Presumption of knowledge of prior loss in marine insurance
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 in the usual mode of transmission and at the usual rate of communication (Sec. 111, Insurance
Code). The presumption, however, is rebuttable.
Concealment 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
1. National character of the insured;
2. The liability of the thing insured to capture and detention;
3. The liability to seizure from breach of foreign laws of trade;
4. The want of necessary documents; and
5. The use of false and simulated papers (Sec. 112,
Insurance Code).
NOTE: Ordinarily, the matters concealed need not be the
cause of the loss. In marine insurance, the
above-mentioned matters, although concealed, will not vitiate the contract except when they caused the loss.
Concealment in marine insurance v. Concealment in other property insurance
MARINE INSURANCE OTHER PROPERTY INSURANCE The information or the
belief or expectation of 3rd
persons in reference to a material fact is material
and must be communicated.
The information or belief of a 3rd party is not
material and need not be communicated, unless it proceeds from an agent of the insured whose
duty is to give information. The concealment of any
fact in relation to any of the matters stated in Sec.
112 does not vitiate the entire contract but merely
exonerates the insurer from a risk resulting from
the fact concealed.
Concealment of any material fact will vitiate
the entire contract, whether or not the loss
results from the risk concealed.
Effect of falsity of a representation by the insured 1. Promissory Representation - If a representation by the insured 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 (Sec. 113, Insurance Code).
2. Representation of Expectation - The eventual falsity of a representation as to expectation does not,
in the absence of fraud, avoid a contract of marine
insurance (Sec. 114, Insurance Code).
Implied warranties in marine insurance (SINAI) 1. Seaworthiness (Sec. 115 to 121, Insurance Code). 2. Non-engagement from Illegal venture.
3. Warranty of Neutrality – The ship will carry the requisite documents too show the nationality or neutrality of the ship or its cargo and will not carry any documents that cast reasonable suspicion on it if the nationality or neutrality of the ship or its cargo is expressly warranted (Sec.
122, Insurance Code).
4. Non-deviation from the Agreed voyage (Secs.
125, 126, 127, Insurance Code).
5. Presence of Insurable interest.
Seaworthiness
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
(Sec. 116, Insurance Code).
Scope of the seaworthiness of a vessel
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 (Sec. 118, Insurance
Compliance with the warranty of seaworthiness GR: It is complied with if the ship is seaworthy at the time of the commencement of the risk (Sec. 117,
Insurance Code).
XPNs:
1. In the case of time policy - the ship must be seaworthy at the commencement of every voyage it undertakes during that time (Sec. 117,
[a], Insurance Code).
2. In the case of cargo policy - each vessel upon which cargo is shipped or transshipped must be seaworthy at the commencement of each particular voyage (Sec. 117, [b], Insurance Code). 3. In the case of voyage policy contemplating a
voyage in different stages- the ship must be
seaworthy at the commencement of each portion of the voyage (Sec. 119, Insurance Code).
Admission of seaworthiness by the insurer Seaworthiness is admitted by the insurer when: 1. The warranty of seaworthiness is to be taken as
fulfilled; or
2. The risk of unseaworthiness is assumed by the insurer (ibid).
Effect of the admission of seaworthiness by the insurer
If the policy provides that the seaworthiness of the vessel as between insured and insurer is admitted, the issue of seaworthiness cannot be raised by the insurer without showing concealment or misrepresentation by the insured (Phil. American
General Insurance Co. v. CA, G.R. No. 116940, June 11, 1997).
Effect if unseaworthiness is unknown to the owner of the cargo
It is immaterial in ordinary marine insurance and may not be used by him as a defense in order to recover on the marine insurance policy. It becomes the obligation of a cargo owner to look for a reliable common carrier, which keeps its vessels in seaworthy conditions. The shipper may have no control over the vessel but he has control in the choice of the common carrier that will transport his goods (Roque
v. IAC, G.R. No. L- 66935, Nov. 11, 1985).
Effect of payment made by the insurer to the insured for the latter’s lost cargo in case the ship is unseaworthy
Payment made by the insurer to the insured for the latter’s lost cargo operates as waiver of the insurer’s right to enforce the implied warranty of seaworthiness. However, this waiver extends only in favor of the insured. There is no waiver in favor of the carrier that transported the cargo. The insurer can still claim payment against the carrier for breach of contract based on the insurer’s right of subrogation
(Sundiang, 2014 citing Delsan Transport Lines, Inc. v. CA, G.R. No. 127897, Nov. 15, 2001).
Effect when the ship becomes unseaworthy during the voyage
An unreasonable delay in repairing the defect exonerates the insurer on ship or shipowner's interest from liability from any loss arising therefrom (Sec. 120, Insurance Code).
Express warranty as to nationality and neutrality
1. As to nationality – imports that the vessel belongs to the subject of a particular country. 2. As to neutrality – imports that the property
insured is neutral in fact, that is it belongs to neutrals and that no act of insured or his agent shall be done which can legally compromise its neutrality.
Rule regarding voyage in marine insurance
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. 123,
Insurance Code).
NOTE: If the course of sailing is not fixed by mercantile
usage, the voyage insured 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. 124, Insurance Code).
Deviation
It is a departure from the course of the voyage insured, mentioned in Sec. 123 and Sec. 124, or an unreasonable delay in pursuing the voyage or the commencement of an entirely different voyage (Sec.
125, Insurance Code).
Instances when deviation is proper
1. When caused by circumstances over which neither the master nor the owner of the ship has any control;
2. When necessary to comply with a warranty, or to avoid a peril, whether or not peril is insured against;
3. When made in good faith, and upon reasonable grounds of belief in its necessity to avoid a peril; or
4. When made in good faith, for the purpose of saving human life or relieving another vessel in distress (Sec. 126, Insurance Code).
Improper deviation
Every deviation not specified under Sec. 126 is improper (Sec. 127, Insurance Code).
NOTE: In improper deviation, an insurer is not liable for any
loss happening to the thing insured subsequent to an improper deviation (Sec. 128, Insurance Code).
Kinds of losses
1. Total, which may be: a. Actual total loss b. Constructive total loss 2. Partial