Concept
Insurance covering loss or liability arising from accident or mishap, excluding certain types of loss which by law or custom are considered as falling exclusively within the scope of other types of insurance such as fire or marine.
Classifications:
1. Insurance against specified perils which may affect the person and/or property of the insured (Accident or health insurance) Ex: personal accident, robbery/theft insurance
2. Insurance against specified perils which may give rise to liability on the part of the insured for claims for injuries to or damage to the property of others (Third party liability insurance)
Insurable interest is based on the interest of the insured in the safety of persons, and their property, who may maintain an action against him in case of their injury or destruction, respectively.
Ex: workmen’s compensation, motor vehicle liability
In a third party liability (TPL) insurance contract, the insurer assumes the obligation by paying the injured third party to whom the insured is liable. Prior payment by the insured to the third person is not necessary in order that the obligation may arise. The moment the insured becomes liable to third persons, the insured acquires an interest in the insurance contract which may
be garnished like any other credit (Perla Compania de Seguro, Inc. v. Ramolete, 205 SCRA 487)
Aside from compulsory motor vehicle liability insurance, the Insurance Code contains no other provisions applicable to casualty insurance. Therefore, such casualty insurance are governed by the general provisions applicable to all types of insurance, and outside of such statutory provisions, the rights and obligations of the parties must be determined by their contract, taking into consideration its purpose and always in accordance with the general principles of insurance law.
In burglary, robbery and theft insurance, the opportunity to defraud the insurer – the moral hazard – is so great that insurers have found it necessary to fill up the policies with many restrictions designed to reduce the hazard. Persons frequently excluded are those in the insured’s service and employment. The purpose of the exception is to guard against liability should theft be committed by one having unrestricted access to the property (Fortune Insurance v. CA, 244 SCRA 208)
Liability insurable
1. liability for quasi-delict or non-fulfillment of contract 2. liability for criminal negligence
Liability of the insurer if insured was committing a felony:
Liabilities arising out of acts of negligence, which are also criminal, are also insurable on the ground that such acts are accidental. But liability consequences of deliberate criminal acts are not insurable.
“Intentional” vs. “Accidental” as used in insurance policies:
1. Intentional - implies the exercise of the reasoning faculties, consciousness and volition. Where a provision of the policy excludes intentional injury, it is the intention of the person inflicting the injury that is controlling. If the injuries suffered by the insured clearly resulted from the intentional act of the third person, the insurer is relieved from liability as stipulated (Biagtan v. the Insular Life Assurance Co. Ltd., 44 SCRA 58, 1972)
2. Accidental - that which happens by chance or fortuitously, without intention or design, which is unexpected, unusual and unforeseen.
Right of a third party injured to sue the insurer of party at fault Depends on whether the contract of insurance is intended to benefit third persons also or only the insured
Test applied:
1. Indemnity against third party liability – a third party injured can directly sue the insurer
Purpose: to protect injured persons against the insolvency of the insured who causes such injury
2. Indemnity against actual loss or payment – A third party has no cause of action against the insurer. The third person’s recourse is limited to the insured alone (Bonifacio Bros. v. Mora, 20 SCRA 261)
If the policy provides for “reimbursement after actual payment by the insured,” or for the indemnity against loss, a third person has no cause of action against the insurer. (Bonifacio Bros. v. Mora 20 SCRA 261)
The insurer is not solidarily liable with the insured. The insurer’s liability is based on contract; that of the insured is based on torts. Furthermore, the insurer’s liability is limited by the amount of the insurance coverage. (Pan Malayan Insurance Corp. v. CA, 184 SCRA 54)
While in a solidary obligation the creditor may enforce the entire obligation against one of the solidary debtors, in an insurance contract, the insurer undertakes to indemnify the insured against loss, damage or liability arising from unknown or contingent event. To make the insurer solidarily liable with the latter’s entire obligation beyond the sum limited in the insurance contract would result in “evident breach of the concept of solidary obligations.” (Vda. De Maglana vs Consolacion, 212 SCRA 268) NO ACTION CLAUSE
a requirement in a policy of liability which provides that suit and final judgment be first obtained against the insured’ that only thereafter can
the person injured recover on the policy (Guingon v. del Monte, 20 SCRA 1043)
A “no action clause” must yield to the provisions of the Rules of Court regarding multiplicity of suits. (Shafer v. RTC, 167 SCRA 386)
D. SURETYSHIP
Definition An agreement whereby a surety guarantees the performance by the principal or obligor of an obligation or undertaking in favor of an obligee. (Sec. 175) It is essentially a credit accommodation.
It is considered an insurance contract if it is executed by the surety as a vocation, and not incidentally.
When the contract is primarily draws up by one party, the benefit of doubt goes to the other party (insured/oblige) in case of ambiguity following the rule in contracts of adhesion. Suretyship, especially in fidelity bonding, is thus treated like non – life insurance in some respects.
Kinds:
a. Fidelity Bond – contract of insurance against loss from misconduct b. Fidelity Guaranty Insurance – a contract whereby one, for a consideration, agrees to indemnify the assured against loss arising from want of integrity, fidelity or honesty of employees or other persons holding positions of trust
Nature of liability of surety 1. Solidary;
2. Limited to the amount of the bond;
3. It is determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obligor and the obligee. (Sec. 176)
SURETYSHIP PROPERTY
INSURANCE