ateneo insurance

7/29/2019 Ateneo Insurance

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INSURANCE CODE

I. Concept of Insurance

1. One of these statements is not correct:

a. A contract of insurance is an agreement whereby oneundertakes for a consideration to indemnify anotheragainst loss, damage or liability arising from an unknownor contingent event.

b. A protection and indemnity club composed of shipownersis engaged in the insurance business.

c. A health maintenance organization whose primarybusiness is to provide health care services to its membersis engaged in the insurance business.

d. An association of jeepney drivers which collects monthlydues from its members and in return answers for the costof repair of their jeepneys and medical expenses of theirpassengers in case the drivers are involved in a vehicularaccident is engaged in the insurance business.

2. One of these statements is not an element of the contract ofinsurance:

a. A person possesses an interest susceptible of pecuniaryestimation.

b. That person is subject to a risk of loss through destructionof that interest by the happening of designated perils.

c. The risk of loss is assumed by another person.d. The other person is assuming the risk as a benefit to

induce more customers to patronize its services.

3. One of these statements is not a characteristic of the contract ofinsurance:

a. It is an aleatory contract.b. It is a contract of indemnity.c. It is a real contract.d. It is a conditional contract.

II. Perfection of Contract


a. There is no contract of insurance unless the insured andthe insurer have assented to it.

b. If the application for an insurance policy has not beenaccepted or rejected, delay in acting upon it does not makethe proposal a contract.

c. If the applicant for life insurance was mailed to the insurerand the acceptance was received by mail, the contract isperfected even if he died before receipt of the acceptance.

d. If the policy provides that the insured must be alive and ingood health at the time of its delivery, if the applicant died


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or was not in good health at the time of its delivery, theinsurer is not liable.

III. Insurable Interest

A. Life Insurance

1. The insured has no insurable interest on the life and health of:

a. Himself, his spouse, and his children.b. Any person on whom he depends wholly or in part for

education or support or in whom he has a pecuniaryinterest.

c. Any person under a legal obligation to him for payment ofmoney, or respecting property or services, whose death orillness might delay or prevent the performance.

d. A person to whom he is engaged to be married .

B. Property Insurance

1. There is no insurable interest in property in one of these:

a. An existing interest.b. An inchoate interest founded on an existing interest.c. An expectancy, coupled with an existing interest in that out

of which the expectancy arise.d. A contingent or expectant interest not founded on an actual

right to the property nor upon a valid contract for it.

2. One of these has no insurable interest in property:

a. An owner.b. A seller of undelivered property.c. A buyer of property pursuant to a fictitious deed of sale .d. An unpaid seller with a lien on the property sold.


a. An unpaid contractor with a lien on the building heconstructed.

b. A lessor of the property being leased.c. A lessee of the property being leased.d. A lessor over the stocks in trade of his lessee .


a. A donor who reserved to himself the right to use theproperty donated.

b. An heir and the properties of his living predecessor-in-

interest.c. A possessor allowed by the owner to use the property

insured.d. A stockholder and the properties of the corporation.

5. One of these has no insurable interest:

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a. A carrier and property delivered to it to be transported.b. A depository and property entrusted to its custody.c. An importer of smuggled goods .d. A garment factory and the textiles delivered to it to be

sewed into finished dresses.

C. Continuation of Insurable Interest


a. The insurable interest in the life or health of the insuredmust exist when the insurance contract takes effect butneed not exist thereafter or at the time of loss.

b. If a spouse insured the life of the other spouse, asubsequent court decision annulling or declaring theirmarriage void will not destroy the insurable interest of the

spouse in the life of the other spouse.c. In case a court decision annulled a marriage or declared it

void or decreed the legal separation of the spouses, theinnocent spouse may revoke the designation of the otherspouse who acted in bad faith as beneficiary in anyinsurance policy, except if the designation is irrevocable.

d. An insurable interest in property insurance must exist whenthe insurance contract takes effect and when the loss occursbut need not exist in the meantime.


a. If the building covered by a fire insurance policy was burnedafter the owner had sold it, he cannot recover for its loss.

b. If a building covered by a fire insurance policy was sold at anexecution sale and the period of redemption had expiredwhen the building was burned, the insured cannot claimagainst the policy.

c. If the owner of a motor vehicle which was covered by aninsurance policy sold it but bought it back before it waswrecked in a collision, the insured can recover under theinsurance policy.

d. If the owner of a motor vehicle which was covered by aninsurance policy sold it, the policy will automatically extendto the buyer.

D. Double Insurance and Over-Insurance


a. In double insurance the insured obtains two insurancepolicies on his insurable interest, and there may be doubleinsurance but no over-insurance.

b. In over-insurance, the insured takes insurance beyond thevalue of his insurable interest and can exist even if there isonly one insurance policy.

c. For double insurance to exist, the interest insured must bethe same.

d. There is double insurance if the owner of a store insured hisstocks-in-trade with the proceeds payable to himself and

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then after mortgaging them insured the stocks-in-trade withthe proceeds payable to the mortgagee.

2. One of these statements is not a requisite of double insurance:

a. The insured is the same.b. There are several insurersc. The subject matter insured need not be the same .d. The risk insured against is the same.

IV. Rescission

A. Concealment


a. Concealment is the neglect to communicate that which aparty knows and ought to communicate.

b. Concealment must be intentional or fraudulent to entitle theinjured party to rescind the policy.

c. If the insured authorized the agent of the insurer to write forhim the answers in an application for a life insurance policyand the answers contained concealment, he is bound by theanswers.

d. An insurer is not liable under a policy if the insured is guiltyof concealment, even if the fact concealed was not thecause of the loss.

2. One of these statements is not an element of concealment:

a. The party making the concealment must have knowledge ofthe fact concealed.

b. The fact concealed must be material to the policy.c. The party making the concealment warranted the fact

concealed.d. The other party does not have the means of ascertaining the

fact concealed.


a. Materiality is determined by the probable and reasonableinfluence of the facts on the party to whom thecommunication is due in forming his estimate of thedisadvantages of the proposed policy or in making hisinquiries.

b. Materiality does not require that the fact concealedcontributed to the loss.

c. An insurer is not liable under a life insurance policy if theinsured concealed that he was suffering from a kidney

ailment and died of a plane crash.d. Good faith is a valid excuse for concealment .

4. The failure to disclose one of these ailments does not constituteconcealment:

a. Cancer

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b. Bronchial asthmac. Diabetesd. Chronic cough

5. The failure to declare one of these ailments does not constitute

concealment:

a. Hypertensionb. Liver disorderc. Heart ailmentd. Gastric discomfort


a. If the insured in a life insurance policy stated the name ofthe hospital where he was confined and the dates of

confinement, his failure to disclose his ailment does notconstitute concealment.

b. Each party to an insurance contract is bound to know all thegeneral causes which are open to his inquiry and which mayaffect the political or material perils contemplated and allgeneral usages of trade.

c. Neither party to an insurance contract is bound tocommunicate his opinion upon matters in question, evenupon inquiry.

d. The waiver of medical examination in life insurance is awaiver of information about ailments of the insured.

7. A party to an insurance contract is bound to communicateinformation on one of these:

a. Those which the other knows.b. Those which, in the exercise of ordinary care, the other

ought to know and of which the former has no reason tosuppose him ignorant.

c. Those which the other waives communication.d. Those which proves the existence of a risk excluded by a

warranty but which are material.

B. Misrepresentation


a. A representation is a statement made by an applicant orinsurer about the subject matter of the insurance to induce itto enter into the contract.

b. A representation may be made at the time of or before theissuance of the policy.

c. A representation may be altered or withdrawn before the

insurance is effected but not afterwards.d. A representation may qualify an implied warranty .


a. A representation is false when the facts do not correspondwith its assertions.

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b. A representation is presumed to refer to the date on whichthe policy goes into effect.

c. When the insured has no personal knowledge of a fact, hemay not repeat the information which he has on the subject,even if he believes it to be true.

d. The materiality of a representation is determined by thesame rule as materiality of a concealment.

3. There is no misrepresentation in one of these:

a. If the insured stated that no insurer ever disapproved hisapplication for reinstatement of a lapsed policy, he is notguilty of misrepresentation if his application was initiallydisapproved but was eventually approved.

b. The insured stated that he had no illness but he wassuffering from the same serious ailments which are material

is concealment.c. A drug addict who stated that he never used prohibited

drugs is guilty of misrepresentation.d. An alcoholic who stated he only drank small quantities of

beer is guilty of misrepresentation.

4. There is no misrepresentation in one of these cases:

a. An insured in a life insurance policy whose parents died ofpulmonary tuberculosis told the insurer that they died ofother causes.

b. An insured in a life insurance policy told the insurer that hedoes not take alcoholic beverages, but he drinks smallquantities of beer on social occasions.

c. An insured in a life insurance policy who is suffering frompulmonary tuberculosis asked somebody else to take hisplace during the medical examination.

d. A bank applying for a bankers blanket policy falsely told theinsurer that all its transactions were pre-audited by aninternal auditor.

C. Warranties


a. A warranty is either express or implied.b. An express warranty is a statement in a policy of a matter

relating to the person or thing insured, or to the risk, as afact.

c. A statement in a policy which imparts that it is intended ornot to do a thing which materially affects the risk is awarranty that such act or omission shall take place.

d. A warranty may relate only to the present or the future.

2. There is no breach of warranty in one of these:

a. Violation of a provision in a fire insurance policy requiringthe insured to inform the insurer of any other insurancepolicies covering the same property.

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b. Placing fireworks in a building covered by a fire insurancepolicy which prohibits the storing of hazardous goods.

c. Keeping in a warehouse covered by a fire insurance policygasoline equivalent to the consumption for two days ofmotor vehicles used to deliver stored goods to customers.

d. Transporting cargoes and passengers in return forcompensation with the use of a truck covered by a motorvehicle insurance policy, which prohibits its use for hire.

3. There is no breach of warranty in one of these:

a. Keeping fire extinguishers, two fire hoses, external firehydrants, and a fire engine on the premises of a warehousecovered by a fire insurance policy which required themaintenance of fire extinguishers, internal hydrants,external hydrants, and a fire pump.

b. Authorizing a third person with an expired drivers license todrive a car covered by a motor vehicle insurance policywhich required the third person to possess a drivers license.

c. Authorizing an alien who is using the drivers license fromhis own country to drive a motor vehicle more than 90 daysafter his arrival when the law allows him to use it for 90 daysonly.

d. Driving with an expired seventy-two hour temporary driverslicense a motor vehicle covered by a motor vehicle policywhich required the authorized driver to have a valid driverslicense.


a. An employee of a car repair shop to which an insured motorvehicle was brought for repair is not authorized to drive it fora road test.

b. An intoxicated person is not authorized to drive a motorvehicle.

c. A person under the influence of narcotic drugs is notauthorized to drive a motor vehicle.

d. A third person whose drivers license prohibited him from

driving a motor vehicle with a gross weight of 4,500kilograms is not authorized to drive a motor vehicle with agross weight of more than 4,500 kilograms.


a. The breach of warranty does not exempt an insurer fromliability if did not contributed to the loss.

b. If an insurer renewed an insurance contract despite itsknowledge of the breach, the breach is waived.

c. The failure of an insured to comply with a warranty isexcused if the loss occurred before the expiration of theperiod for its performance, or performance has becomeunlawful or impossible.

d. A breach warranty without fraud exonerates the insurer fromliability only for loss that occurred from the time of thebreach.

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V. Premiums

A. Payment


a. As a rule, no insurance policy is valid and binding unless anduntil the premium has been paid.

b. A separate premium should be paid for a cover note .c. Payment of the premium to an agent of the insurer is

binding on it.d. If an insurer delivered the policy to an insurance, broker, it is

deemed to have authorized him to receive the payment ofthe premium in its behalf.

2. One of these statements regarding the requirement for thepayment of the premium is not correct:

a. A grace period of 30 days is given to pay the insured in lifeinsurance and industrial life insurance contracts to pay thesubsequent premiums after the first premium.

b. An acknowledgment in an insurance contract of receipt ofthe premium is conclusive for the purpose of making itbinding.

c. The insurer cannot grant credit extension to pay thepremium.

d. An insurer which consistently granted credit extension forpayment of the premium is estopped to deny liability for losswhich occurred within the term of the credit extension.


a. An insurance contract is valid and effective if there is anagreement that the premium will be paid in installments.

b. If there is an agreement that the premium will be paid ininstallments and the insurance contract provides that it willbe effective only upon full payment of the premium, the

insurer is not liable for loss which occurred before the fullpayment.

c. If the premium was not paid, the insurer can cancel thepolicy.

d. If the premium was not paid, the insurer can sue forpayment of the premium.

B. Refund


a. The insured is entitled to a return of the whole premium ifno part of his interest in the thing insured was exposed toany of the perils insured against.

b. If the insurance is made for a definite period of time andthe insured surrendered the policy, he is entitled to areturn of a portion of the premium as corresponds withthe unexpired time, at a pro rata rate; unless a short

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period rate was agreed upon in the policy, afterdeducting any claim for loss which has previouslyaccrued.

c. The insured in a life insurance policy may also surrenderthe policy to obtain a return of the premium.

d. If a peril insured against has existed and the insurer hasbeen liable for any period, however short, the insured isnot entitled to a return of the premium so far as thatparticular risk is concerned.


a. The insured is entitled to a return of the premium if thecontract is voidable on account of fraud ormisrepresentation of the insurer or of its agent, or anaccount of facts, or the existence of which the insured

was ignorant without his fault.b. The insured is not entitled to return of the premium in

case of any default of the insured.c. The insured is not entitled to a refund of the premium if

the insurance contract is annulled because of hismisrepresentation.

d. In case of over-insurance by several insurers, the insuredis entitled to a proportionate return of the premiumproportioned to the amount by which the aggregate suminsured in all the policies exceeds the insurable value ofthe property.

VI. Classes of Insurance

A. Marine Insurance


a. Each party is bound to communicate all the informationwhich he possesses, material to the risk, and to state theexact and whole truth in relation to all matters that herepresents, or upon inquiry discloses or assumes to

disclose.b. The rules as to concealment are stricter in marine

insurance than in fire insurance.c. Information of the belief or expectation of a third person

in reference to a material fact, is not material.d. The insured is presumed to know, at the time of insuring,

of a prior loss, if the information might possibly havereached him in the usual mode of transmission.

2. Concealment does not merely exonerate the insurer from lossresulting from the risk concealed in one of these:

a. The national character of the insured.b. The liability of the thing insured to capture and detention.c. The liability to seizure from breach of foreign laws of

trade.d. The unseaworthiness of the vessel.

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3. One of these statements is not an implied warranty in marineinsurance:

a. The ship is seaworthy.b. The ship will not deviate from the agreed voyage.

c. The ship will not engage in illegal ventures.d. The shipowner has been paid the stipulated freightage inaccordance with the charter party.


a. A vessel is seaworthy if it is reasonably fit to perform theservice and to encounter the ordinary perils of thevoyage contemplated by the parties to the policy.

b. A ship which is seaworthy for the purpose of insurance ofthe ship may be unseaworthy for the purpose of

insurance on the cargo.c. A warranty of seaworthiness does not extend only to the

condition of the structure of the ship.d. The warranty of seaworthiness of the ship is limited to

insurance on its cargoes.

5. One of these statements does not constitute deviation:

a. Departure from the voyage insured.b. Unreasonable delay in pursuing the voyage.c. Commencement of an entirely different voyage.

d. Misconduct on the part of the master and the crew .

6. Deviation is proper if:

a. It is caused by circumstances over which neither themaster nor the owner of the ship has any control.

b. It is necessary to comply with a warranty or to avoid aperil, whether or not the peril is insured against.

c. It was made in good faith and on reasonable grounds ofbelief in its necessity to avoid a peril.

d. Damage caused by barratry on the part of the master

and the crew.

7. One of these statements does not constitute actual total loss:

a. Total destruction of the thing insured.b. 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.d. It was caused by barratry of the master or the crew .


a. Constructive total loss is one which gives to an insured aright to abandon.

b. Abandonment is the act of the insured by which, after aconstructive total loss, he declares the relinquishment tothe insurer of his interest in the thing insured.

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c. The insured may abandon the thing insured if the loss ismore than three-fourths of its value or of the expenses torecover it from the peril.

d. If logs loaded on two barges were insured under onepolicy and because of the rough sea and strong winds

more than three fourths of the logs in one barge werelost, the insured can declare a constructive total loss withrespect to the logs in that barge.


a. Abandonment must be neither partial nor conditional.b. Abandonment, once accepted, is irrevocable.c. Accepted abandonment does not become ineffectual if

the information on which it was made proves incorrect.d. If notice of abandonment is properly given, the rights of

the insured are not prejudiced by the refusal of theinsurer to accept it.


a. Since an all-risk policy insures against all losses exceptthose excluded in the policy or due to fraud ormisconduct of the insured, the insured has to prove lossonly and need not prove its cause.

b. A policy which is not an all-risk policy insures againstperils of the sea only and does not include perils of the

ship.c. Two requisites are required for perils of the sea: (1) the

violence must be unusual or unexpected and (2) the perilmust be connected with navigation.

d. Perils of the ship do not refer to unseaworthiness of theship.

11. Losses due to one of these are not covered by a marinepolicy:

a. Barratry

b. Error of judgment, simple negligence, and lack of skill.c. Contribution to a general average loss.d. Sue and labor expenses.

B. Fire Insurance


a. An insurer is liable only for loss caused by hostile fire, onethat escaped from the place where it is intended to burn,and not for loss caused by friendly fire, one that burns in

the place where it is intended to burn.b. The insured has the burden of proving his loss.c. The insurer has the burden of proving that the loss was

due to an excluded risk like rebellion.d. An alteration in the use of the thing insured from that to

which it is limited by the policy made without the consentof the insurer and by means within the control of the

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insured and which, increases the risk entitles the insurerto rescind the fire insurance policy.

C. Casualty Insurance


a. An insurer which issued a liability insurance policy is notliable unless the insured is legally liable to the thirdperson who was injured.

b. If a liability insurance policy insures against liability tothird parties, third parties who were injured can sue theinsurer.

c. If the liability insurance policy provides for indemnity tothe insured against actual loss or payment, third personswho were injured cannot sue the insurer.

d. An insured which insured a payroll against robbery isliable if the policy excluded loss caused by an authorizedrepresentative of the insured and if the payroll was stolenby the driver and the security guard escorting it whowere provided by an independent security guard agency.


a. An insurer is liable under a personal accident policyissued to a security guard who joined a police officerand a homeowner who were going to the house of the

homeowner because it was being robbed and thesecurity guard was killed when the robber fired uponthem to scare them.

b. An insurer is liable under a personal accidentinsurance issued to a person who joined an amateurboxing contest and was killed when he accidentallyslipped and was hit in the head by his opponent.

c. An insurer is not liable under a personal accidentpolicy when the insured was killed without anyprovocation or warning while waiting for a bus ride,because his death was unexpected.

d. An insurer is not liable under a personal accidentpolicy it issued to a seaman who drowned when hejumped from the ship to rescue a passenger who felloverboard.

D. Suretyship


a. A contract of suretyship is an agreement whereby aparty called the surety guarantees the performance by

another party called the principal or obligor of anobligation or undertaking in favor of a third partycalled the obligee.

b. The liability of a surety is joint and several with theobligor and is limited to the amount of the bond.

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c. The liability of the surety is determined strictly by theterms of the suretyship in relation to the principalcontract between the obligor and the obligee.

d. A surety is not liable even if the bond has beenaccepted by the obligee if the premium has not been

paid.


a. If the obligation whose performance was guaranteedby a surety bond has been extinguished, the surety isnot entitled to collect any renewal premium any more.

b. In the case of continuing bonds, such as judicialbonds, the obligor must pay the annual premiumsuntil the bond is cancelled by the obligee or by a courtof competent jurisdiction.

c. The obligation of the surety is extinguished at thesame time as that of the obligor and for the samecauses as all other obligations.

d. The surety can invoke defenses that are purelypersonal to the obligor.

V. Life Insurance Policy

1. The insured can designate as beneficiary:

a. A person who has no insurable interest in his life .

b. A person with whom the insured was committingadultery or concubinage.

c. A person with whom he committed a criminal offensein consideration of it.

d. A public officer, his wife, descendants and ascendants,by reason of his office.


a. The insured can change the beneficiary he designatedin the policy.

b. The insured cannot change the beneficiary hedesignated in the policy if he expressly waived hisright.

c. The insured cannot change the irrevocable beneficiaryin the policy even if the beneficiary consents to it.

d. If a court decision annuls a marriage, declares it void,or decrees the legal separation of the spouses, theinnocent spouse may revoke the designation of theother spouse who acted in bad faith as beneficiary inany life insurance policy even if the designation isirrevocable.


a. If an insured named a woman with whom he iscommitting adultery as beneficiary in his insurancepolicy, it is his legal wife who should receive theproceeds of the policy.

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b. The designation of the illegitimate children of theinsured as beneficiaries in the insurance policy is valid.

c. If only the illegitimate children were designated asbeneficiaries in life insurance policy, the legitimatechildren are not entitled to receive any share in the

proceeds of the policy.d. If the beneficiary designated in a life insurance policypredeceases the insured and he did not designateanother beneficiary, the proceeds of the policy shouldbe paid to his estate.

4. One of these statements is not a requisite for the insured tobe barred from proving that the policy is void or rescindableby reason of fraudulent concealment or misrepresentation:

a. The policy is a life insurance policy.

b. It is payable on the death of the insured.c. It has been in force during the lifetime of the insured

for two years from the date of its issuance or its lastreinstatement.

d. The insured was in good health when the two-yearperiod lapsed.

5. One these defenses is barred by the incontestability period:

a. The person who obtained the policy had no insurableinterest.

b. The cause of the death of the insured is an exceptedrisk.

c. The policy lapsed because the premiums were notpaid.

d. The insured is guilty of concealment .

6. One these defenses is barred by the incontestability period:

a. The conditions of the policy regarding military or navalservice in times of war were violated.

b. The policy was taken in furtherance of a scheme to kill

the insured.c. The insured substituted another person for himself

during the medical examination.d. The insured made a misrepresentation .

7. One of these defenses is barred by the incontestabilityperiod:

a. The beneficiary failed to furnish proof of death or tocomply with any condition imposed by the policy afterthe loss had happened.

b. The action was not filed on time.c. The insurer waived the ground for rescission of the

policy.d. The insured was guilty of deceit.


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a. The insurer is not liable if the insured committedsuicide within two years from the date of the issue ofthe life insurance policy or of its last reinstatement.

b. The insurer will be liable if the insured committedsuicide in the state of insanity regardless of the date

of its commission.c. The interest of the beneficiary in a life insurance policyshall be forfeited if he willfully and unlawfully broughtabout the death of the insured as principal,accomplice or accessory.

d. If the beneficiary forfeited his interest in a lifeinsurance policy, the proceeds shall not be paid toanyone.


a. Cash surrender value is the amount of money theinsurer agrees to pay to the insured if he surrenders itand releases his claims upon it.

b. If the designation of the beneficiary is irrevocable, hisconsent is required for the insured to obtain a policyloan or surrender the policy.

c. If the irrevocable beneficiary life insurance policy is aminor, in the absence of a judicial guardian, the fatheror the mother may obtain a policy loan or surrenderthe policy if the amount involved does not exceedP50,000.

d. The proceeds of a life insurance policy are not exemptfrom execution.

10. One of these is not a relief from forfeiture of thebenefits of a life insurance policy:

a. Grace period to pay the subsequent premiums.b. Surrender of the policy for the cash surrender value.c. Reinstatement of a lapsed policy.d. Condonation of the arrears in the premium .

11. One of these is not a relief from the forfeiture of thebenefits of a life insurance policy:

a. Granting extended insurance for a certain period.b. Granting paid-up insurance for a certain period.c. Automatic loan.d. Reformation of the insurance contract .

VI. Compulsory Motor Vehicle Liability Insurance

1. One of these is not a third party:

a. A member of the household of the owner of the motorvehicle.

b. A member of the family within the second degree ofaffinity or consanguinity.

c. An employee in the course of employment.d. An employee who is not in the course of employment .

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a. The policy provides indemnity for death or bodilyinjury.

b. The amount of the coverage for private cars isP100,000.c. Third parties can sue the insurer directly.d. The requirement in the policy that the person

authorized by the driver of the motor vehicle musthave a drivers license is applicable.

3. One these statements is not correct:

a. Under the no-fault indemnity provision, a claim fordeath injury to a third party shall be paid without

necessity of proving fault or negligence.b. The insurer should not be held jointly and severally

liable with the insured, because its liability is based oncontract.

c. If the amounts of the liabilities of the insured and theinsurer are the same, they should be jointly andseverally liable.

d. If an insurer paid the no-fault indemnity, it cannotrecover reimbursement from the owner of the othermotor vehicle who was responsible for the accident.


a. The maximum indemnity under the no-fault indemnityprovision is P15,000.

b. A third party may file a claim for a no-fault indemnityagainst one motor vehicle only.

c. If the victim is riding in a vehicle, the claim should befiled against the insurer of the motor vehicle in whichhe is riding.

d. If the victim is not riding in a vehicle, the claim shouldbe filed against the insurer of the offending vehicle.

5. To recover against the no-fault indemnity provision, one ofthese is not required:

a. Police report of the accident.b. Death certificate and proof of the right of the proper

party to receive the indemnity.c. Medical report and evidence of medical expenses.d. Photographs .


a. The payment of the no-fault indemnity is withoutprejudice to the right of the victim to pursue his claimin excess of it on showing that the driver of the motorvehicle was at fault.

b. The insured should pay the total claim of the victimwithin ten working days after it has ascertained the

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claim of the insured and reached an agreement withhim.

c. If no agreement was reached, the insurer should paythe no-fault indemnity without prejudice to the right ofthe victim to pursue his excess claim.

d. If the insured settled with the victim without thewritten consent of the insurer, when this required bythe policy, the insured cannot ask for reimbursementfrom the insurer.


a. The victim must file his claim with the insurer withinsix months from the date of the accident.

b. If the claim is denied, he must file an action againstthe insurer within one year from the denial of the

claim.c. The Insurance Commissioner and the Metropolitan

Trial Courts, Municipal Trial Courts, and MunicipalCircuit Trial Courts have concurrent jurisdiction overclaims against a compulsory motor vehicle liabilitypolicy.

d. The decision of the Insurance Commission may beappealed to the Supreme Court if the appeal involvesa question of law.

VII. Claims Settlement

A. Cause of Loss

1. An insurer is not liable for one of these losses:

a. Loss the proximate cause of which is the peril insuredagainst even though the immediate cause is not aperil insured against.

b. Loss the immediate cause of which is the peril insuredagainst.

c. Loss the immediate cause of which is the peril insured

against but the proximate cause is an excepted risk.d. Loss caused by the negligence of the insured.

2. An insurer is liable for one of these losses:

a. Loss caused by the gross negligence of the insured.b. Loss where the thing insured is rescued from the peril

insured against that would otherwise have caused aloss if in the course of it the thing is exposed to a perilnot insured against, which permanently deprived theowner of its possession.

c. Loss where the peril insured against is its remotecause.

d. Loss caused by connivance of the insured.

3. An insurer is liable for one of these losses:

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a. Loss caused by willful act of the insured.b. Loss caused by efforts to rescue the thing insured

from a peril insured against.c. Loss the proximate cause of which is an excepted

peril.

d. Loss of property whose possession is illegal.

B. Notice and Proof of Loss


a. In case of a fire insurance policy, if notice of loss is notgiven without unnecessary delay, the insurer isexonerated.

b. When preliminary proof is required, the insured is notbound to give such proof as would be necessary in a

court of justice, as it is sufficient to give the bestevidence he has in his power at the time.

c. All defects in a notice of loss or preliminary proofwhich the insured might remedy are waived if theinsurer does not specify them to the insurer.

d. Delay is not waived even if the insurer did not invokeit as a ground for denying a claim.

C. Period for Filing Action


a. A stipulation limiting the period to file an action to lessthan one year from the time when the cause of actionaccrued is void.

b. If the policy requires the filing of written claim as acondition for filing an action, the period for filing anaction should be counted from denial of the claim.

c. The filing of a request for reconsideration of the denialof claim suspends the running of the period to file anaction.

d. A request for explanation of the denial of the claim

does not suspend the remaining of the period to file anaction.

D. Claims Settlement

1. One of these does not constitute unfair claim settlementpractice:

a. Knowingly misrepresenting to claimants pertinentfacts or policy provisions relating to the coverage atissue.

b. Failing to acknowledge with reasonable promptnesspertinent communications with respect to claimsarising under its policies.

c. Failing to adopt and implement reasonable standardsfor the prompt investigation of claims arising under itspolicies.

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d. Paying less than what is being claimed under itspolicies.


a. Not attempting in good faith to effectuate prompt, fairand equitable settlement of claims submitted in whichliability has become reasonably clear is an unfairsettlement practice.

b. Compelling policyholders to institute suits to recoveramounts due under its policies by offering withoutjustifiable reason substantially less than the amountsultimately recovered in suits brought by them is anunfair settlement practice.

c. The certificate of authority of an insurer may besuspended or revoked for unfair settlement practice.

d. In case of litigation for the enforcement of anyinsurance contract, if the decision held the insurerliable, the insurer must be held liable for attorneysfees.


a. In case of litigation for the enforcement of aninsurance contract, the decision should make a findingas to whether the refusal of the insurer to pay wasunreasonable.

b. If the refusal of the insurer to pay was unreasonable, itshould be held liable for attorneys fees and otherexpenses incurred by the insured.

c. The insurer may be held liable for exemplary damagesfor unreasonably refusing to pay a plainly valid claim.

d. An insurer cannot be held liable for moral damages fordenying a claim in bad faith.


a. If an insurer was adjudged liable under a policy, it

should be held liable for interest at the rate of six percent a year from the time a written demand wasmade or from the time the action was filed, whichevercomes first.

b. Upon finality of the decision, the interest will be 12 percent a year until the insured is paid.

c. If the insurer acted in bad faith in denying a claim, itwill be liable for interest at the rate of 24 per cent ayear until the insured is paid.

d. If a claim on a fire insurance policy is partly fraudulent,it does not make the whole claim fraudulent and the

actual loss should be paid.


a. The mere fact that the amount claimed by the insuredexceeded the amount awarded by 20 per cent doesnot make the claim fraudulent.

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b. The proceeds of a life insurance company shall be paidimmediately upon maturity of the policy.

c. If the proceeds of a life insurance policy is payable ininstallments or as annuities, the installments orannuities shall be paid as they fall due.

d. If a life insurance policy matures upon the death of theinsured, the proceeds shall be paid within 90 daysafter the presentation of the claim and proof of thedeath of the insured.


a. In property insurance, the loss shall be paid within 30days after presentation of proof of loss andascertainment of the loss by agreement between theinsured and the insurer or by arbitration.

b. If the loss is not ascertained within 60 days afterreceipt of proof of loss, the loss shall be paid within 90days after receipt of proof of loss.

c. If property has been insured and the insurerindemnified the insured for a loss, the insurer issubrogated to the rights of the insured against thewrongdoer.

d. For the insurer to be subrogated to the rights of theinsured, the insured must execute a writtenassignment in its favor.

7. One of these is not a requirement of subrogation:

a. The property was insured.b. The insured received indemnity from the insurer.c. The indemnity was for injury or loss arising from the

loss complained of.d. The wrongdoer admitted his liability .


a. If the insurer paid the insured, the insured cannot sue

the wrongdoer for the amount paid because of thesubrogation in favor of the insurer.

b. If a mortgagee insured his interest in the propertymortgaged and was indemnified by the insurerbecause of a loss, he cannot claim against themortgagor to the extent of the indemnity paid.

c. If the insured released the wrongdoer from liability orsettled with him, the insurer cannot recover from thewrongdoer but will be entitled to a refund from theinsured for the payment he received.

d. If the insured was required to file a claim with the

wrongdoer within a certain period by law or bycontract with the wrongdoer and failed to do so, theinsurer can recover from the wrongdoer.


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a. If the goods insured were lost by the sinking of avessel and were replaced but the insured still collectedindemnity from the insurer, the insurer cannot recoverfrom the shipowner.

b. If the amount recoverable by the insured in case of

loss of the goods insured is limited to a certain amountbecause of a provision in the bill of lading but theinsurer paid the insured more on the basis of the fairmarket value, the insurer can recover the fair marketvalue.

c. If the cause of action of the insured against thewrongdoer is barred by prescription, this will also bindthe insurer if it paid the insured for the loss.

d. If the goods insured were covered by a bill of ladingissued by a shipowner which provided for arbitration, ifthe insurer paid the insured for the loss of the goods it

will be bound by the provision for arbitration.

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