CASUALTY INSURANCE
What is Casualty insurance?
It is an 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 Insurance or Marine Insurance. 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. (Insurance Code of the Philippines, Section 174)
What are the main classes of Casualty Insurance?
Casualty Insurance may be classified into the following:
I. First Party Insurance - it shall cover the loss suffered by the insured
II. Liability Insurance - it shall pay on behalf of the insured the loss suffered by a third person because the proximate cause of the latter's loss is the action, error, or omission of the insured.
III. Combination
What are the main classes of Casualty Insurance based on coverage?
Casualty Insurance may be classified into the following: Bodily injury or property damage suffered by third party
Bodily injury or property damage suffered by a non-third party
Bodily injury or property damage suffered by a third party due to defective product.
Financial loss suffered by the insured due to a defective product.
Financial loss suffered by third party
What are the sources of liability an insured?
Obligations arise from:
What are the pertinent provisions in the Civil Code concerning liability?
It is an 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 Insurance or Marine Insurance. 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. (Insurance Code of the Philippines, Section 174)
What are the main classes of Casualty Insurance?
Casualty Insurance may be classified into the following:
I. First Party Insurance - it shall cover the loss suffered by the insured
- Personal Accident Insurance
- Life Insurance
- Crime Insurance such as Fidelity Insurance, Money Securities and Payroll Robbery Insurance and Bankers Blanket Bond
- Products Recall/Contaminated Products Insurance
II. Liability Insurance - it shall pay on behalf of the insured the loss suffered by a third person because the proximate cause of the latter's loss is the action, error, or omission of the insured.
- Commercial General Liability Insurance
- Comprehensive Personal Liability Insurance
- Products Liability Insurance
- Employers Liability Insurance
- Directors and Officers Liability Insurance
- Professional Liability Insurance
- IPO Insurance
III. Combination
What are the main classes of Casualty Insurance based on coverage?
Casualty Insurance may be classified into the following: Bodily injury or property damage suffered by third party
- Commercial General Liability Insurance
- Comprehensive Personal Liability Insurance
- Products Liability Insurance
Bodily injury or property damage suffered by a non-third party
- Employers Liability Insurance
Bodily injury or property damage suffered by a third party due to defective product.
- Products Liability Insurance
Financial loss suffered by the insured due to a defective product.
- Product Recall
- Contamination Products Insurance
Financial loss suffered by third party
What are the sources of liability an insured?
Obligations arise from:
- Law
- Contracts - this serves as the law between the parties.
- Quasi-contracts
- Delicts or acts or omissions punished by law - this is un-insurable because it is against public policy to cover illegal acts.
- Quasi-delicts - is also known as torts. Unlike delicts, these are un-intentional act but not legally excusable from any liability. It is an act or omission causing damage to another wherein there is no pre-existing contractual relation between the parties.
What are the pertinent provisions in the Civil Code concerning liability?
- Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. (Article 19)
- Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. (Article 20)
- Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict. (Article 2176)
- When the plaintiff's own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant's lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. (Article 2179).
- In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty of reckless driving or violating traffic regulations at least twice within the next preceding two months. If the owner was not in the motor vehicle, the provisions of article 2180 are applicable. (Article 2184)
- Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers. (Article 2187)
LIABILITY IN GENERAL
What is the rule on liability in the Philippines?
GENERAL RULE
Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Meaning, a person shall be liable for the consequence of his own acts. (See New Civil Code, Art. 2176)
EXCEPTIONS
The obligation imposed under Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible.
The mere fact that the employee was using a service vehicle at the time of the injurious incident is not of itself sufficient to charge the Corporation with liability for the negligent operation of said vehicle unless it appears that he was operating the vehicle within the course or scope of his employment. (Castilex Industrial Corporation vs Vasquez, G.R. No. 132266 [21 December 1999])
Insofar as third persons are concerned, the registered owner of the motor vehicle is the employer of the negligent driver, and the actual employer is considered merely as an agent of such owner. (Filcar Transport Services v. Jose A. Espina, G.R. No. 174156 [20 June 2012]).
Define negligence.
Negligence, that is, a failure to comply with some duty of care owed by one to another, is a mixed question of law and fact, of standards of care and compliance therewith, involving the preliminary question as to whether defendant owed any duty of care to plaintiff, and leaving it for the jury to decide the ultimate facts of negligence, subject to the exceptions hereinafter stated. Where the standard of care is fixed and the measure of duty is defined by the law and is the same under all circumstances, and where compliance therewith is proved or disproved by uncontradicted evidence or undisputed facts from which only one inference can reasonably be made, the court may declare defendant to be guilty or not guilty of negligence as matter of law. Cases, where the standard of care is fixed, go to the jury only where the evidence of compliance rests on contradictory evidence or upon disputed facts. But where the standard of duty is not fixed, but variable, shifting with the circumstances, as is generally the case, it is for the jury to determine, under instructions, what the standard of care required in a particular case is, and whether there has been a compliance with such requirements. (Ireneo Santos vs Manuel Rustia, G.R. No. L-4917-R, [October 31, 1951])
GENERAL RULE
Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Meaning, a person shall be liable for the consequence of his own acts. (See New Civil Code, Art. 2176)
EXCEPTIONS
The obligation imposed under Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible.
- The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company
- Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company.
- The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions.
The mere fact that the employee was using a service vehicle at the time of the injurious incident is not of itself sufficient to charge the Corporation with liability for the negligent operation of said vehicle unless it appears that he was operating the vehicle within the course or scope of his employment. (Castilex Industrial Corporation vs Vasquez, G.R. No. 132266 [21 December 1999])
Insofar as third persons are concerned, the registered owner of the motor vehicle is the employer of the negligent driver, and the actual employer is considered merely as an agent of such owner. (Filcar Transport Services v. Jose A. Espina, G.R. No. 174156 [20 June 2012]).
- Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.
- The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176 shall be applicable.
- Teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody.
Define negligence.
Negligence, that is, a failure to comply with some duty of care owed by one to another, is a mixed question of law and fact, of standards of care and compliance therewith, involving the preliminary question as to whether defendant owed any duty of care to plaintiff, and leaving it for the jury to decide the ultimate facts of negligence, subject to the exceptions hereinafter stated. Where the standard of care is fixed and the measure of duty is defined by the law and is the same under all circumstances, and where compliance therewith is proved or disproved by uncontradicted evidence or undisputed facts from which only one inference can reasonably be made, the court may declare defendant to be guilty or not guilty of negligence as matter of law. Cases, where the standard of care is fixed, go to the jury only where the evidence of compliance rests on contradictory evidence or upon disputed facts. But where the standard of duty is not fixed, but variable, shifting with the circumstances, as is generally the case, it is for the jury to determine, under instructions, what the standard of care required in a particular case is, and whether there has been a compliance with such requirements. (Ireneo Santos vs Manuel Rustia, G.R. No. L-4917-R, [October 31, 1951])
What are the defenses to refute or reduce liability?
They are as follows:
They are as follows:
- Loss is solely due to the negligence of the claimant.
- The claimant is contributory negligent to his loss. If he is partly responsible for his own injury, he should not be entitled to recover damages in full but must bear the consequences of his own negligence.
- Loss is due to a fortuitous event.
- Loss is barred by prescription. The claim was filed beyond the allowable time under the law.
- The claim is fraudulent in nature.
COMMERCIAL GENERAL LIABILITY INSURANCE
What is Commercial Liability Insurance?
It is also known as Public Liability Insurance. It is aimed at indemnifying a third party or public in general from injury attributable to the insured's negligence in connection with their business activities or due to a condition in their premises such as slippery floor, uneven floors or stairs, lack of safety warnings or facilities, to name a few.
It is a precondition for the issuance of a business permit by local governments in the Philippines.
What are the standard clauses in ISO's Commercial General Liability Insurance?
What are the major exclusions in Commercial General Liability Insurance?
How do you compare CGL with Professional Liability Insurance?
The former covers claims arising bodily injury and property in connection with the insured's business like a visitor slipping and falling the insured's commercial property. The latter covers pure financial losses caused to a third party while providing professional services.
How do you compute liability in case of a death claim?
It is also known as Public Liability Insurance. It is aimed at indemnifying a third party or public in general from injury attributable to the insured's negligence in connection with their business activities or due to a condition in their premises such as slippery floor, uneven floors or stairs, lack of safety warnings or facilities, to name a few.
It is a precondition for the issuance of a business permit by local governments in the Philippines.
What are the standard clauses in ISO's Commercial General Liability Insurance?
- Bodily injury and Property Damage Liability - this section covers liability in connection with Bodily Injury and Property Damage caused to a third party.
- Personal and Advertising Injury Liability - shall cover injury, including consequential "bodily injury", arising out of one or more of the following offenses: (i) False arrest, detention or imprisonment., (ii) Malicious prosecution, (iii) The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor, (iv) Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services, (v) Oral or written publication, in any manner, of material that violates a person's right of privacy, (vi) The use of another's advertising idea in an insured's advertisement"; or (vii). Infringing upon another's copyright, trade dress or slogan in an insured's "advertisement". Advertisement means a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters. For the purposes of this definition: a. Notices that are published include material placed on the Internet or on similar electronic means of communication; and b. Regarding web-sites, only that part of a website that is about your goods, products or services for the purposes of attracting customers or supporters is considered an advertisement.
- Medical Payments - shall cover in connection with bodily injury claim. It shall include reasonable expenses for: (i) First aid administered at the time of an accident. (ii) Necessary medical, surgical, x-ray and dental services, including prosthetic devices, (iii) Necessary ambulance, hospital, professional nursing and funeral services.
- Supplementary Payments - it shall include legal fees to defend a suit arising from a covered claim under a and b.
What are the major exclusions in Commercial General Liability Insurance?
- Intentional acts of the insured - as a rule, an insured covers events that are accidental or fortuitous in nature.
- Assumed liability by the insured - the insured must always seek the prior consent of his insurer before he assumes liability.
- Pollution claims - this peril is covered by a more specific policy.
- Loss arising from use and ownership of motor vehicle, aircraft or watercraft - these perils are covered by a more specific policy.
- War and acts of war.
- Products liability and product recall - this peril is covered by a more specific policy.
- Pure financial loss - this refers to losses that does not involve bodily injury or property damage.
- Employers liability - this peril can be bought back as an endorsement.
How do you compare CGL with Professional Liability Insurance?
The former covers claims arising bodily injury and property in connection with the insured's business like a visitor slipping and falling the insured's commercial property. The latter covers pure financial losses caused to a third party while providing professional services.
How do you compute liability in case of a death claim?
- In considering the earning capacity of the victim as an element of damages, the following factors are considered in determining the compensable amount of lost earnings: (1) the number of years for which the victim would otherwise have lived; and (2) the rate of loss sustained by the heirs of the deceased. Jurisprudence provides that the first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of Mortality or the Actuarial Combined Experience Table of Mortality. As to the second factor, it is computed by multiplying the life expectancy by the net earnings of the deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses. The net earning is ordinarily computed at fifty percent (50%) of the gross earnings. Thus, the formula used by this Court in computing loss of earning capacity is: Net Earning Capacity = [2/3 x (80 – age at time of death) x (gross annual income – reasonable and necessary living expenses)]. (Nelen Lambert , assisted by her husband, Glenroy Aloysuis Lambert vs. Heirs of Ray Castillon, G.R. No. 160709, [February 23, 2005])
- In the case of moral damages, while it is true that there can be no exact or uniform rule for measuring the value of human life and the measure of damages cannot be arrived at by a precise mathematical calculation, the prevailing jurisprudence is Php50,000. (People v. Hapa, 413 Phil. 679, 699-700 [2001])
COMPREHENSIVE PERSONAL LIABILITY INSURANCE
What is Comprehensive Personal Liability?
It is a class of liability insurance which seeks to protect the insured and the member of insured household for injuries caused to a third party in connection with personal activities - those which are not connected to the business activities that is covered by a CGL.
Here some scenarios covered by CPL:
This product is typically part of the Homeowner's Insurance Package.
It is a class of liability insurance which seeks to protect the insured and the member of insured household for injuries caused to a third party in connection with personal activities - those which are not connected to the business activities that is covered by a CGL.
Here some scenarios covered by CPL:
- Pets causing injury to a guests
- A guest slips and fall within your premises
This product is typically part of the Homeowner's Insurance Package.
EMPLOYERS LIABILITY INSURANCE
What is Employers Liability Insurance?
It is intended to complement Comprehensive General Liability Insurance. This policy shall cover work-related injuries suffered by the employees of the insured which is not covered by Comprehensive General Liability Insurance because the latter shall only respond to injuries caused to a third party.
Unlike Workman's Compensation Insurance provided by Social Security System and Government Service Insurance System, it must be proven that there is negligence on the part of the employer.
It is intended to complement Comprehensive General Liability Insurance. This policy shall cover work-related injuries suffered by the employees of the insured which is not covered by Comprehensive General Liability Insurance because the latter shall only respond to injuries caused to a third party.
Unlike Workman's Compensation Insurance provided by Social Security System and Government Service Insurance System, it must be proven that there is negligence on the part of the employer.
PRODUCTS LIABILITY INSURANCE
What is Products liability insurance?
It is a type of insurance which protects against claims bodily injury or property damage caused by products sold or supplied by the insured, provided, the insured has already relinquished possession thereof.
Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers. (Article 2187, New Civil Code)
Who is liable relative to a defective product?
It is not limited to manufacturers. Under the Consumer Act of the Philippines, "Any Filipino or foreign manufacturer, producer, and any importer, shall be liable for redress, independently of fault, for damages caused to consumers by defects resulting from design, manufacture, construction, assembly and erection, formulas and handling and making up, presentation or packing of their products, as well as for the insufficient or inadequate information on the use and hazards thereof."
Also, the tradesman/seller is likewise liable in the following instances:
What are the types of products defect?
It is a type of insurance which protects against claims bodily injury or property damage caused by products sold or supplied by the insured, provided, the insured has already relinquished possession thereof.
Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers. (Article 2187, New Civil Code)
Who is liable relative to a defective product?
It is not limited to manufacturers. Under the Consumer Act of the Philippines, "Any Filipino or foreign manufacturer, producer, and any importer, shall be liable for redress, independently of fault, for damages caused to consumers by defects resulting from design, manufacture, construction, assembly and erection, formulas and handling and making up, presentation or packing of their products, as well as for the insufficient or inadequate information on the use and hazards thereof."
Also, the tradesman/seller is likewise liable in the following instances:
- It is not possible to identify the manufacturer, builder, producer or importer.
- The product is supplied, without clear identification of the manufacturer, producer, builder or importer;
- He does not adequately preserve perishable goods. The party making payment to the damaged party may exercise the right to recover a part of the whole of the payment made against the other responsible parties, in accordance with their part or responsibility in the cause of the damage effected.
What are the types of products defect?
- Manufacturing Defects—when the product departs from its intended design, even if all possible care was exercised.
- Design Defects—when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design, and failure to use the alternative design renders the product not reasonably safe.
- Inadequate Instructions or Warnings Defects—when the foreseeable risks of harm posed by the product could have been reduced or avoided by reasonable instructions or warnings, and their omission renders the product not reasonably safe. (Source: Insurance Journal)
PRODUCTS RECALL INSURANCE
What is Product Recall Insurance?
This product is intended to complement Products Liability Insurance. It seeks to indemnify the insured for expenses arising from a defective product such as:
This product is intended to complement Products Liability Insurance. It seeks to indemnify the insured for expenses arising from a defective product such as:
- Cost recall the product
- Cost to dispose the product, if found hazardous
- Cost to replace the product
- Cost to rehabilitate
MANUFACTURERS ERRORS AND OMISSION INSURANCE
What is a Manufacturer's E&O Insurance?
It is a class of liability insurance that covers liability due to negligence in the design or manufacturing of their own product that results to financial loss on the part of a third party.
This policy intends to complement Products Liability Insurance which covers liability arising from third party bodily injury and/or property damage only in connection with their defective products.
It is a class of liability insurance that covers liability due to negligence in the design or manufacturing of their own product that results to financial loss on the part of a third party.
This policy intends to complement Products Liability Insurance which covers liability arising from third party bodily injury and/or property damage only in connection with their defective products.
EQUIPMENT FLOATER INSURANCE
What is Equipment Floater Insurance?
It is a class of All Risk Insurance. This policy seeks to indemnify the insured's equipment against direct physical loss or damage due to an external cause not exclude the policy.
The equipment that may be covered under this policy are heavy equipment such as tractors, trailers, cranes, concrete mixers, fork life trucks, bulldozers, to name a few.
It is a class of All Risk Insurance. This policy seeks to indemnify the insured's equipment against direct physical loss or damage due to an external cause not exclude the policy.
The equipment that may be covered under this policy are heavy equipment such as tractors, trailers, cranes, concrete mixers, fork life trucks, bulldozers, to name a few.
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