Fundamental Principles In Every Insurance Cover
- Utmost Good Faith – The Contract of Insurance requires not only from the Insurer but also from the Insured the observance of Utmost Good Faith or Uberrimae Fidae. Both parties must disclose conditions affecting the risk and other material facts, as such shall be the basis of the agreements of the contracting parties. Failure of either party to declare in utmost good faith may avoid the contract.
- Insurable Interest – It is the relationship of the Insured to the thing that is subject of insurance, where the former would suffer loss, pecuniary or otherwise, in case of loss.
- Indemnity – The obligation of the Insurer to make good any loss or damage which the Insured has incurred, provided the cause of loss or damage and the thing are covered in the contract of insurance, within a given period of coverage.
- Subrogation – It is the substitution of the Insurer to the rights of the Insured after the former has paid or settled, in whole or in part, the supposed obligation of the latter to a third person.
- Premium – It is the consideration being required by the Insurer for undertaking to indemnify the Insured against loss, damage or liability arising from unforeseen, unknown or contingent event.
- Proximate Cause – It is the Responsible Cause of an event or happening. That cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result event or result would not have occurred.
What is Motor Insurance?
Any kind of insurance pertaining to the ownership, maintenance, or use of motor vehicle may be referred to, in general, as automobile insurance.
However for the purpose of Chapter VI of the New Insurance Code (P.D. 612), an Insurance Policy or “Policy” refers to a contract of insurance against passenger and third-party liability for death or bodily injuries arising from motor vehicle accident.
General Classes of Motor Insurance
1. Physical Damage Insurance – covers loss or damage to the insured’s vehicle caused by the insured perils specified in the policy.
2. Liability Insurance – refers to the injuries which the insured’s vehicle may do to people in other vehicles or to members of the public in general, and the damaging of real personal property of such people.
Types of Policy Forms
- Private Car Policy (P.C.)
- Commercial Vehicle Policy (C.V.)
- Motor Trade Policy (M.T.)
- Motor Cycle (M.C.)
- Land Transportation Operators Policy (L.T.O.)
Motor Car Insurance Covers
Section I- Compulsory Third Party Liability
Principal Provision – to pay all sums necessary to discharge liability of the insured in respect of bodily injury and/or death to any third party, in an accident caused by or arising out of the use of the scheduled vehicle provided that the insured’s liability shall have first been determined.
Section II- No Fault Indemnity
Policy Provision – the insurance company will pay any claim for bodily injury/or death to any third party or passenger without the necessity of providing fault or negligence of any kind. ( limit – P15,000.00)
Section III- Loss or Damage (OD/Theft)
This part of the policy protects the vehicle described in the schedule, its accessories and spare parts.
Cause of loss covered in the policy
- Accidental Collision or overturning consequent upon mechanical breakdown or consequence upon wear and tear
- Fire, external explosion, self-ignition or lightning or burglary, house breaking or theft.
- Malicious act. Whilst in transit (including the process of loading and unloading) accidental to transit by road, rail, inland waterway, lift or elevator)
What are not covered?
- Loss or damage not in excess of the deductible.
- Consequential loss, depreciation, wear and tear, mechanical or electrical breakdowns, failures or breakages.
- Damage to tires unless scheduled vehicle is damaged at the same time.
- Any malicious damage caused by the insured, any member of his family or by a person in the insured’s service.
Section IV- Excess Liability Body Injury / Property Damage
This the part of the policy that covers liability of the insured which are not covered under Section I because of the limits in the schedule.
Unnamed Passenger Personal Accident including the driver.
Insurance against accidents to the insured named persons, passengers, named or unnamed drivers
Acts of Nature (AON)
Flood, Typhoon, Hurricane, Volcanic eruption, Earthquake or other convulsion of nature