Insurance Flashcards
What is a Contract of Insurance?
An agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.
Requisites of Subrogation.
1) The insurance involved is property insurance
2) The insured received indemnity from the insurer for the loss
3) There is a loss arising from the risk insured against
What may be insured against?
1) Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest or creates a liability against him;
2) A past event, provided the loss is unknown to both parties and they expressly stipulated that prior loss is insured by the policy; and
3) Contingent liability
Requisites for recovery upon the insurance
1) Interest is covered by the policy
2) There must be a loss
3) The insured must have insurable interest in the subject matter
4) The loss must be proximately caused by the peril insured against
Explain the Authorized Driver clause.
The clause limits the use of the insured vehicle to two persons only, namely: 1) the insured himself; or 2) any person on his permission.
Enumerate those who cannot be named beneficiaries.
Any person who is forbidden from receiving any donation under Art. 739 cannot be named beneficiary of a LIFE INSURANCE POLICY by the person who cannot make any donation to him, thus:
1) Those who are guilty of adultery or concubinage with the insured at the time of designation;
2) Those who were found guilty with the insured of the same criminal offense, committed in consideration of the designation; and
3) A public officer or his wife, descendants and ascendants designated by reason of his office.
State the rules on the right to change the beneficiary.
GR: The insured shall have the right to change the beneficiary he designated in the policy
XPN: if the right to change the beneficary is expressly waived in the policy, then the insured has no power to make such change without the consent of the beneficiary.
XPN to XPN:
1) the innocent spouse may revoke the designation of the other spouse who acted in bad faith as beneficiary in any insurance policy, if such designation be stipulated as irrevocable
2) after the finality of the decree of legal separation, the innocent spouse may revoke the donations made by him or her in favor of the offending spouse, as well as the designation of the latter as beneficiary
What are the effects of an irrevocable designation in favor of a beneficiary?
1) The beneficiary acquires a vested right in the policy. Such beneficiary, to whom a policy of insurance upon life or health has passed by transfer, will or succession, may recover upon it whatever the insured might have recovered
2) If the insured refuses to pay the premiums, the designated irrevocable beneficiary may continue the policy by paying premiums that are due to protect his interest
3) A new beneficiary cannot be added tot he irrevocably designated beneficiary for this would, in effect, reduce the latter’s vested rights
What is a Mortgage Redemption Insurance?
A life insurance pursuant to a group mortgage redemption scheme by the lender of the money on the life of the mortgagor, who mortgages the house constructed to the extent of the mortgage indebtedness, such that if the mortgagor dies, the proceeds of his life insurance will be used to pay for his indebtedness and the deceased’s heirs will thereby be relieved from paying the unpaid balance.
What are the matters that need not be disclosed?
Neither party to a contract of insurance is bound to communicate information of the following matters, except in answer to inquiries of the other:
1) Those which prove or tend to prove the existence of a risk excluded by a warranty and which are not otherwise material;
2) Those which the other knows;
3) Those of which the other waives communication;
4) Those which, in the exercise of ordinary care, the other ought to know and of which, the former has no reason to suppose him ignorant;
5) Those which relate to a risk excepted from the policy and whic are not otherwise material; and
6) Information of the nature or amount of the interest of one insured except as prescribed by Section 51.
What are the matters that need not be disclosed even in answer to inquires?
1) Neither party is bound to communicate, even upon inquiry, information of his own judgment;
2) The parties are bound to know all the general causes which are open to his inquiry, equally with the other, and all general usages of trade.
What are the matters that must be disclosed even in the absence of inquiry?
1) Those which the other has no means of ascertaining;
2) Those material to the contract; and
3) Those as to which the party with the duty to communicate makes no warranty.
What are the kinds of Warranties?
1) Express - an agreement expressed in a policy whereby the insured stipulates that certain facts relating tot he risk are or shall be true, or certain acts relating to the same subject have been or shall be done.
2) Implied - it is deemed included in the contract although not expressly mentioned.
3) Affirmative - one which asserts the existence of a fact or condition at the time it is made. The warranty is continuing if it is one that must be satisfied during the entire coverage of the insurance.
4) Promissory - one where the insured stipulates that certain facts or conditions pertaining to the risk shall exist or that certain things with reference thereto shall be done or omitted.
What are the grounds of rescission?
1) Breach of material warranty
2) False representation
3) Breach of a condition subsequent
4) Alteration of the thing insured
5) Concealment
What is an Incontestability Clause?
The defenses available to the insurer may only be availed during the first two years of a life insurance policy, provided that after a policy of insurance made payable on the death of the insured shall have been in force during the lifetime of the insured for a period of two years from the date of its issue or its last reinstatement, the insurer cannot prove that the policy is void ab initio or it is rescindable by the reason of fraudulent concealment or misrepresentation of the insured or his agent.
