What is Loss?
Loss is any injury, damage or liability sustained by the insured in consequence of the happening of one or more perils against which the insurer, in consideration of the premium, has undertaken to indemnify the insured. The insurer is liable for the following losses: 1) Loss of which a peril insured against was the proximate cause (Sec. 84) 2) Loss caused by efforts to rescue the thing insured from a peril insured against (Sec. 85) 3) Loss caused by a peril not insured against to which the thing insured was exposed in the course of rescuing the same from the peril insured against (Sec. 85) 4) Loss, the immediate cause of which was the peril insured against unless the proximate cause thereof was excepted in the contract (Sec. 86) 5) Loss caused by the negligence of the insured (Sec. 87) Sec. 83. An agreement not to transfer the claim of the insured against the insurer after the loss has happened, is void if made before the loss except as otherwise provided in the case of life insurance. Is a stipulation prohibiting the transfer of a policy valid? NO. It is void. It is against public policy for it hinders the free transmission of property from one person to another.
EXC: Fire insurance = non-transferable (sec.173) Sec. 84. 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 which the peril insured against was only a remote cause. Proximate cause is that event which in a natural and continuous sequence, unbroken by any efficient intervening cause, produces the injuiry and without which the injuiry would not have occurred. Immediate cause is the cause or condition nearest to the time and place of injuiry. When the immediate cause of the loss is a peril insured against, the insurer is liable therefore unless the proximate cause is an excepted risk.
Extent of Loss How much the insurer will pay depends upon whether the insured suffers a loss and the extent of that loss. It is satisfied by the payment of the loss, reinstatement of the property lost or damaged, or replacement with similar property. Cause of Loss The insurer assumes liability only for a loss proximately caused by the perils insured against although a peril not insured against may have been a remote cause of the loss. Insurer is still liable even if the proximate cause is not the peril insured against if the IMMEDIATE cause is the peril insured against.
Friendly fire So long as the fire burns in a place where it was intended to burn, and ought to be, it is to be regarded merely an agency for the accomplishment of some purpose and not as a hostile peril. Hostile fire Occurs outside of the usual confines or begins as a friendly fire and becomes hostile by escaping from the place where it ought to be to some place where it ought not to be. Sec. 85 An insurer is liable: 1. 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 is exposed to a peril not insured against, which permanently deprives the insured of its possession, in whole or in part; 2. Where a loss is caused by efforts to rescue the thing insured from a peril insured against. 3. Sec. 86 Where a peril is especially excepted in a contract of insurance, a loss, which would not have occurred but for such peril, is thereby excepted although the immediate cause of the loss was a peril which was not excepted.
Is the insurer liable? It depends. The peril insured against must be the proximate cause. If it is only the remote cause of the loss, the insurer is not liable. Sec. 87 An insurer is not liable for a loss caused by : a) the willful act or; b) through the connivance of the insured; but he is not exonerated by the negligence of the insured, or of the insurance agents or others. Ordinary negligence - the doctrine of contributory negligence does not apply to right under a contract of insurance. Mere negligence on the part of he insured will not exonerate the insurer. Ex. An accident resulted through the reckless driving of the insured. Can the insurer deny the claim on the ground of negligence? NO. A man who was insured against personal accident removed the magazine of his handgun and playfully pointed it to his secretary, then to his temple. He pulled the trigger and there was an explosion which left him dead. (Sun Insurance Office, Ltd. vs. Court of Appeals, G.R. 92383)
Is the insurer liable? YES. Fraudulent claims Fraud in the statement of loss operates to defeat recovery upon any part of the policy for the policy is avoided by any false and material representation in the statement of loss and all benefits thereunder are forfeited. In case the insured over-valuated the property insured in the claim for the loss, the insurance is avoided.
