I. LIABILITY FOR LOSS
II. REQUISITES FOR RECOVERY FROM INSURANCE
III. NOTICE AND PROOF OF LOSS IV. CLAIMS SETTLEMENT V. PRESCRIPTION OF ACTION VI. TIME OF PAYMENT
VII. SUBROGATION
VIII. INSURANCE COMMISSION
I. Liability for Loss
(Asked in 96, 05, 07) Loss for which insureris liable
Loss for which insurer is not liable Loss the proximate
cause of which is the peril insured against (Sec. 84);
Loss by insured’s willful act;
Loss the immediate cause of which is the peril insured against except where proximate cause is an excepted peril;
Loss due to connivance of the insured (Sec. 87);
and Loss through negligence of insured except where there was gross negligence amounting to willful acts; and
Loss where the
excepted peril is the proximate cause.
Loss caused by efforts to rescue the thing from peril insured against;
If during the course of rescue, the thing is exposed to a peril not insured against, which permanently deprives the insured of its possession, in whole or in part (Sec.
85).
II. Requisites for Recovery from Insurance
1. The insured must have insurable interest in the subject matter;
2. That interest is covered by the policy;
3. There must be a loss; and
4. The loss must be proximately caused by the peril insured against.
Proximate Cause Remote Cause An event that sets all
other events in motion without any intervening or independent case, without which the injury or loss would not have occurred.
An event preceding another in a causal chain, but separated from it by other events
III. Notice and proof of Loss
A. Notice of Loss - The formal notice given the insurer by the insured or claimant under a policy of the occurrence of the loss insured against.
Purpose: To apprise the insurance company so that it may make proper investigation and take such action as may be necessary to protect its interest.
It is necessary as the insurer cannot be liable to pay a claim unless he receives notice of that claim.
Under Sec. 88 insurer is exonerated if notice of loss is not given to the insurer by the insured or by the person entitled to the benefit without unnecessary delay.
However, it has been held that formal notice of loss is not necessary if insurer has actual notice of loss already.
In fire insurance In other types of insurance
Required Not required
Failure to give notice will defeat the right of the insured to recover.
Failure to give notice will not exonerate the insurer, unless there is a stipulation in the policy requiring the insured to do so.
B. Proof of Loss - The formal evidence given the insurance company by the insured or claimant under a policy of the occurrence of the loss, the particulars and the data necessary to enable the company to determine its liability and the amount.
Is not tantamount to proof or evidence under the law on evidence.
Proof of loss is intended to:
Give the insurer information by which he may determine the extent of his liability.
Afford him a means of detecting any fraud that may have been practiced upon him.
IV. Claims Settlement
A. No insurance company doing business in the Philippines shall refuse, without just cause, to pay or settle claims arising under coverages provided by its policies, nor shall any such company engage in unfair claim settlement practices. (Sec. 241)
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B. Unfair Claims Settlement
Sec. 241 (1) provides instances of unfair claims settlement done by an insurance company:
1. Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverages at issue;
2. Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;
3. Failing to adopt and implement reasonable standards for the prompt
investigation of claims arising under its policies;
4. Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear;
5. Compelling policyholders to institute suits to recover amounts due under its polices by offering without justifiable reason substantially less than the amounts ultimately recovered in suites brought by them.
CLAIMS LIFE INSURANCE NON-LIFE INSURANCE
Maturity
1. Upon death of the person insured;
2. Upon his surviving a specific period
3. Otherwise contingently on the continuance or cessation of life (Sec. 180)
Upon happening of event insured against
Event must occur within the period specified in policy, otherwise insurer has no liability
Delivery of Proceeds
GENERAL RULE:
Immediately upon maturity of policy.
EXCEPTION:
If payable in INSTALLMENTS or as an ANNUITY, when such instalments or annuities become due
IF MATURITY IS UPON DEATH:
Within 60 days after presentation of claim and filing of proof of death of insured.
Within 30 days after
(1) Proof of loss is received by insurer; and
(2) Ascertainment of loss or damage is made either by agreement between the insured and insurer or by arbitration
If ascertainment not made within 60 days after such receipt by insurer of proof of loss, loss or damage shall be paid within 90 days after such receipt.
Effect of Refusal or Failure to pay claim within time prescribed:
In case of litigation, it is the duty of the Commissioner or the Court to determine WON
claim has been
unreasonably denied of withheld.
Failure to pay any such claim within the time prescribed shall be considered prima facie evidence of unreasonable delay in payment.
Entitles beneficiary to collect interest on the proceeds of policy for the duration of the delay at rate of twice ceiling prescribed by the monetary board (unless refusal to pay is based on ground that claim in fraudulent)
In case damages awarded, this includes attorney’s fees and other expenses incurred due to delay (plus the interest)
Entitles beneficiary to collect interest on the proceeds of policy for the duration of the delay at rate of twice ceiling prescribed by the monetary board (unless refusal to pay is based on ground that claim in fraudulent)
In case damages awarded, this includes attorney’s fees and other expenses incurred due to delay (plus the interest)
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V. Prescription of Action (asked in 96)
Sec. 63. A condition, stipulation, or agreement in any policy of insurance, limiting the time for commencing an action there under to a period of less than one year from the time when the cause of action accrues, is void.
Rules:
1. In the absence of an express stipulation in the policy, it being based on a written contract, the action prescribes in 10 years.
2. However, the parties may validly agree on a shorter period provided it is not less than one year from the time the cause of action accrues. In motor vehicle insurance, action prescribes in one year.
3. The cause of action accrues from the rejection of the claim of the insured and not from the time of loss.
The period for filing claim is not merely a procedural requirement.
It is essential for the prompt settlement of claims as it demands for suits to be brought while the evidence as to the origin and cause of the loss or destruction has not yet disappeared.
It is a condition precedent to the insurer’s liability or a resolutory cause in case the action is not filed by the insured within the stipulated period.
The Insurance Commissioner has the power to adjudicate disputes relating to an insurance company’s liability to an insured under a policy.
A complaint or claim filed with such official is considered an “action” or “suit”
the filing of which would have the effect of tolling the suspending the running of the prescriptive period.
Art. 1144. The following action must be brought within ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law (3) Upon a judgment. (n)
VI. Time of Payment
LIFE POLICIES NON-LIFE POLICIES Maturing upon the
expiration of the term – The proceeds are immediately payable to the insured, unless they are made payable in installments or as annuity, in which case, the installments or annuities shall be paid as they become due
The proceeds shall be paid within 30 days after the receipt by the insurer of proof of loss, and ascertainment of the loss or damage by agreement of the parties or by arbitration but not later than 90 days from such receipt of proof of loss
whether or not
ascertainment is had or made
Maturing at the death of the insured, occurring prior to the expiration of the term stipulated – The proceeds are payable to the beneficiaries within 60 days after presentation and filing of proof of death
VII. Subrogation
Normal incident of indemnity insurance as a legal effect of payment; insurer steps into the shoes of insured
Note: There is only subrogation in property insurance.
Rules:
1. NO need of a formal assignment or an express stipulation in the policy. It is a legal effect of payment.
2. The insurer can only recover from the third person what the insured could have recovered. Thus, there can be no recovery if the insurer voluntarily paid even if the loss is not covered by the policy.
3. The insured can no longer recover from the offended party what was paid to him by the insurer but he can recover any deficiency, that is, if his damages are more than what was paid. The deficiency is not covered by the right of subrogation.
4. The insurer must present the policy as evidence to determine the extent of its coverage (Wallen Phil. Shipping vs.
Prudential Guarantee, 2003).
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Cases Where There is No Right of Subrogation
1. Where the insured by his own act releases the wrongdoer or third party liable for the loss or damage;
2. Where the insurer pays the insured the value of the loss without notifying the carrier who has in good faith settled the insured’s claim for loss;
3. Where the insurer pays the insured for a loss or risk not covered by the policy (Pan Malayan Insurance Company v. CA, 1997).
4. In life insurance
5. For recovery of loss in excess of insurance coverage (DE LEON).
Manila Mahogany vs. CA (1987): By the act of Manila Mahogany issuing a release claim to SMC, the right of Zenith against SMC is nullified since the insurer can be subrogated to only such rights as the insured may have, should the insured, after receiving payment from the insurer, release the wrongdoer who causes the loss, the insurer loses his rights against him. But in such a case the insurer will be entitled to recover from the insured whatever it has paid, unless it was made with the consent of the insurer.
VIII. Insurance Commission
Jurisdiction of Insurance Commission (Sec.
416)
Includes the following as long as any SINGLE CLAIM, excluding interests, costs and attorney’s fees, does NOT EXCEED 100,000.00:
1. Claims and complaints involving liability of insurer under any kind of policy or contract 2. Suretyship
3. Reinsurance
4. Mutual Benefit membership certificates
Circumstances when the Commissioner May Revoke or Suspend the License of an Insurer 1. If insurance contract is in unsound condition
(Sec. 247).
2. If it has failed to comply with the provisions of law or regulations obligatory upon it (Sec.
247).
3. Its conditions or methods of business is such as to render its proceedings hazardous to the public or to its policy holders (Sec.
247).
4. That its paid up capital stock, or its available cash assets, or its security deposits, as the case may be, is impaired or deficient (Sec.
247).
5. That the margin of solvency required of each company is deficient (Sec. 247).
6. That the insurer engages in unfair settlement practices (Sec. 241)
end of Insurance Law -NOTE:
The Insurance Commission has concurrent jurisdiction with the regular courts to hear and decide claims for which an insurer may be answerable.
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