Sec.

167 As used in this Code, the term shall include insurance against loss by fire lightning windstorm tornado or earthquake and other allied risks, when such risk are covered by extension to fire insurance policies or under separate policies.

A contract of fire insurance is not affected by any act of the insured subsequent to the execution of the policy, which does not violate its provisions, even though it increases the risk and is the cause of a loss.

MEASURE OF INDEMNITY UNDER AN OPEN POLICY* Amount of actual loss sustained/ Replacement Cost

Sec. 60. An open policy is one in which the value of the thing insured is not agreed upon, but is left to be ascertained in case of loss.

A house was insured for P1,000,000.00, but the insurer introduced evidence to show that the property was really worth P800,000.00 at the time of the loss.
How much can the insured recover from the insurer?

A house was insured for P1,000,000.00, but the insured showed that the damage actually suffered is P1,200,000.00.
How much can the insured recover from the insurer?

MEASURE OF INDEMNITY UNDER A VALUED POLICY* (Same rule as in Marine Insurance) Valuation is conclusive between the parties

Sec. 61. A valued policy is one which expresses on its face an agreement that the thing insured shall be valued at a specified sum.

About ten (10) years ago, X constructed a house for which he spent P300,000.00 which he insured against fire for the same amount. He renewed the insurance for the same amount every year. This year, when the house was already worth P600,000.00 (if it is rebuilt) on account of inflationary prices, 1/5 of the house was destroyed by accidental fire. How much can X recover from the insurer?

Insured is not a co insurer under fire policies in the absence of the stipulation.

Thus, if the property valued at P1,000,000.00 is insured for P500,000.00 and is damaged by fire to the extent of one half of its value, the insurer will be compelled to pay the entire P500,000.00 necessary to repair the loss.

To avoid such a situation, fire insurers insert two types of clause in their policy:

1. Co-Insurance Clause
2. Option to Rebuild Clause

The is a clause requiring the insured to maintain insurance to an amount equal to the value or specified percentage of the value of the insured property under penalty of becoming co-insurer to the extent of such deficiency.

If a house is valued at P500,000.00 is insured only for P300,000.00 and is damaged to the extent of P300,000.00, how much can the insured claim?

It is the option given to the insurer to reinstate or replace the property damaged or destroyed or any part thereof, instead of paying the amount of the loss or damage.

Consent of or notice to, insurer not required

Limitation: Transfer of a policy of a fire insurance to any person or company who acts as an agent or otherwise represents the insurer. Any pledge, etc. shall be void and of no effect insofar as it may affect other creditors of the insured.