which in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury and without which the result would not have occurred (Vda. De bataclan v. Medina)
Cause in Insurance
- To determine what happened to the subject matter of the insurance and how it happened.
Cause in Torts
- to determine who caused the injury
6. Rescue from covered peril (Sec. 87)
7. Loss due to negligence (Sec. 89)
Q. When Can Insured Recover on the Policy?
Loss Due to Covered Peril -
where the proximate cause of the loss is a covered peril (IC 86)
Loss due to Rescue
- When the thing insured is rescued from a covered peril (IC 87)
- here, the insurer liable even if the thing insured is rescued from a covered peril and in the course of such rescue, the thing is exposed to a peril not insured which permanently deprives the insured of its possession or, where a loss is caused by such efforts to rescue the thing insured against a covered peril
- Covers loss due to uncovered peril. Sufficient that there was exposure to the covered peril and loss occurred as an incident to the rescue from covered peril.
1 more item...
When Insurer Not Liable
Not Proximate Cause
- where the covered peril was only a remote cause of the loss.(IC 86)
- where even if loss was due to a covered peril, if it is especially excepted then no recovery.(IC 88)
Acts of the Insured
- If loss due to willful act or through connivance of the insured, no claim on the policy(IC 89)
- Insurer still liable for the negligence of the insured.
1 more item...
- that cause which some independent force merely took advantage of to accomplish something which is not the natural effect thereof
- that occurs immediately prior to the happening of the loss. Chiefly concerned with proximity in time.
All Risk Policy
- Covers all losses of an accidental cause.
Burden of Proof
- Insurer is presumed liable upon the happening of the loss. Burden of proof on insurer to show that not liable.
Definition of Insurable Risk
- “SEC. 3. Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest, or create a liability against him, may be insured against.
- Element of uncertainty is key. It follows that any loss caused by ordinary affairs or deliberate acts of the insured do not fall under the insurance contract coverage.
Coverage of Liability Under Insurance Contract
- Unless otherwise provided by the policy, an insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.
- Chance or exposure to loss or damage.
- cause of the loss or damage.
- Insurer only liable for the covered peril. This also means that insurer may exempt/exclude peril from the coverage of the policy.
B. Life Insurance
1. Death or Survival
3. Accidental Death
4. Group Life Insurance
(IC 50 & 234)
5. Industrial Life Insurance
6. Mutual life Insurance Companies
- Mutual life insurance is one where the member-policyholders constitute both the insurer and the insured. All members contribute through a system of premiums or assessments, to the creation of a fund from which all losses and liabilities are paid. (Republic v. Sunlife Assurance)
- life insurance under which the premiums are payable either monthly or oftener, if the face amount of insurance provided in any policy is not more than five hundred times that of the current statutory minimum daily wage in the City of Manila, and if the words industrial policy are printed upon the policy as part of the descriptive matter.
- Designed for workers or low-income individuals. Only distinguished from normal life insurance by lower premium amount but frequent payment.
- A single insurance contract that provides for the coverage of many individuals. Original and most common form is life insurance for employees. (Pineda v. CA)
Employer considered as an agent of the insurer in performing the duties of the administration of the policy. Any omission/failure to perform on the part of the employer is considered as omission on the part of the insurer.
General Rule -
Death due to accident is a valid ground for claims of insurance.
Death due to Act of Another Person
- murder/homicide, etc. considered as an accident on the part of the insured. Thus, insurer still liable. (Dela Cruz v. CA)
- that which happens without intent or design and is unusual and unforeseen.
- Gross negligence exonerates the insured from liability. (Sun Insurance v. CA)
- must amount to willful exposure to needless peril
Non-Accidental Death -
If death intentionally inflicted by a third party is excluded by the policy
- no claims may be made arising from suicide - this is because no claims may be made where cause of loss was due to connivance or willful act of the insured. (IC 89)
- (a) when suicide is committed after the policy has been in force for a period of (2) years; (b) When suicide is committed in a state of insanity (IC 183)
- Life insurance is insurance on human lives and insurance appertaining thereto or connected therewith.
“Every contract or undertaking for the payment of annuities including contracts for the payment of lump sums under a retirement program where a life insurance company manages or acts as a trustee for such retirement program shall be considered a life insurance contract for purposes of this Code.
- a contract where one party insures a persona against loss by the death of another.
(1) Death of a Person
(2) Upon surviving a specified period
Annuities and Endowments
- considered as life insurance under the insurance Code.
- Where a person agrees to pay an insurance company a certain amount of money so that at a future date, the person will be entitled to receive a series of payments until they die
Endowment (Lump Sum) -
Where a person invests or et asides a certain amount over a period of time, with the promise that he will receive a lump sum at a future date.
- Non-life insurance deals with uncertain risks. Whereas life insurance deals with a certain risk with an unknown period.
C. Fire Insurance
1. Coverage (Sec. 169)
2. Hostile and Friendly Fire
3. Increase of Risk and Moral Hazard Clauses
4. Measure of Indemnity
Determination of Liability
- dependent on what is provided in the policy.
- expense is equivalent to the cost that the insured would suffer to replace the thing lost or injured in the condition in which it was at the time of the injury.
- based on the valuation fixed on the policy. Valuation may be done by an independent appraiser
Rule of Thumb
- liability cannot exceed the actual cost for replacement/repair. Taking into consideration relevant factors such as depreciation.
- Promise to indemnify the insured is premised on certain conditions surrounding the subject matter of the policy. (IC 170 and 171)
- General Rule - if the alteration made by the insured increases the risk and is without the consent of the insurer, then no recovery can be made on the policy.
- uncontrolled,extends beyond the confines of its usual boundaries
- contained, in its proper receptacle (stove, candle, etc.)
Liability of Insurer
- only when the damage is caused by a hostile fire. Any damage caused while fire is friendly cannot be grounds for insurance claims.
- a hostile fire may be caused either by natural circumstances or negligence. If by negligence, subject to IC 89
- fire insurance shall include insurance against loss by fire, lightning, windstorm, tornado or earthquake and other allied risks,
when such risks are covered by extension to fire insurance policies or under separate policies.
- Generally, a fire insurance policy cannot be transferred without the consent of the insurer. Transferee must also have insurable interest.
- Cannot be transferred without the consent of the insurer, and any transferee must have an insurable interest in the thing insured.
- May be transferred even without insurer's consent.
- No transfer may be made to an agent or representative of the insurer.
D. Casualty & Liability Insurance
1. Definition and Extent of Liability
2. Premium Payment
- No suretyship contract is valid and binding until premiums have been paid
- when the obligee/creditor has accepted the bond.
- An agreement whereby the surety guarantees the performance by the principal/obligor of an obligation or undertaking in favor of the obligee. Includes official recognizance, stipulations bonds or undertakings issued by a company.
- Suretyship only an insurance contract if it is made by a surety who is doing an insurance business.
- Different from a regular insurance contract. Instead, creates a solidary liability on the part of the surety with the principal for the fulfillment of the obligation.
- As an accessory contract, role of the surety arises only upon the debtors default. It also follows that the surety may not intervene in the principal creditor-debtor relationship by reason of the surety agreement. (Intra-Strata v. Republic)
F. Motor Vehicle Insurance
1. Compulsory Motor Vehicle Insurance
2. No-Fault Clause
- claim for death or injury can be made for a specific amount (P15k) without the need for proving negligence or fault of any kind
- allows injured persons to claim immediately, pending determination of liability for the injuries.
- law requires that all motor vehicles secure a motor vehicle liability insurance as a prerequisite for registration.
- To provide compensation for the death or bodily injuries suffered by innocent third parties or passengers due to motor vehicle negligence. Regardless of the financial capacity of the owners of the vehicles. (Shafer v. Judge of RTC of Olongapo
Direct Liability of the Insurer
- No need for recovery of judgment against the injured party for a claim on the insurance to be made.
1 more item...
I. Pre-Need Plans
- While governed by other law, within jurisdiction of the insurance commissioner. (RA 9829)
1 more item...
- Contract for performance of future services or, for the delivery of benefits or payments of monetary considerations at the time of actual need or agreed date. e.g. Life, Pension, Educational Plans, etc.
1 more item...
- Aimed at low income persons.
- does not exceed 7.5% of the current daily minimum wage rate for nonagricultural workers in Metro Manila
1 more item...
- Insurance whereby an insurer procures a third person to insure him against loss or liability due to an original insurance. Basically, insurance on insurance.
- Because insurance companies have a retention limit. This is maximum amount that they can pay out to an individual claim. Reinsurance covers amount not covered.
2 more items...
- insurance covering loss or liability arising from accident, excluding those kinds that are already covered by other forms of insurance. (IC 176)
- includes, but not limited to employer's liability insurance, motor vehicle, plate glass, theft, personal accident and health insurance, ec.
Classifications of Casualty Insurance -
(a) Those affecting the person/property insured
- Affects insured directly such as theft, etc. Insured suffers the loss.
(b) Those that may give rise to a liability on the part of the insured
- Damage or loss suffered by a third person to whom the insured may be liable e.g. workmen's compensation insurance.
- all kinds of loss caused by accident not covered by other forms of insurance.
- same definition as before.