INSURANCE-LAW-WARRANTIES-SECS.-67-TO-76.pptx

Insurance

1. WARRANTIES SECS. 67-76, RA 10607

2. WARRANTY-STATEMENT OR PROMISE BY THE INSURED IN THE POLICY OR ATTACHED TO IT BY PROPER REFERRENCE SEC. 67. A warranty is either expressed or implied. “SEC. 68. A warranty may relate to the past, the present, the future, or to any or all of these. “SEC. 69. No particular form of words is necessary to create a warranty.

3. WaRranties vs. representations Warranties Representations 1. Considered part of the contract; -Mere collateral inducements 2. Written on the face of policy of by reference; -Written in separate paper or may be oral 3. To be substantially complied; -Substantial truth is enough 4. Any falsity or non-fulfilment , will result to breach ; -any falsity renders contract voidable or recissible on the ground of fraud (Sec. 45) 5. Presumed material; -insurer must show its materiality in order to defeat action of the policy

4. EXAMPLE OF WARRANTY American Home Insurance Vs. Tantoco - 366 SCRA 740) The IN FIRE policy states “Warranted during the pendency of the policy, Fire Extinguishing appliances as mentioned below be maintained in efficient working condition in order of the premises :a). PORTABLE EXTINGUISHERES, 2)INTERNAL HYDRANTS, 3)EXTERNANL HYDRANTS, 5). FIRE PUMPS , 6) 24-HOUR SECURITY SERVICES Insurer/Petitioner argues that the Warranty clearly obligates the insured to maintain all fire extinguishing appliances mentioned.

5. Issue : was the respondent guilty of breach of warranty? HELD : No, respondent was not required to provide for all extinguishing appliances enumerated because what the warranty provides is only to maintain efficient fire extinguishing and supporting gadgets on good working conditions. 2. Records show that the insured complied the warranty by having numerous portable fire extinguishers, two fire hoses, fire hydrant and emergency fire exits where all these pieces of equipment are in efficient conditions 3. Warranties are strictly construed with reasonableness in mind

6. EXPRESS WARRANTY-WHERE CONTAINED “SEC. 70. Without prejudice to Section 51, every express warranty, made at or before the execution of a policy, must be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy as making a part of it.

7. EXPRESS WARRANTY, PERSON AND FACTS SEC. 71. A statement in a policy, of a matter relating to the person or thing insured, or to the risk, as fact, is an express warranty thereof. “SEC. 72. A statement in a policy, which imparts that it is intended to do or not to do a thing which materially affects the risk, is a warranty that such act or omission shall take place.

8. Sec.72 refers to promisory warranty Breach of promises as to future acts will not avoid the policy unless the promises are material to the risk Example- A violation warranty avoids the policy: 1). If it is stipulated in the policy requiring owners occupancy that the house shall be occupied by a tenant, there is warranty that such condition shall not take place; 2).If it is agreed that the insured shall store inflammable materials of any kind, there is warrant that such act will not be committed

9. Section 73 breach of warranty that does not avoid the policy "Section 73. When, before the time arrives for the performance of a warranty relating to the future, a loss insured against happens, or performance becomes unlawful at the place of the contract, or impossible, the omission to fulfill the warranty does not avoid the policy.

10. Example: Sec. 73 Not to drive the car drinking alcoholic beverages Under a liability insurance, and property damage policy for automobile, in consideration of reduced premium, insured-car owner, signed a statement that he did not drink alcoholic beverages and would not do so during the life of the policy. The insured car was later involved in an accident and was greatly damaged. The insurer proved the insured was returning from a cocktail party at the time of the accident and drunk. Held : In this case the insurer is not liable for the loss.

11. EFFECTS OF VIOLATION OF WARRANTY? “SEC. 74. The violation of a material warranty, or other material provision of a policy, on the part of either party thereto, entitles the other to rescind. “SEC. 75. A policy may declare that a violation of specified provisions thereof shall avoid it, otherwise the breach of an immaterial provision does not avoid the policy. “SEC. 76. A breach of warranty without fraud merely exonerates an insurer from the time that it occurs, or where it is broken in its inception, prevents the policy from attaching to the risk.