Claims Settlement and corporation which, for money,

Subrogation commission or any other thing of

value, acts on behalf of an insured
Claims Settlement in negotiating for, or effecting, the
The liability of the insurer attaches the settlement of a claim or claims of the
moment the risk insured against said insured arising under insurance
causes lost to the insured. contracts or policies, or which
Sec 241 of the Insurance code: advertises for or solicits employment
Sec. 241. (1) No insurance as an adjuster of such claims.
company doing business in the
Philippines shall refuse, without The adjuster’s function is merely to
just cause, to pay or settle claims settle and adjust claims in behalf of
arising under coverages provided the principal. He does not assume
by its policies, nor shall any such personal responsibility.
company engage in unfair claim
settlement practices. Any of the Article 241 states the following acts of
following acts by an insurance an insurance company, that if
company, if committed without committed without just cause and
just cause and performed with performed with such frequency as to
such frequency as to indicate a indicate a general business practice
general business practice, shall shall constitute unfair claim
constitute unfair claim settlement settlement practices which may result
practices: in the suspension or revocation of the
certificate of authority of the insurer
Adjusting- term used to denote the by the Insurance Commission.
function of loss payment. Adjuster is
the person employed by the insurer in Thus:
property and casualty insurance to (a) knowingly misrepresenting to
settle in behalf of the insurer the claim claimants pertinent facts or policy
of the insured. The adjuster evaluates provisions relating to coverage at
the insurance claim and makes the issue;
proper recommendation to the insurer.
An adjuster may be an Independent (b) failing to acknowledge with
Adjuster or a Public Adjuster. reasonable promptness pertinent
communications with respect to claims
Sec. 324. An adjuster may be an arising under its policies;
independent adjuster or a public
adjuster. (c) failing to adopt and implement
reasonable standards for the prompt
The term "independent adjuster" investigation of claims arising under
means any person, partnership, its policies;
association or corporation which, for
money, commission or any other thing (d) not attempting in good faith to
of value, acts for or on behalf of an effectuate prompt, fair and equitable
insurer in the adjusting of claims settlement of claims submitted in
arising under insurance contracts or which liability has become reasonably
policies issued by such insurer. clear; or

The term "public adjuster" means (e) compelling policyholders to

any person, partnership, association or institute suits to recover amounts due
under its policies by offering without the ground that the claim is
justifiable reason substantially less fraudulent.
than the amounts ultimately
recovered in suits brought by them. The proceeds of the policy maturing
by the death of the insured payable to
(2) Evidence as to numbers and types the beneficiary shall include the
of valid and justifiable complaints to discounted value of all premiums paid
the Commissioner against an in advance of their due dates, but are
insurance company, and the not due and payable at maturity.
Commissioner's complaint experience
with other insurance companies Non-Life Insurance Policy
writing similar lines of insurance shall
be admissible in evidence in an Shall be paid after 30 days after proof
administrative or judicial proceeding of loss is received by the insurer and
brought under this section. ascertainment of the loss or damage is
Life Insurance Policy made either by agreement between
the insured and the insurer or by
The proceeds of a Life Insurance Policy arbitration.
shall be paid immediately upon
maturity of the policy. However the Sec. 243. The amount of any loss or
policy may provide that the proceeds damage for which an insurer may be
are made payable in installments or as liable, under any policy other than life
an annuity, in which case the insurance policy, shall be paid within
installments, or annuities shall be paid thirty days after proof loss is received
as they become due. by the insurer and ascertainment of
the loss or damage is made either by
Sec. 242. The proceeds of a life agreement between the insured and
insurance policy shall be paid the insurer or by arbitration; but if
immediately upon maturity of the such ascertainment is not had or
policy, unless such proceeds are made made within sixty days after such
payable in installments or as an receipt by the insurer of the proof of
annuity, in which case the loss, then the loss or damage shall be
installments, or annuities shall be paid paid within ninety days after such
as they become due: Provided, receipt. Refusal or failure to pay the
however, That in the case of a policy loss or damage within the time
maturing by the death of the insured, prescribed herein will entitle the
the proceeds thereof shall be paid assured to collect interest on the
within sixty days after presentation of proceeds of the policy for the duration
the claim and filing of the proof of the of the delay at the rate of twice the
death of the insured. ceiling prescribed by the Monetary
Board, unless such failure or refusal to
Refusal or failure to pay the claim pay is based on the ground that the
within the time prescribed herein will claim is fraudulent.
entitle the beneficiary to collect
interest on the proceeds of the policy The double interest referred to in
for the duration of the delay at the Section 243 means 24% or twice the
rate of twice the ceiling prescribed by 12% prescribed by the monetary
the Monetary Board, unless such board.
failure or refusal to pay is based on
The insurer must settle the claim even claim due the insured, from the date
without the participation of an following the time prescribed in
adjuster. There is nothing in the section two hundred forty-two or in
Insurance Code that makes the section two hundred forty-three, as
participation of an adjuster in the the case may be, until the claim is
assessment of the loss imperative or fully satisfied; Provided, That the
indispensable. failure to pay any such claim within
the time prescribed in said sections
Section 325 .,.. shall be considered prima facie
evidence of unreasonable delay in
Sec. 325. For every line of insurance payment.
claim adjustment, adjusters shall be
licensed either as independent Failure to pay any such claim
adjusters or as public adjusters. No within the time prescribed in
adjuster shall act on behalf of an Sections 242 and 243 of the
insurer unless said adjuster is licensed Insurance Code shall be
as an independent adjuster; and no considered prima facie evidence
adjuster shall act on behalf of an of unreasonable delay in
insured unless said adjuster is licensed payment.
as a public adjuster: Provided,
however, That when a firm or person Interest and damages. If the claim
has been licensed as public adjuster, is unreasonably delayed then, the
he shall not be granted another insured is entitled to:
license as independent adjuster and 1. Attorney’s fees
vice versa. 2. Other expenses incurred by the
insured person by reason of
… speaks of licensing adjusters but such unreasonable denial
this does not require as a prerequisite 3. 24% interest (that twice
the assessment of adjusters in the prescribed by the monetary
settlement of the insurance claim. board)
4. The amount of calim.
UNREASONABLE DENIAL OR
WITHHOLDING OF CLAIM. Delay must be wanton, oppressive or
Sec. 244. In case of any litigation for malevolent. Such refusal must be
the enforcement of any policy or willful and without reasonable cause.
contract of insurance, it shall be the IF there was problem in settling as to
duty of the Commissioner or the Court, whom the policy accrues, then there is
as the case may be, to make a finding no unjust delay.
as to whether the payment of the
claim of the insured has been If there is no unreasonable delay, then
unreasonably denied or withheld; and the insured is given 6% since it is not
in the affirmative case, the insurance a loan or forbearance of money,.
company shall be adjudged to pay However after litigation, allowed 12%
damages which shall consist of because there is forbearance in
attorney's fees and other expenses accordance with EASTERN SHIPPING
incurred by the insured person by LINES vs. CA.
reason of such unreasonable denial or
withholding of payment plus interest If insurance co. is acting in good faith,
of twice the ceiling prescribed by the there is no right to claim for damages.
Monetary Board of the amount of the
Fraudulent Claim. The insurer may 10 years for being a written contract
reject a claim that is fraudulent, i.e. under article 1144 of the CIVIL CODE.
fraudulent policy papers, etc.
SUBROGATION.
Prescriptive Period. Insurance
Code does not provide for a Applies according to Article 2207 of
prescriptive period for the filing NCC.
of a complaint. Exception is the CTPL
insurance, which must be made within Art. 2207. If the plaintiff's property has
one year under section 384 of the been insured, and he has received
Insurance code. indemnity from the insurance
company for the injury or loss arising
Stipulation. A stipulation may out of the wrong or breach of contract
however be made by the parties complained of, the insurance company
stipulating the period in the policy shall be subrogated to the rights of the
subject to the limitation under Section insured against the wrongdoer or the
63 of the IC. person who has violated the contract.
If the amount paid by the insurance
Sec. 63. A condition, stipulation, or company does not fully cover the
agreement in any policy of insurance, injury or loss, the aggrieved party
limiting the time for commencing an shall be entitled to recover the
action thereunder to a period of less deficiency from the person causing the
than one year from the time when the loss or injury
cause of action accrues, is void.
The right of subrogation does not
If there is such stipulation, the arise out of a contract but out of
stipulation prevails. It is not a mere law.
procedural requirement. It has its roots on equity. And is
designed to promote and to
Accrual. The right of the insured to accomplish justice and is the mode
the payment of his loss accrues from which equity adopts to compel the
the happening of the loss. ultimate payment of a debt by one
who in justice, equity and good
The cause of action agains the insurer conscience ought to pay.
does not accrue until the insured’s
claim is rejected by the insurer. Payment by the insurer to the assured
Rejection may be express or implied. operates as an equitable assignment
to the former of all remedies which the
Rejection contemplated is rejection in latter may have against the third party
the first instance. Not the one under whose negligence or wrongful act
reconsideration. caused the loss.

A stipulation may be made by the Requisites of Subrogation

parties with regards to a period within
which to file for such cause of action. 1. The insurance involved is
property insurance.
IF THERE IS NO STIPULATION. Or 2. There is a loss arising from the
no prescriptive period given in the risk insured against.
policy, then the prescriptive period is 3. The insured received indemnity
from the insurer for the loss.
 4. The indemnity is covered by the The insurance company is also bound
face value of the policy. by the laws wherein the insured is also
THERE IS NO SUBROGATION bound by, such as the COGSA, in
WHEN: international carriage. In terms of
prescriptive periods, etc.
1. The assured by his own act
releases the wrongdoer or third DISCRETION TO USE THE RIGHT OF
party liable for the loss or SUBROGATION. –It lies with the
damage from liability, the insurer who may opt not to use the
insurers right of subrogation is said right.
defeated.
2. Where the insurer pays the
assured the value od the lost DOUBLE INSURANCE
goods without notifying the
carrier whjo has in good faith DEFINITION
settled the assured’s claim for
loss, the settlement is binding Sec. 93. A double insurance exists
on both the assured and the where the same person is insured by
insurer, and the latter cannot several insurers separately in respect
bring an action against the to the same subject and interest.
carrier on his right of
subrogation. Requisites
3. Where the insurer pays the
assured for a loss which is not a (P2-SIP)
risk covered by the policy, 1. The same person is insured
thereby effecting “voluntary 2. There are two or more insurers
payment” the former has no that insured the person
right of subrogation against the separately
third party liable for the loss. 3. The insurance is over the same
4. When life insurance is involved subject
(ofcourse for there is no 4. The same interest is involved
contract of indemnity in life 5. The same peril is insured
insurance) against

LIMITATIONS OTHER INSURANCE CLAUSE

When the rights of the insured is The implication of the rules on double-
limited, the rights of the insurer are insurance under the insurance code is
also limited, since it is only that double-insurance is NOT
subrogation. PROHIBITED. However, it may be
prohibited by a stipulation known as
EG. If insurance company gets the the “other insurance clause”
whole value of the amount loss from
the negligent party, then the insured FORMS OF THE OTHER INSURANCE
may claim the balance from the CLAUSE.
insurance company, if the insurance
company only pays for the value of 1. A condition that states that
the indemnity stipulated. procurement of additional
insurance without the consent
 of the insurer renders the policy If the insured takes out an insurance
void ipso facto over the property insured in an
2. A provision that required the amount which is in excess of the value
insured to disclose the of his insurable interest.
existence of any other
insurance on the property, House worth 500K insured with ABC
otherwise the contract may be for 700K.
avoided for material
concealment Over-insurance may also exist if there
3. A warranty that there is no is double insurance: thus house worth
other existing insurance over 500K insured with ABC Ins Co. for
the same property 400K and YXZ Co. for 300K.

A standard fire policy used by the It does not however follow that just
insurance companies usually contains because there is double insurance that
a condition that the insured shall give there is over insurance. EG. If ABC
notice to the insurer of any insurance insures house worth 1M for 300k and
or insurances already effected, or with GHI co 200K.
which may subsequently be effected
covering any property or properties RULES IN OVER-INSURANCE BY
and unless such notice is given and DOUBLE INSURANCE
the particulars of such insurance or
insurances is stated, all the benefits Contract of insurance – Contract of
under the policy shall be forfeited. Indemnity, thus the insured cannot
recover more than what he lost.
RATIO
The purpose is to avoid over insurance Section 94.
and thus avert the perpetration of
fraud, or from the insured to make Sec. 94. Where the insured is
profit. ( SUNOG BAHAY) overinsured by double insurance:

VALIDITY. IF clearly prohibited by the (a) The insured, unless the policy
stipulation, additional insurance may otherwise provides, may claim
be a ground to hold the insurance payment from the insurers in such
contract void. order as he may select, up to the
amount for which the insurers are
Santa ana v. Commercial union severally liable under their respective
assurance co. contracts;

Additional insurance – Gonzalez La’O (b) Where the policy under which
v. Yek Tong Lin Fire and Marine the insured claims is a valued policy,
Insurance CO. => must be deemed the insured must give credit as against
abandoned if there are new the valuation for any sum received by
circumstances because subject was him under any other policy without
not separated, and the same subject is regard to the actual value of the
insured with the same peril insured subject matter insured;
against.
(c) Where the policy under which
OVERINSURANCE as a result of the insured claims is an unvalued
DOUBLE INSURANCE. policy he must give credit, as against
the full insurable value, for any sum
received by him under any policy;

(d) Where the insured receives any

sum in excess of the valuation in the
case of valued policies, or of the
insurable value in the case of
unvalued policies, he must hold such
sum in trust for the insurers, according
to their right of contribution among
themselves;

(e) Each insurer is bound, as

between himself and the other
insurers, to contribute ratably to the
loss in proportion to the amount for
which he is liable under his contract.

Sundiang notes:
Value of house 20 M

Insurer Amt of Premium

Policy
A 10M 10K
B 20M 20K
C 10M 10K
Total 40M

Sum Total of Policy – Value of

thing insured
Ratio =

Sum Total of Policy

(Ratio) * (Amount of premium) = proportionate

amt.
Thus: 40M -20M = 20M

= 20M/40M

= 1/2

= ½ (10K) = 5K from A

= ½ (20K) = 10K from B

= ½ (10K) = 5K from C