VII. RISKS AND COVERAGES

Question 1

Sec. 3. Any […], whether past or future, which may […], or […] against him may be insured against, subject to the provisions of this Chapter.

Answer 1

Sec. 3. Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest, or create a liability against him may be insured against, subject to the provisions of this Chapter.

Question 2

What is a “specified risk” insurance policy?

Answer 2

In “specified risks” type of insurance contract, the policy will specify the risks the insurer has agreed to grant coverage for, and beyond this it may not be held liable.

Question 3

What is an “all risk” insurance policy?

Answer 3

An “all risk” insurance policy is that “policy which insures against all causes of conceivable loss or damage, except as otherwise excluded in the policy or due to fraud or intentional misconduct on the part of the insured.”

Question 4

What is the difference between and exception and an exclusion?

Answer 4

Exceptions or exclusions in a policy work to limit or restrict the operation of the general provisions in the contract. An exclusion in a policy is a means employed by the insurer to protect itself from an additional risk or hazard against which it does not wish to insure without the payment of an additional premium.

Exceptions on the other hand, as limitation on this policy, work to constitute as a defense which the insurer may urge to defeat a claim since it has not assumed that risk against such perils and hazards.

Question 5

IC. Sec. 86. Unless otherwise provided by the policy, an insurer is liable for a loss of which a peril insured against was the […], although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was […]

Answer 5

IC. Sec. 86. Unless otherwise provided by the policy, an insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.

Question 6

What is the definition of proximate cause?

Answer 6

That cause, which, in natural and continuous sequence, unbroken by new independent cause, produces the event, and without which that event would not have occured. [Vda. de Bataclan v. Medina]

Question 7

IC. Sec. 87. An insurer is liable where the thing insured is rescued from a peril insured against that would otherwise have caused a loss, if, in the course of such rescue, […], which permanently deprives the insured of its possession, in whole or in part; or where a loss is caused by […].

Answer 7

IC. Sec. 87. An insurer is liable where the thing insured is rescued from a peril insured against that would otherwise have caused a loss, if, in the course of such rescue, the thing exposed to a peril not insured against, which permanently deprives the insured of its possession, in whole or in part; or where a loss is caused by the efforts to rescue the thing insured from a peril insured against.

Question 8

IC. Sec. 89. An insurer is not liable for a loss caused by the willful act or through the connivance of the insured; but he is not exonerated by […].

Answer 8

IC. Sec. 89. An insurer is not liable for a loss caused by the willful act or through the connivance of the insured; but he is not exonerated by the negligence of the insured, or of the insurance agents or others.

Question 9

Life insurance is an insurance policy the proceeds of which are payable either upon (a) […]; (b) […]; or (c) on the […].

Answer 9

Life insurance is an insurance policy the proceeds of which are payable either upon (a) death of the person; (b) his surviving a specified period; or (c) on the continuance or cessation of life.

Question 10

Who are the parties involved in a life insurance?

Answer 10

The parties involved in a life insurance are:

1. the owner of the policy;
2. the cestui que vie;
3. the beneficiary.

Question 11

Kind of life insurance which refers to one wherein the benefits are payable upon the death of the person whose life is insured.

Answer 11

Whole life insurance.

Question 12

Kind of life insurance which provides for the payment of a specified amount if death occurs within the time period designated in the policy, usually for periods of one to five years.

Answer 12

Term life insurance.

Question 13

Generally understood to describe a policy that combines terms and whole life insurance in a single insurance policy. The objective is to provide a coverage in which the premiums paid by the insured during the first few years are substantially less than the cost of a whole life policy. During the remaining policy term, the premiums increase.

Answer 13

Modified life insurance.

Question 14

Type of life insurance where the policy owner is typically the employer or an entity such as a labor organization, and the policy covers the employees or members of the group.

Answer 14

Group life insurance.

Question 15

Refers to a life insurance which provides insurance coverage to industrial workers or people who are unable to afford insurance for bigger amounts. It is tailored to meet the needs of majority of its purchasers - the urban industrial class or blue collar workers - thus, the premiums are typically small and the proceeds are generally small too.

Answer 15

Industrial life insurance.

Question 16

Are insurers liable for suicide of the insured?

Answer 16

Yes, after two years of effectivity unless committed in a state of insanity, in which case insurer is liable regardless of the date.

Sec. 183. The insurer in a life insurance contract shall be liable in case of suicide only when it is committed after the policy has been in force for a period of two (2) years from the date of its issue or of its last reinstatement, unless the policy provides a shorter period. Provided, however, that suicide committed in the state of insanity shall be compensated regardless of the date of commission.

Question 17

What is the relationship between suicide and the exposure to needless peril?

Answer 17

They are in pari materia. Sun Life Insurance v. CA states “[S]uicide and willful exposure to needless periol are in pari materia because they both signify a disregard for one’s life. The only difference is in degree, as suicide imports a positive act of ending such life whereas the second ct indicates a reckless risking of it that is almost suicidal in intent.”

Question 18

Insurance “against loss by fire, lightning, windstorm, tornado, or earthquake and other allied risks when such risks are covered by extension to [the policies] or under separate policies.”

Answer 18

Fire insurance.

Question 19

Differentiate friendly fire from hostile fire.

Answer 19

Friendly fire is fire that burns in a place where it is intended to burn and ought to be. Conversely, hostile fire is fire which burns at a place where it is not intended to burn or ought not to be. Friendly fire may become hostile fire by escaping from the place where it ought to be to some place in which it ought not to be.

Question 20

What type of fire is covered by fire insurance?

Answer 20

Hostile fire.

Question 21

What is a contract of suretyship?

Answer 21

IC. Sec. 177. A contract of suretyship is an agreement whereby a party called the surety guarantees the performance by another party called the principal or obligor of an obligation or undertaking in favor of a third party called the obligee. It includes official recognizances, stipulations, bonds or undertakings issued by any company by virtue of and under the provisions of Act No. 536, as amended by Act No. 2206.

Question 22

What is a casualty insurance?

Answer 22

IC. Sec. 176. Casualty insurance is insurance covering loss or liability arising from accident or mishap, excluding certain types of loss which by law or custom are considered as falling exclusively within the scope of other types of insurance such as fire or marine. It includes, but is not limited to, employer’s liability insurance, motor vehicle liability insurance, plate glass insurance, burglary and theft insurance, personal accident and health insurance as written by non-life insurance companies, and other substantially similar kinds of insurance.

Question 23

This word means either an “accident” or an event that results from a “sudden, unexpected, or unusual cause.”

Answer 23

Casualty

Question 24

What is Compulsory Motor Vehicle Liability Insurance?

Answer 24

Compulsory Motor Vehicle Liability Insurance (third party liability or TPL) is a type of insurance that is primarily intended to provide compensation for the death or bodily injuries suffered by innocent third parties or passengers as a result of a negligent operation and use of motor vehicles.

Question 25

What is a contract of reinsurance?

Answer 25

A contract of reinsurance is one where one party agrees to indemnify another, either in whole or in part, against loss or liability which the latter may sustain or incur under a separate and original contract of insurance with a third party.

Question 26

Differentiate reinsurance from double insurance.

Answer 26

In double insurance, the insurer remains the insurer of the original insured while in reinsurance the insurer becomes the insured insofar as the reinsurer is concerned. In double insurance, the subject of the insurance is property while in reinsurance the subject of the contract is the original insurer’s risk.

Question 27

What does the term bancassurance mean?

Answer 27

Sec. 375. The term bancassurance shall mean the presentation and sale to bank customers by an insurance company of its insurance products within the premises of the head office of such bank, duly licensed by the Bangko Sentral ng Pilipinas, or any of its branches, under such rules and regulation which the Commissioner and the Bangko Sentral ng Pilipinas may promulgate. To engage in bancassurance arrangement, a bank is not required to have equity ownership of the insurance company. No insurance company shall enter into bancassurance arrangement unless it possesses all the requirements as may be prescribed by the Commissioner and the Bangko Sentral ng Pilipinas.