POLICY 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 (1) year from the time when the cause of action accrues, is void. Q: When can an insured file an action? A: when the cause of action accrues. Q: When cause of action accrues? A: At the time of the final rejection of the insurer. Note: Essential element of cause of action: -legal right -correlated obligation of the defendant -violation of such right Q: May the parties stipulate as to when the cause of action accrue in a contract of insurance? A: Yes, provided that it is not less than 1 year. Q: May the parties stipulate that the cause of action may accrue after 15 years? 10years? A: Yes. Q: within 6 months? A: no. contrary to sec. 63 Q: What if there is no provision as to when the insured must file a case? A: 10 years because the contract of insurance is a written contract under the Civil Code. Q: When can an insured file a claim A: AFTER THE LOSS. (Dont be confused with filing an action against the insurer)

SEC. 64 No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following: (a) Nonpayment of premium; (b) Conviction of a crime arising out of acts increasing the hazard insured against; (c) Discovery of fraud or material misrepresentation; (d) Discovery of willful or reckless acts or omissions increasing the hazard insured against; (e) Physical changes in the property insured which result in the property becoming uninsurable; (f) Discovery of other insurance coverage that makes the total insurance in excess of the value of the property insured; or (g) A determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code. SEC. 65 All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to the named insured at the address shown in the policy, or to his broker provided the broker is authorized in writing by the policy owner to receive the notice of cancellation on his behalf, and shall state: (a) Which of the grounds set forth in Section 64 is relied upon; and (b) That, upon written request of the named insured, the insurer will furnish the facts on which the cancellation is based.

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CANCELATION the right to rescind, abandon, or cancel a contract of insurance.

SEC. 66 In case of insurance other than life, unless the insurer at least forty-five (45) days in advance of the end of the policy period mails or delivers to the named insured at the address shown in the policy notice of its intention not to renew the policy or to condition its renewal upon reduction of limits or elimination of coverages, the named insured shall be entitled to renew the policy upon payment of the premium due on the effective date of the renewal. Any policy written for a term of less than one (1) year shall be considered as if written for a term of one (1) year. Any policy written for a term longer than one (1) year or any policy with no fixed expiration date shall be considered as if written for successive policy periods or terms of one (1) year. Q: May the contract of insurance be renewed? A: Yes. Q: What if the contract of insurance has no provision for its renewal? A: a new contract of insurance is made upon payment of premium Q: What if there is a provision for the renewal in the contract? A: It is deemed to be an Extension of the old contract. Q: If there is a provision for renewal, may the insurer still refuse to renew the contract? A: yes, provided refusal is made at least 45 days in advance of the end of the policy period. Note: A notice of its intention not to renew policy or to condition its renewal upon reduction of limits or elimination of coverages is mailed or delivered to the insured. Q: If the duration of the contract is for 6 months, when can the notice be delivered?

Requisites: (POWG) 1. Prior notice of cancellation to the insured 2. based on the occurence, after the effective date of the policy 3. It must be in writing, mailed or delivered to the named insured. 4. grounds Grounds: (NCFW-PDA) 1. Non-payment of premium; 2. Conviction of a crime arising out of acts increasing the hazard insured against; 3. Discovery of fraud or material misrepresentation; 4. Discovery of willful or reckless acts or omissions increasing the hazard insured against; 5. Physical changes in the property insured which result in the property becoming uninsurable; 6. Discovery of other insurance coverage that makes the total insurance in excess of the value of the property insured; or 7. A determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code. Q: What is the importance of notice? A: To prevent the cancellation of the policy and to give the other party the opportunity to negotiate.

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A: at least 45 days in advance before 1 year expiration, it is considered as if written for a term of 1 year Q: what if the duration of the contract is not stipulated? A: considered as if written for successive policy period or terms of 1 year. Q: contract is 10 years A: successive/yearly renewal

Example: the house is used for residential purpose The house will be used for residential purposes a promissory warranty What if there is a rider? Rider is considered as part of the insurance itself. Q: What is the warranty is presumed? A: affirmative SEC. 68 A warranty may relate to the past, the present, the future, or to any or all of these. Q: Time to which warranty refers? Past insured warrants was used as residential house Present insured warrants is used as residential house Future - insured warrants will be used as residential house SEC. 69

WARRANTIES SEC. 67 A warranty is either expressed or implied. WARRANTY -A statement or promise by the insured set forth in the policy itself or incorporated in it by proper reference.

KINDS OF WARRATY 1. Express An agreement expressed in a policy whereby the insured stipulates that certain facts relating to the 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 Example: In marine insurance seaworthiness 3. Affirmative is one which asserts that existence of a fact or condition at the time it is made 4. Promissory is one where the insured stipulates that certain facts or conditions pertaining to risk shall exist or that certain things with reference thereto shall be done or omitted. MCBC notes (atty. Soleng) | finals INSURANCE LAW

No particular form of words is necessary to create a warranty. Q: Is there any form of words necessary to create a warranty? A: No. Q: In case of doubt, how is it construed? A: a statement is construed as a representation.

WARRANTY vs. REPRESENTATION WARRANTY Part of the contract Written on the policy, actually or by reference Presumed material Must be strictly complied with Falsity or non-fulfilment operates as a breach of contract REPRESENTATION Mere collateral inducement May be written in the policy or may be oral Must be proved to be material Requires only substantial truth and compliance Falsity renders the policy void on the ground of fraud.

Note: Excludes a rider. A rider attached to a policy is a part the contract. A rider need not be signed by the insured nor referred to in the policy as making a part of it. Cannot be considered as another instrument as used in Sec. 70. SIR: even if the rider is not signed by the insured, it provides certain warranties.

SEC. 71 A statement in a policy, of a matter relating to the person or thing insured, or to the risk, as fact, is an express warranty thereof. SEC. 72

EXAMPLE: I am not inflicted with any serious disease Representation because it is held to be merely a statement of opinion. I warrant that I am not afflicted with any serious disease Warranty because such statement is warranted to be true in every respect. Note: Sir: it is a matter of simple play of words that such statement becomes a warranty

A statement in a policy, which imparts that it is intended to do or not to do a thing which materially affects the risk, is a warranty that such act or omission shall take place. SEC. 73 When, before the time arrives for the performance of a warranty relating to the future, a loss insured against happens, or performance becomes unlawful at the place of the contract, or impossible, the omission to fulfill the warranty does not avoid the policy. Q: Breach of Warranty, will it avoid the policy? A: GR: A violation of a warranty avoids a contract of insurance Exceptions: (LUI) 1. When loss occurs before time for performance 2. When performance becomes unlawful 3. When the performance becomes impossible

SEC. 70 Without prejudice to Section 51, every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy as making a part of it. Q: Where is express warranty provided? A: 1. In the policy itself OR 4 2. In any other instrument signed by the insured and referred to in the policy

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WAIVER an intentional relinquishment of a known right. ESTOPPEL the insurer is precluded because of some action or inaction on its part.

Q: Is fraud essential? A: No. Effect of warranty is breached with fraud 1. Without Fraud The policy is avoided only from the time of breach and the insured is entitled to the: (a) return of premium paid at a pro rata rate from the time of breach after the inception of the contract; (b)to all premiums if it is broken during the inception of the contract 2. With Fraud -The policy is avoided ab initio -insured is not entitled to the return of the premium CONDITION is an event signifying in its broadest sense either an occurrence or a non-occurrence that alters previously existing legal relations of the parties to the contract. CONDITION PRECEDENT the happening of some event or performance before the contract shall be binding on the parties CONDITION SUBSEQUENT pertains not to the attachment of the risk and the inception of the policy, but to the contract of insurance after the risk has attached and during the existence thereof.

SEC. 74 The violation of a material warranty, or other material provision of a policy, on the part of either party thereto, entitles the other to rescind.

Q: May the insured rescind the insurance contract the warranty? A: YES. (sec. 74) either party Q: May the insurer rescind? A: YES. SEC. 75 A policy may declare that a violation of specified provisions thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid the policy. Q: May immaterial provision can avoid policy? A: No. Breach of any provision which is not material will NOT avoid the policy Exception: -express stipulation that violation of a particular provision (although immaterial) shall avoid it.

SEC. 76 5 A breach of warranty without fraud merely exonerates an insurer from the time that it occurs, or where it is broken in its inception, prevents the policy from attaching to the risk.

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WARRANTY vs. CONDITION CONDITION precedent WARRANTY Limitation to the Does not have that attachment of the risk effect Non-performance of Does not suspend or which, although in form defeat the operation of executed by the parties the contract and delivered, does not spring into life The occurrence of breach temporarily renders the entire contract voidable

PREMIUM vs. ASSESMENT PREMIUM ASSESSMENT levied and paid to meet anticipated losses collected to actual losses meet

After the first payment Legally enforceable once levied, unless otherwise agreed. -not enforceable against the insured All payments are contributions from all members of the insuring organization to make good the losses of individual members

PREMIUM SEC. 77 An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies, or whenever under the broker and agency agreements with duly licensed intermediaries, a ninety (90)-day credit extension is given. No credit extension to a duly licensed intermediary should exceed ninety (90) days from date of issuance of the policy. PREMIUM the agreed price for assuming and carrying the risk that is, the consideration paid an insurer for undertaking to indemnify the insured against a specified peril.
Note: contract is entire/ indivisible (not severable or divisible) where only 1 premium is paid for several things not separately valued or separately insured, making for only 1 cause or consideration.

GR: payment of premium ordinarily not a debt or obligation Exception: (1) In fire, casualty and marine insurance the premium becomes a debt as soon as the risk attaches In suretyship as soon as the contract or bond is perfected and delivered to the obligor. Note: non-payment of the balance of the premium does not cancel the contract of insurance (2) In life insurance premium becomes a debt only when in the case of the first premium

ASSESMENT is the sum specifically levied by mutual insurance companies or associations, upon a fixed and definite plan, to pay losses and expenses

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