Insurance Flashcards
(32 cards)
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.
What are the kinds of insurance policies?
1) Open - one in which the value of the thing insured is not agreed upon and the amount of the insurance merely represents the insurer’s maximum liability. The value of such thing insured shall be ascertained at the time of the loss.
2) Valued - one which expresses on its face an agreement that the thing insured shall be valued at a specified sum.
3) Running - one which contemplates successive insurances and which provides that the object of the policy may be from time to time defined, especially as to the subjects of insurance, by additional statements or endorsements.
What is a rider?
It is an attachment to an insurance policy that modifies the conditions of the policy expanding or restricting its benefits or excluding certain conditions from the coverage.
What are the requisites for a valid rider?
1) No rider, clause, warranty or endorsement shall be attached to, printed or stamped upon such policy, certificate or contract UNLESS the form of such application, rider, clause, warranty or endorsement has been approved by the Commissioner;
2) That such is attached to the policy;
3) If not applied for by the insured or the owner, the rider, clause, warranty or endorsement shall be countersigned by the insured; and
4) The descriptive title or name of the rider, clause, warranty or endorsement is mentioned and written on the blank spaces provided in the original printed policy form.
What is a binding receipt?
It is a mere acknowledgment on behalf of the company that its branch office had received from the applicant the insurance premium and had accepted the application subject to processing by the head office.
What is a Cover Note?
It is a concise and temporary written contract issued by the insurer through its duly authorized agent embodying the principal terms of an expectedpolicy of insurance.
What are the requisites of Double Insurance?
1) two or more insurers insuring separately
2) same insured person
3) same risk or peril insured against
4) same interest insured
5) same subject matter
What is an Additional or Other Insurance Clause?
A condition in the policy requiring the insured to inform the insurer of any other insurance coverage of the property insured. It is lawful and specifically allowed under Sec. 75 which provides that, “a policy may declare that a violation of a specified provision thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid it.”
Define Reinsurance.
A contract by which the insurer procures a third person to insure him against loss or liability by reason of an original insurance.
Time for payment of claims in life policies.
1) Maturing upon the expiration of the term:
GR: immediately payable to the insured
XPN: if the proceeds are payable in installments or annuities, it shall be paid as they become due
2) Maturing at the death of the insured, occuring prior to the expiration of the term stipulated
The proceeds are payable to the beneficiaries within 60 days after:
a) presentation of the claim; and
b) filing of the proof of death
