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INSURANCE CODE
(P.D. No. 1460)
Making or proposing to make, assurety, any contract of suretyship asa vocation, not as
a mere incident toany other legitimate business of asurety;3.
SUBROGATION
It is the legal effect of the payment of claim by the insurer. Upon payment of the
claim, the insurer assumes all the legal rights and remedies available to the
insured against any and all parties liable for the loss.
The cause of the loss or injury must be a risk covered by the policy to entitle the
insurer to subrogation. (New Civil Code, Article 2207)
1. When the insurer pay the insured for a loss not covered by the
policy.(Sveriges Angfartygs Assurans Forening vs Qua Chee Gan, 21 SCRA
12 [1959])
2. The insurer by his own act releases the wrongdoer. (Pan Malayan
Insurance Co. vs. Court of Appeals, 184 SCRA 54 [1990])
3. In case of life insurance.
4. Recovery of loss in excess of the limits provided by the policy.
CONTRIBUTION
The maximum retention of an insurer per risk should not exceed twenty (20)
percent of its net worth. (Insurance Code of the Philippines, Section 221)
The purpose of this principle is to prevent the insured from recovering more than
the full amount of his loss where two (2) or more policies exist over the subject
matter of insurance.
Frodo insured his Php 2,000,000.00 property against fire for Php 2,000,000.00 each
with Mabagal and Mabilis Insurance Company, respectively. The property was partially
burned and the value of the loss was determined to be Php 1,200,000.00.
If you were Frodo’s insurance consultant, what will be your advice to him?
Frodo may file a claim against either one or both insurers, provided his aggregate
claim will not exceed Php1,200,000.00. Thus, he can do any of the following:
1. File a claim against either insurer for the full amount of loss.
2. File two simultaneous claims against the insurers based on their pro-rata
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