Pointers(3rd exam) Flashcards
What are the implied warranties in marine insurance?
The following warranties are implied in marine insurance:
a. That the ship is seaworthy to make the voyage and/or to take in certain cargoes;
b. That the ship shall not deviate from the voyage insured;
c. That the ship shall carry the necessary documents to show nationality or neutrality and that it will not carry document which will cast reasonable suspicion thereon;
d. That the ship shall not carry contraband, especially if it is making voyage through belligerent waters.
When is a ship seaworthy?
A ship is seaworthy when it is reasonably fit to perform the service and to encounter the ordinary perils of the voyage contemplated by the parties to the policy. A warranty of seaworthiness extends not only to the condition of the structure of the ship itself, but requires that it be properly laden, and provided with a competent master, a sufficient number of competent officers and seamen, and the requisite appurtenances and equipment, such as ballasts, cables and anchors, cordage and sails, food, water, fuel and lights, and other necessary or proper stores and implements for the voyage.
When the ship becomes unseaworthy during the voyage to which an insurance relates, an unreasonable delay in repairing the defect exonerates the insurer on ship or shipowner’s interest from liability from any loss arising therefrom.
What are the kinds of loss in marine insurance?
A loss may be either total or partial. Every loss which is not total is partial. A total loss may be either actual or constructive.
When may the insured recover for an actual total loss under a marine insurance?
The insured may recover for an actual total loss under a marine insurance in the following cases:
If the actual total loss is caused by:
“(a) Total destruction of the thing insured;
“(b) The irretrievable loss of the thing by sinking, or by being broken up;
“(c) Any damage to the thing which renders it valueless to the owner for the purpose for which he held it; or
(d) Any other event which effectively deprives the owner of the possession, at the port of destination, of the thing insured.
True or False. Upon an actual total loss, a person insured is entitled to payment without notice of abandonment.
True
What is abandonment?
Abandonment, in marine insurance, is the act of the insured by which, after a constructive total loss, he declares the relinquishment to the insurer of his interest in the thing insured.
What are the requisites of a valid abandonment?
The requisites of a valid abandonment are as follows:
1. It must be neither partial nor conditional.
- It must be made within a reasonable time after receipt of reliable information of the loss, but where the information is of a doubtful character, the insured is entitled to a reasonable time to make inquiry.
- It is made by giving notice thereof to the insurer, which may be done orally, or in writing: Provided, That if the notice be done orally, a written notice of such abandonment
shall be submitted within seven (7) days from such oral notice.
An agent who procured the insurance can also give notice of abandonment for his principal
- A notice of abandonment must be explicit, and must specify the particular cause of the abandonment, but need state only enough to show that there is probable cause therefor, and need not be accompanied with proof
of interest or of loss.” - It can be sustained only upon the cause specified in the notice thereof.
- It must be accepted by the insurer.
The acceptance of an abandonment may be either express or implied from the conduct of the insurer. The mere silence of the insurer for an unreasonable length of time after notice shall be construed as an acceptance.”3 - An abandonment once made and accepted is irrevocable, unless the ground upon which it was made proves to be unfounded.”
If an insurer refuses to accept a valid abandonment, he is liable as upon an actual total loss, deducting from the amount any proceeds of the thing insured which may have come to the hands of the insured.
What is the effect of abandonment?
An abandonment which is made after a constructive total loss entitles the insured to recover for a total loss.
On the part of the insurer, an abandonment is equivalent to a transfer by the insured of his interest to the insurer, with all the chances of recovery and indemnity. If a marine insurer pays for a loss as if it were an actual total loss, he is entitled to whatever may remain of the thing insured, or its proceeds or salvage, as if there had been a formal abandonment.
What are the requisites to be considered as a constructive total loss?
A person insured by a contract of marine insurance may abandon the thing insured, or any particular portion thereof separately valued by the policy, or otherwise separately insured, and recover for a total loss thereof, when the cause of the loss is a peril insured against:
“(a) If more than three-fourths (3/4) thereof in value is actually lost, or would have to be expended to recover it from the peril;
“(b) If it is injured to such an extent as to reduce its value more than three-fourths (3/4);
“(c) If the thing insured is a ship, and the contemplated voyage cannot be lawfully performed without incurring either an expense to the insured of more than three-fourths (3/4) the value of the thing abandoned or a risk which a prudent man would not take under the circumstances; or
“(d) If the thing insured, being cargo or freightage, and the voyage cannot be performed, nor another ship procured by the master, within a reasonable time and with reasonable diligence, to forward the cargo, without incurring the like expense or risk mentioned in the preceding subparagraph. But freightage cannot in any case be abandoned unless the ship is also abandoned.
When is there constructive loss?
Yes, in marine insurance, a constructive total loss occurs under any of the conditions: a) If more than three-fourths thereof in value is actually lost or would have to be expended to recover it from the peril; or b) If it is injured to such an extent as to reduce its value more than three-fourths.
What is the effect of the omission of the insured to abandon?
He cannot recover for a total loss but he may nevertheless recover his actual loss.
When should the warranty of seaworthiness be complied?
An implied warranty of seaworthiness is complied with if the ship be seaworthy at the time of the commencement of the risk, except in the following cases:
(a) When the insurance is made for a specified length of time, the implied warranty is not complied with unless the ship be seaworthy at the commencement of every voyage it undertakes during that time;
(b) When the insurance is upon the cargo which, by the terms of the policy, description of the voyage, or established custom of the trade, is to be transhipped at an intermediate port, the implied warranty is not complied with unless each vessel upon which the cargo is shipped, or transhipped, be seaworthy at the commencement of each particular voyage.
In general, the warranty of seaworthiness must be complied with at the beginning of the voyage. This means that the ship must be seaworthy—capable of safely completing the journey—when it leaves the port for the insured voyage. If the vessel is not seaworthy at the start of the trip, it could void the insurance coverage.
when i a deviation proper?
**Section 126. A deviation is proper:
(a) When caused by circumstances over which neither the master nor the owner of the ship has any control;
(b) When necessary to comply with a warranty, or to avoid a peril, whether or not the peril is insured against;
(c) When made in good faith, and upon reasonable grounds of belief in its necessity to avoid a peril; or
(d) When made in good faith, for the purpose of **saving human life **or relieving another vessel in distress.
What is the extended coverage of fire insurance?
Section 169. As used in this Code, the term fire insurance shall include insurance against loss by fire, lightning, windstorm, tornado or earthquake and other allied risks, when such risks are covered by extension to fire insurance policies or under separate policies.
Distinguish friendly fire from hostile fire.
Friendly fire is one which is deliberate and remains within the limits for it. Hostile fire is a fire that goes out of control and beyond the limits intended for it. To be covered by fire insurance, the fire must be hostile.
Friendly fire is fire that burns in a place where it is supposed to burn. Hostile fire is fire that escapes and burns in a place where it is not supposed to be. It may also refer to fire that started out as a friendly fire escapes from original place or becomes too strong as it becomes out of control.
What are the kinds of life insurance?
The principal types of life insurance are as follows:
a. Term Insurance — this is the simplest form of life insurance. It pays only if the death occurs the term of the policy.
b. Whole life or permanent insurance - it pays a death benefit whenever the insured dies.
c. Annuity - a contract with the insurer where individuals agree to pay the company a certain amount of money, either in a lump sum or through installments, which entitles them to receive payment annually from the insurer, but which obligation ends upon death of the
annuitant.
d. Endowment is a life insurance that doubles as an investment or a savings account. It pays a lump sum to the insured after a specified number of years but if he dies before the agreed period, the beneficiary gets the proceeds of the policy.
e. Industrial life — The form of life insurance under which premiums are payable weekly or monthly or oftener, if the face amount of the insurance is not more than 500 times that of the current statutory daily wage in manila and if the words “industrial policy are printed on the policy.”