INSURANCE

(Codal/Beda Notes/De Leon)

SEC 2
Insurance- an agreement whereby one undertakes for a
consideration to indemnify another against lost, damage or
liability arising from an unknown or contingent event.

6. Consensual
Characteristics: (RAPE-ACUCU)
1.
2.
3.
4.
5.
6.
7.
8.
9.

Sources of Insurance Law:

1.
2.
3.
4.
5.
6.
7.
8.
9.

Insurance Code of 1978

Revised Government Service Insurance Act of 1977
Social Security Act of 1954
Government Property Insurance Law
Philippine Deposit Insurance Corporation Law
Code of Commerce
An Act Strengthening the Insurance Industry
Act Amending Republic No. 7875
National Health Insurance Act
Suppletory:
Civil Code
General Principles (California and New York)

Elements of a Contract of Insurance: (PARIS)

1.
2.
3.
4.
5.

Payment of Premium
Assumption of Risk
Risk of Loss
Insurable Interest
Scheme to Distribute the Losses

Nature of an Insurance Contract: (VAPOR-C)

1.
2.
3.
4.
5.

Voluntary
Aleatory
Property
Onerous
Risk Distributing Device

Risk Distributing Device

Aleatory
Personal
Executory- executory to the insurer
Contract of Adhesion- already in printed form; fine print rule
Conditional
Uberrimae Fidae- perfect good faith
Consensual
Unilateral- executed to the insured after premium and
executory upon the insurer until payment of loss

Right of Subrogation:

Make the person/s who caused the loss, legally responsible

for it
Prevent the insured from receiving double recovery
Applies only to property insurance not to life insurance
It accrues only upon payment of the insurance claim by the
insurer
Exceptions:
1. When the insured by his own act releases the wrongdoer
2. The insurer pays the insured the value of the loss without
notifying the carrier who has in good faith settled the
insureds claim for loss
3. The insurer pays the insured for the loss not covered by
the policy
4. Life insurances

Classifications:
(1) Life Insurance
a. Individual life
b. Group life
c. Industrial life
(2) Non-life
a. Marine

b. Fire
c. Casualty
Surety:

Suretyship- an agreement whereby a party called the surety,

guarantees the performance by another called the principal
obligor of an obligation or undertaking in favour of the third
party called the obligee.
Bonds of guaranty and surety companies who engage in the
business for profit are usually insurance contracts (GENERAL
RULE)
Only if made by a surety who or which, as such is doing an
insurance business within the meaning of the Code.

Construction:

Ambiguity: liberally in favour of the insured and strictly against

the insurer (Contract of adhesion)
Terms are clear: construed and enforced according to the
sense and meaning of the terms

Principal object and purpose test

-if the principal object and purpose is indemnity
(Insurance)
-if it is service, risk, transfer and distribution being
merely incidental (Not insurance)

SEC 3

SEC 4

Transacting an insurance business:

If the contract is fair and no fraud or undue influence was

practiced by the insurer, the minor cannot recover the
premiums paid, if he cannot return the benefits received.

Married woman may also take out insurance on her

paraphernal or separate property or the property given to her
by her husband.
A contract of insurance entered into by a minor is not entirely
void, only voidable.
If the contract is not disaffirmed by the minor, the insurer
cannot escape liability by pleading minority as a defense.

Lottery- extends to all schemes for the distribution of

prizes by chance, such as policy playing, gift exhibition,
prize concerts, raffles at fairs etc. and all various forms of
gambling.
If the prizes do not come out of the fund or contributions
by the participants, no consideration has been paid, no
lottery.
Purpose of insurance: indemnity/reimbursement; not a
wagering contract
Gambling: receive much more than a person pays

SEC 6
Parties of the Contract of Insurance:
1. Insurer/assurer/underwriter-assumes/accepts the risk of
loss, undertakes for a consideration to indemnify the
insured on the happening of a specified contingent or
event.
2. Insured- who is indemnified. (ANYONE EXCEPT PUBLIC
ENEMY)
3. Cestui que vie- a person on whose life the insurance is
written
4. Beneficiary- person designated by the terms of the policy
as one to receive the proceeds of the insurance.

Insurer:
1. Foreign or domestic insurance corporation
Sufficient capital and assets required under the
Insurance Code

Certificate of authority to operate issued by the

Insurance Commission
2. Individual, partnership, association

Business of insurance is one that is affected with public interest

therefore it is subject to regulation and control by the state by virtue
of the exercise of its police power.

SEC 7
Public enemy- designates a nation with whom Philippines is at
war ans it includes every citizen or subjects of that nation.
-Alien enemy
SEC 8

Insurable interest of mortgagee and mortgagor:

(1) Separate insurable interest
Mortgagor: (?)
Mortgagee: interest on the lien
(2) Extent of insurable interest:
Mortgagor: extent to its value
Mortgagor: extent to the debt insured

Insurance by MORTGAGEE on his own interest:

1. He is entitled to the proceeds of the policy in case of loss
before payment of the mortgage
2. Subrogated by the insurer
3. Does not relieve the mortgagor from his principal obligation
but only changes the obligation
Insurance by MORTGAGOR on his own interest:

1. The insurance proceeds do not inure to the benefit of the

mortgagee who has no greater right than unsecured creditors
in the same.
2. For the benefit of the mortgagee:
He may become the assignee of the policy
He may become the pledgee
Rider: payable to the mortgagee
Standard mortgage clause: collateral independent
contract between mortgagee and the insurer
Payable absolutely to the mortgagor: mortgagee
acquires an equitable lien upon the proceeds
Insurance by mortgagor for benefit of mortgagee/assigned to
mortgagee:

The contract is deemed to be upon the interest of the

mortgagor
Any act of the mortgagor prior to the loss which would avoid
the insurance affects the mortgagee even if the property is in
the hands of the mortgagee
Any act to be performed by mortgagor may be performed by
mortgagee
In case of loss, mortgagee is entitled to the proceeds to the
extent of his credit
Upon recovery, the debt in extinguished

Note: NO SUBROGATION IN THIS CASE

Right of mortgagee under mortgagors policy:
1. Before loss: mortgagee is a conditional appointee
2. After loss: When credit not due; the mortgagee is entitled to
receive the money to apply to the extinguishment of the debt
as fast as it becomes due.
Insurance by mortgagee on behalf of mortgagor:
The rule on subrogation does not apply if there is no
stipulation unless the mortgagee insures only his interest.

SEC 9

Where a new and distinct consideration passes from the

mortgagee to the insurer, a new contract is created between
them.
A novation of the original contract takes place; acts of
mortgagor cannot take effect the rights of the mortgagee, the
assignee.

SEC 10
Insurable interest- interest which the law requires the owner of
an insurance policy to have in the person or thing insured.

Pecuniary/financial benefit
Benefit from its existence and prejudice from
destruction

its

(c) Parents and their legitimate children and the legitimate or

illegitimate children of the latter
(d) Parents and their illegitimate children and the legitimate or
illegitimate children of latter
(e) Legitimate brothers and sisters, full or halfblood
Pecuniary interest essential:

Lesser degree of kinship

E.g. uncle, aunt, nephew, niece
A mere relationship by affinity

Note: Under our law, the consent of the person insured is not
essential to the validity of the policy. So long as it could be proved
that the assured has a legal insurable interest at the inception of the
policy, the insurance is valid even without such consent.
Note: Debtor insures his life for the benefit of the creditor, if there is
full payment, debtors estate will benefit.

Classes of Life Policies:

1. Insurance upon ones life- for the benefit for himself or of his
estate; matures only at his death or for the benefit of a third
person who may be designated as beneficiary.
-unlimited insurable interest
2. Insurance upon life of another- insurable interest upon the life
of the person.
-evidence of good faith of the parties
-pecuniary
-third party as a beneficiary: both owner and
beneficiary must have an insurable interest in the life
of the cesti que vie.
Insurable Interest in life of person upon whom one depends for
education/support:
Article 195 Family Code; obliged to support each other
(a) Spouses
(b) Legitimate ascendants and descendants

SEC 11
Kinds of Beneficiary:
1. Insured himself
2. Third person who paid a consideration
3. Third person through mere bounty of the insured
Cannot be beneficiaries: (Art 739)
Those who are guilty of adultery or concubinage with
the insured at the time of the designation
Those who were found guilty with the insured of the
same criminal offense, committed in the consideration
of the designation
A public officer or his wife, descendants and
ascendants designated by reason of his office.
Right of insured to change beneficiary in Life Insurance:

Insured has the power to change the beneficiary without the

consent of the latter who acquires no vested right but only an
expectancy of receiving the proceeds under the insurance.
Insureds power to extinguish the beneficiarys interest ceases
at death; designation becomes irrevocable.
If the right to change the beneficiary is expressly waived, the
insured has no power to make such change without the
consent of the beneficiary.
Vested right of the beneficiary: measured on its full face value;
beneficiary may continue paying, entitled to automatic
extended term, vested right cannot be divisible at any given
time if insured stopped paying.

-payable to my wife and children the insurance is for the

benefit of all children of the insured, whether by named wife or those
of another.
(4) Family- the court will ascertain whether that person was so
regarded by the insured.
(5) Heirs/Legal heirs- class of persons who would take the property of
the insured in case he died intestate.
(6) Estate or Legal representatives of deceased- executors,
administrators
Note: If no beneficiary, proceeds will go to legal heirs.

Where beneficiary dies before insured:

1st view- his vested rights should pass to his representatives;
proceeds should belong to the representatives of the beneficiary
2nd view- the estate of the insured should be entitled to the
proceeds of the insurance especially where the designation is subject
to the express condition to pay the beneficiary if he survives the
insured or if surviving.
Designation of Beneficiary:
(1) Children- descendants of the first degree
-named individually: other children cannot share the insurance
proceeds
(2) Husband; wife or widow
-no legal status of the wife of the insured does not prevent her
from taking as beneficiary
-but if not named: the legal husband or wife is entitled to the
benefits.
(3) Husband and children; wife and children
- payable to wife and their children includes children by
another wife

SEC 12
Interest- right to receive the proceeds
Nearest relatives of the insured:
(1) Legitimate children
(2) Father and mother
(3) Grandmother and grandfather or ascendants in nearest
degree
(4) Illegitimate children
(5) Surviving spouse
(6) Collateral relatives
Brothers and sisters (halfblood and fullblood)
Nephews and nieces
In default, the State shall be entitled to receive the insurance
proceeds.
Liability of insurer on death of the insured:
(1) Death at the hands of the law assumed by the insurer under a
life policy in the absence of a valid policy exception
(2) Death by self-destruction, insurer is not liable in the case that
insured commits suicide intentionally. But death which is
purely accidental, even though due to the insureds own
carelessness or negligence is not excluded from the
coverage by the words self-destruction.

(3) Death by suicide while insane does not discharge the insurer
from his liability on the contract. (Insurer must have known)
(4) Death caused by beneficiary, still can recover if:
a. Killing was accidental/defense
b. Beneficiary was insane
(5) Death caused by violation of law- the insurer must establish
that the commission of the felony or the violation of the law
was the cause or the causal connection with the accident
resulting in the death of the insured.

SEC 16
Mere hope or expectation of benefit uncoupled with any
present legal right will not support a contract of insurance
Insurable interest of a beneficiary under a will- no legal basis
since the will has no legal effect before the death of the
testator.
SEC 19

SEC 13

Applicable only to property insurance

Interest in the property must exist:
a. On the date of execution
b. On the date of the occurrence of the risk

Insurable interest in the property

Anyone has insurable interest in the property who derives

a benefit from its existence or would suffer loss from its
destruction.
It is sufficient that it pecuniary injury would be the natural
consequence
Ones interest is not determined by concept of title but
whether the insured has substantial economic interest in
the property.

Life vs. Property:

Life
a. Unlimited insurable interest
b. Insurable interest must exist at the policy takes effect;
need not exist at the time of the loss
c. Expectation of benefit be derived from the continued
existence of life need not have any legal basis whatever
Property
a. Limited to the actual value of the interest
b. Must exist when the insurance takes effect and when the
loss occurs
c. Has a basis of a legal right

SEC 14
1. Existing interest- legal title or equitable title
2. Inchoate title
-Even if without title, he will suffer the loss as the
proximate result of its damage or destruction.
3. Expectancy with existing interest
-Expectation of benefit to be derived from the
continued existence of the property must have a basis of a
legal right.
-Such expectation not arising from any legal right or
duty in connection with the property does not constitute an
insurable interest.

SEC 20

The mere transfer of a thing insured does not transfer the

policy but suspends it until the same person becomes the
owner of both the policy and the thing insured.
Not void, but merely suspended by a change of interest.
Change of interest in Sections 20, 21, 22, 23, 24: ABSOLUTE
TRANSFER of the property insured.

Exceptions:

(1) Life, health and accident insurance

(2) Change of interest after the occurrence of an injury,
resulting to loss
-after the loss, the liability of the insurer becomes fixed
-the right is absolute and cannot be delimited by
agreement
(3) Change of interest in one or more several things,
separately insured by one policy
-Divisible contract: things are separately insured in
one policy, violation of one doesnt affect others
-Indivisible contract: things are insured under one
policy for a gross sum and for the entire premium,
change of interest in one will also avoid as to others
(4) Change of interest by will or succession
-the insurance on property passes automatically, on
the death of the insured to the heir, legatee or devisee
who acquired the interest in the thing insured.
(5) Transfer of interest by one if several partners, joint
owners, or owners in common, jointly insured
-Exception: sale of interest in partnership property by
the partner to one his co-partners without the consent
of the insurer and before the loss occurs (contains in
the condition)
-transfer to stranger will not avoid the policy. It ends
the contract as to him but does not affect the insurance
as to others.
(6) Policy framed that will inure to the benefit of whomsoever
during the continuance of the risk
(7) Express prohibition against alienation, completely
avoided

SEC 26
Devices for ascertaining and controlling risk and loss:
(1)
(2)
(3)
(4)

Concealment
Representation
Warranties
Conditions

Requisites of concealment:
1. Knows the fact which he neglects to communicate/disclose to
other
2. Duty bound to disclose such fact
3. The party concealing makes no warranty of the fact concealed
4. The other party has no means of ascertaining the fact
concealed

SEC 27

Basis of the rule vitiating the contract in cases of concealment

is that it misleads/deceives the insurer in accepting the risk or
accepting it at the rate of premium agreed upon.
The presence or absence of an intent to deceive is immaterial.

SEC 28
Test: If the applicant is aware of the existence of some circumstances
which he knows would influence the insurer in acting upon his
application. Good faith requires him to disclose that
circumstance, though unasked.

There is no obligation upon the insurance company to verify

the statements made by the insured especially if the insured
knows such facts.

SEC 31

After the contract has become effective: the insured has no

duty to disclose even though the policy is yet to issue
Before contract becomes effective: under the duty to disclose
to the insurer.

SEC 34

The policy of insurance must specify the interest of the

insured in property insured if he is not the absolute owner
Such requirement is made so that the insurer may determine
the extent of the insureds insurable interest
No duty to disclose mere opinion, speculation, intention or
expectation.

The insured is given the discretion to communicate

to the insurer what he knows of the matter of which
he has no personal knowledge. (he is not
responsible if it turns out to be false)
Where a party orders insurance and afterwards
receives information material to the risk, or has
knowledge to the loss, he ought to communicate to
his agent as soon as with due diligence. If he omits
to do so, the policy is avoided.
The captain of the ship is bound to communicate
its loss to the owner

SEC 36
Representation-statement made by the insured at the time of or
prior to the issuance of the policy relative to the risk to be insured,
as to an existing or past fact or state of facts, or concerning a
future happening, to give information to the insurer and otherwise
induce him to enter into the insurance contract.

SEC 44

Representations are not required to be literally true, they only

need to be substantially true.
In order that a policy shall be avoided, a representation must
be false in a substantial and material aspect.
MARINE INSURANCE: Substantial truth is not sufficient.

Misrepresentation
(1) Fact which is untrue
(2) With an intent to deceive/stated as true without it to be true
which has a tendency to mislead
(3) Such fact is material to the risk

SEC 39
Kinds of Representation:
1. Affirmative representation- allegation as to the existence or
non-existence of a fact when the contract begins.
2. Promissory representation- promise to be fulfilled after the
contract has come into existence or any statement concerning
what is to happen during the existence of the insurance.

SEC 46
Concealment vs Misrepresentation
(1) The insured withholds information of material facts from the
insurer (Concealment)
The insured makes erroneous statements of facts with the
intent of inducing the insurer to enter into the contract.
(Misrepresentation)
(2) Materiality is determined by the same rules of
misrepresentation
(3) Rescind the contract
(4) Whether intentional or not

SEC 48
SEC 43

NON LIFE POLICY: the insurer is no longer entitled to rescind

a contrct of insurance after the insured has filed an action to
collect the amount of insurance.
LIFE POLICY: the defenses are only available during the first
2 years of the life insurance policy.

Incontestability clause- after the requisites are show to exist, the

insurer shall be estopped from contesting the policy or setting up any
defense. (2 years)
-may be shortened but it cannot be extended by stipulation.
-Reinstated policy: from the time of its reinstatement
Exceptions:
(1)
(2)
(3)
(4)

Lack of insurable interest

Cause of the death of the insured is an excepted risk
Non-payment of premiums
Conditions of the policy relating to military or naval service
have been violated
(5) Vicious fraud; scheme to murder the insured
(6) Beneficiary failed to furnish proof of death or to comply with
any condition imposed by the policy after the loss happened
(7) Action was not brought within the time specified

SEC 49 & 50
Policy- written document embodying the terms and stipulations of the
contract of insurance between the insurer and the insured.

Only signed by the insurer of his agent unless express

warranties are contained in a separate instrument.

Perfection of Insurance Contract:

(1) Acceptance of Application- Retention by the insurer of the
premium paid with the application for an unreasonable length
of time may constitute an acceptance especially where the

insurer was guilty of negligent delay in acting on the

application.
(2) Compliance with Condition Predecent-additional conditions
found in the application for insurance or in the policy is
delivered and the first premium paid. Until the conditions are
fulfilled, the policy is of no binding effect.
(3) LIFE INSURANCE: binding slip or binding receipt does not
insure by itself.
Cover Notes- issued to bind the Insurance temporarily pending
the issuance of the policy.
Binding receipt- a receipt given to an applicant for insurance
confirming that the application has been signed and the first
premium paid and stipulating that the insurance shall go
into effect immediately if the risk proves to be acceptable
irrespective of the date of delivery of the policy.
Modes of Delivery of the Policy:
(1) Actual-in person/agent
(2) Constructive -deposited in the mail duly directed to the insured
or to his agent.
Effect of Delivery of the Policy:
(1) Where delivery conditional: non-performance of the condition
precedent prevents the contract from taking effect.
(2) Where delivery is unconditional- the unconditional delivery of
the insurance policy corresponding to the terms of the
application ordinarily consummates the contract and the policy
delivered becomes the final contract between the parties.
(3) Where premium still unpaid after unconditional delivery- clear
and express acceptance by the insured of the insurers offer to
extend credit, in absence, the policy will lapse if the premium
is not paid.
Rider- small printed or typed stipulation contained on a slip of paper
attached to the policy and forming an integral part of the policy.
-additional stipulations of the parties
-more deliberate expression of the agreement of the parties.

Doctrine of Reasonable Expectation- Insureds reasonable

expectations entitle him to coverage despite policy language to the
contrary because the insurer failed to explain the limitations on
coverage of the insured.
Attached papers on Insurance Policy:

No rider etc. shall be attached to, printed or stamped upon a

policy of insurance unless the form of such rider, etc. has
been approved by the Insurance Commissioner.
Not binding on the insured unless the descriptive title or name
of the rider, etc. is also mentioned and written on the blank
spaces provided in the policy.
Clause- agreement between the insurer and the insured on
certain matter relating to the liability of the insurer in case of
loss.
Endorsement- any provision added to an insurance contract
altering its scope or application.
Countersignature of the insured is required to any rider, etc.
not applied for by him if issued after the policy, which
countersignature shall be taken as his agreement to the
contents of the matter so attached.

Failure of Insured to ready policy:

Majority Rule- customary for insured persons to accept policies
without reading is judicially recognized
Minority Rule- insured has the duty to read his policy and is bound by
his contract as written whether he reads it or not.
Exception to the minority rule:
(1) Copy of the application containing the false statements was
not attached to the policy
(2) He is induced by the fraud of the agent of the insurer not to
read his policy
(3) Illiterate or unable to read English
(4) Contracts are long, complicated and difficult to understand.

-The insurer must instead take affirmative steps to make sure that the
insured is informed of his remedial rights.

SEC 51
Contents of the Policy:
(1)
(2)
(3)
(4)
(5)
(6)

Name of the parties

Amount of Insurance
Premium
Property or life insured
Interest of insured in the property
Risk insured against
Personal risks
Property risks
Liability risks
(7) Term or duration of insurance
Risk- chance of loss, possibility of occurrence of loss based on
known and unknown factors.
Peril- contingent or unknown event which may cause a loss.
Hazard- condition or factor, tangible or intangible which may
create or increase the chance of loss from a given peril.
-Physical hazards
-Moral hazards
Requirements of risks to be insurable:
(1) Importance-warrant the existence of the insurance contract.
(2) Calculability-reasonable statistical estimate of the chance of
loss and possible variations from the estimate

(3) Definite of loss- fairly definite as to cause, time, place, and

amount
(4) No catastrophic loss
(5) Accidental in nature- cover fortuitous or unexpected losses

(1) Open policy- does not predetermine the value of the insured
property but establishes a maximum amount the insurer will
pay in case of a total loss of the property insured.
-establish the FMV of the insureds property at the
time of the loss. If the FMV exceeds the maximum, the
latter will control, if below, the former.

Note: These requirements are not absolute, it varies among insurers

and may change over time.

-pays actual cash value of the property.

SEC 52
Preliminary contract of present insurance- the insurer insures the
subject matter usually by what is known as the binding slip or cover
note, the contract to be effective until the formal policy is issued or
the risk rejected.

(2) Valued policy- the value of the insureds property is

predetermined and the value is the amount to be used in case of total
loss.
-2 values (face value of the policy, the value of the thin
insured)

LIFE INSURANCE: no liability shall attach until the insurer

approves the risk.

-liability of the insurer under a life policy is measured by the

face value of the policy.

Preliminary executory contract of insurance-the insurer makes a

contract to insure the subject matter at some subsequent time which
may be definite or indefinite.

(3) Running policy-provide indemnity for property which cannot well

be covered by a valued policy because of its frequent change of
location and quantity, or for property of such nature as not to admit of
a gross valuation.

-the right acquired by the insured is merely to demand the

delivery of the policy in accordance with the terms agreed upon and
the obligation assumed by the insurer is to deliver such policy.
Cover note- valid for 60 days, whether or not the premium has been
paid, but may be cancelled at least 7 days notice to the other party;
may be extended with certification that the risk is not yet determined
or established.
-may impose on cover noted a deposit premium equivalent to
at least 25% of the estimated premium of the intended insurance
coverage.

SEC 59, 60, 61, 62

Kinds of policies:

-has no fixed face value, the face value adjusting itself to the
changing value at one specified location or at each of several
location.
Advantages of a running policy:
(1) He is neither underinsured/overinsured
(2) Avoids cancellations- adjustments to the value at each
location
(3) Saved by the trouble of watching the insurance and the
danger of being uninsured
(4) Rate is adjusted to 100% insurance.
SEC 63

The period for commencing an action under a policy of

insurance is to be computed not from the time when the loss

actually occurs but from the time when the insured has a right
to bring an action against the insurer.
(1) Stipulated prescriptive period begins from the happening of
the loss
(2) Stipulated prescriptive period begins from the rejection of the
claim
(3) Stipulated prescriptive period begins from filing of the claim
(contradicts public policy)

SEC 64 and 65
Cancellation- right to rescind, abandon, or cancel a contract of
insurance.
-termination by insured or insurer before expiration

(1) Non-payment of premiums

(2) Conviction of a crime arising out of acts increasing the hazard
insured against
(3) Discovery of fraud or material misrepresentation
(4) Discovery of willful or reckless acts or omissions increasing
the hazard insured against
(5) Physical changes in the property insured which result in the
property becoming uninsurable.
(6) Discovery of other insurance coverage that makes the total
insurance in excess of the value of the property insured
(7) A determination by the Commissioner that the continuation of
the policy would violate or would place the insurer in violation
of the Code.
Sufficiency of notice of cancellation:
(1) Prior notice of cancellation to the insured
(2) Based on the occurrence, after the effective date of the policy
(3) Must be in writing, mailed or delivered to the named insured at
the address shown in the policy or to his authorized broker
(4) Must state which grounds set fort is relied upon.
Renewal of non-life insurance policy: (N/A to life)

(1) Right to renew upon the same terms and conditions of the
original policy upon payment of the premium due on the
effective date of the renewal
(2) Unless insurer at least 45 days in advance gives notice of its
intention not to renew the policy or to condition its renewal
upon reduction of its amount or elimination of some
coverages.
(3) Notice within the prescribed period:
a. Written less than 1 year- considered as if written 1 year
b. Written for a longer term or with no fixed expiration
date is considered as if written for successive policy
period terms for 1 year.