insurance as when the sum total of the amounts of the policies issued does not
exceed the insurable interest of the insured.
When the amount of the insurance is beyond
the value of the insured’s insurable
interest.
Two or more insurers.
There may be only one insurer, with whom the insured takes insurance beyond the value of his
insurable interest.
Rules when the insured in a policy other than life is over insured by double insurance
1. The insured, unless the policy otherwise provides, may claim payment from the insurers
in such order as he may select, up to the amount which the insurers are severally liable under their respective contracts;
2. Where the policy under which the insured claims is a valued policy, any sum received by him under any other policy shall be deducted from the value of the policy without regard to the actual value of the subject matter insured;
3. Where the policy under which the insured claims is an unvalued policy, any sum received by him under any policy shall be deducted against the full insurable value, for any sum received by him under any policy;
4. Where the insured receives any sum in excess of the valuation in the case of valued policies, or of the insurable value in the case of unvalued policies, he must hold such sum in trust for the insurers, according to their right of contribution among themselves.
5. Each insurer and the other insurers, to contribute ratably to the loss in proportion to the amount for which he is liable under his contract (Sec. 96,
ibid).
Additional or other insurance clause
A clause in the policy that provides that the policy shall be void if the insured procures additional insurance without the consent of the insurer (Pioneer
Insurance and Surety Corp vs. Yap, 61 SCRA 426).
Q: Wyeth Philippines, Inc. (Wyeth) procured a marine policy from Philippines First Insurance Co., Inc. (Philippines First) to secure its interest over its own products while the same were being transported or shipped in the Philippines. Thereafter, Wyeth executed its annual contract of carriage with Reputable Forwarder Services, Inc. (Reputable). Under the contract, Reputable undertook to answer for all risks with respect to the goods and shall be liable to Wyeth, for the loss, destruction, or damage of the goods/products due to any and all causes whatsoever, including theft, robbery, flood, storm, earthquakes, lightning, and other force majeure while the goods/products are in transit and until actual delivery to the customers, salesmen, and dealers. The contract also required Reputable to secure an insurance policy on Wyeth’s goods. Thus, Reputable signed a Special Risk Insurance Policy (SR Policy) with Malayan Insurance Co., Inc., (Malayan) for the amount of P1,000,000.00. Is there is double insurance (as prohibited in Section 5 of the SR policy between Malayan and Reputable) so as to preclude Philippine First from claiming indemnity from Malayan?
A: No. The interest of Wyeth over the property subject matter of both insurance contracts is different and distinct from that of Reputable’s. The policy issued by Philippines First was in consideration of the legal and/or equitable interest of Wyeth over its own goods. On the other hand, what was issued by Malayan to Reputable was over the latter’s insurable interest over the safety of the goods, which may become the basis of the latter’s liability in case of loss or damage to the property and falls within the contemplation of Section 15 of the Insurance Code. Therefore, even though the two concerned insurance policies were issued over the same goods and cover the same risk, there arises no double insurance since they were issued to two different persons/entities having distinct insurable interests. Necessarily, over insurance by double insurance cannot likewise exist (Malayan Insurance Co., Inc., v. Philippine First
Insurance Co., Inc. And Reputable Forwarder Services, Inc., G.R. No. 184300, July 11, 2012).
An insurer may provide that the insured may not procure additional insurance
The insurer may insert an “other insurance clause” which will prohibit double insurance. The rationale is to prevent the danger that the insured will over insure his property and thus avert the possibility of perpetration of fraud (ibid). It is lawful and specifically allowed under Sec. 75 of the Insurance Code which provides that “a policy may declare that a violation or a specified provision thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid it.”
Absence of notice of existence of other insurance constitutes fraud
When the insurance policy specifically requires that notice should be given by the insured of the existence of other insurance policies upon the same property, the total absence of such notice nullifies the policy. Such failure to give notice of the existence of other insurance on the same property when required to do so constitutes deception and it could be inferred that had the insurer known that there were many other insurance policies on the same property, it could have hesitated or plainly desisted from entering into such contract (Perez, 2006).
Cancellation of policy of insurance by reason of over insurance
Sec. 64 of the Insurance Code of 2013 provides that upon discovery of other insurance coverage that makes the total insurance in excess of the value of the property insured, the insurer may cancel such
policy of insurance; provided there is prior notice and such circumstance occurred after the effective date of the policy.
Waiver of violation
When the insurer, with the knowledge of the existence of other insurances, which the insurer deemed a violation of the contract, preferred to continue the policy, its action amounted to a waiver of annulment of the contract (Perez, 2006 citing
Gonzales Lao v. Yek Tong Lin Fire & Marine Ins. Co., 55 Phil. 386).
MULTIPLE OR SEVERAL INTERESTS ON SAME