Loss in Insurance

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Stipulation prohibiting transfer of claim after occurrence of loss void if conveyance made before loss – Except as otherwise provided in the case of life insurance, a stipulation prohibiting the transfer of the claim of the insured against the insurer after the loss has happened is void if such conveyance was made before the said loss.[1]

Insurer liable for a loss of which a peril insured was proximate cause – Unless otherwise stipulated in the policy, the insurer is liable for a loss which a peril insured against was the proximate cause even if the peril not contemplated by the contract may have been the remote cause of the loss.[2] Conversely, the insurer is not liable for a loss which the peril insured against only a remote cause.[3]

Liability of insurer for rescuing thing insured from peril insured against – The insurer is liable for the loss of a thing in these situations: (a) if the insurer rescues the thing insured from a peril insured against that would otherwise have caused a loss, but the thing insured is exposed to a peril not insured against resulting in the permanent deprivation of the insured of its possession (in whole or in part) in the course of such rescue, or (b) if the loss is caused by efforts to rescue the thing insured from a peril insured against.[4]

But-for clause on excepted peril – If a peril is especially excepted in a contract of insurance, a loss that would not have occurred “but for such peril” is excepted even if the immediate cause of the loss was a peril which was not excepted.[5]

Insurer not liable for willful act or connivance of insured, but insurer not exonerated for negligence of insured or of insurance agents or others – The insurer is not liable for a loss caused by the willful act or through the connivance of the insured; however, he is not exonerated by the negligence of the insured, or of the insurance agents or others.[6]

Sun Insurance v. Court of Appeals
G.R. No. 92383, 17 July 1992

Felix Lim Jr., who was covered with a personal accident policy, got himself killed after playing with a gun thinking it was not loaded since he removed the cartridge. He was in a happy mood and not drunk when he played with the gun. When the beneficiary claimed, Sun Insurance rejected it stating that what happened was not an accident, i.e., Lim willfully exposed himself to needless peril which voids the contract.

HELD: Sun Insurance was liable. There is no accident. In De la Cruz vs. Capital Insurance, it was held that “there is no accident when a deliberate act is performed unless some additional, unexpected, independent & unforeseen happening occurs which produces or brings about their injury or death.” In the case at bar, there was such a happening – the firing of the gun. Moreover, he did not expose himself to needless peril since he didn’t know that it was loaded. Lastly, he may be negligent but nothing in the policy avoids the insurance should the insured be negligent. An accident is an event that takes place without one’s foresight or exception.

Notice of Loss

Written notice of loss for insurance against fire without unnecessary delay – Without unnecessary delay, the insured is obligated to send a written notice of loss covered by an insurance against fire to the insurer; otherwise, the insurer is exonerated.[7] For other non-life insurance, the Insurance Commissioner is mandated to specify the period for the submission of the notice of loss.[8]

Best Legal Practices

  • Notify insurer immediately of the loss – The insured should immediately notify the insurer of the loss without unnecessary delay. Otherwise, the insurer will be released from liability. The purpose behind the rule is to give a fair opportunity for the insurer to investigate the claim.

What constitutes preliminary proof of loss – In case a preliminary proof of loss is required by a policy, it is sufficient upon the insured to give the best evidence which he has in his power at the time.[9] He is not obligated to give such proof as would be necessary in a court of justice.[10]

Waiver of defects in a notice of loss of preliminary proof – Without unnecessary delay, the failure of the insurer to specify his grounds for objections arising from any defect in a notice of loss or preliminary proof which the insured might remedy are waived.[11]

Waiver of delay in presentation of notice or proof of loss – The insurer waives the delay in the presentation of notice or proof of loss if such is caused by any act of him, or if he omits to take objection promptly and specifically upon that ground.[12]

Reasonable diligence sufficient in obtaining certificate or testimony of third person – If required by the policy, it is sufficient for the insured to use reasonable diligence to procure the certificate or testimony of a third person by way of preliminary proof of loss.[13] In case of refusal, the insured is to furnish reasonable evidence to the insurer that such refusal was not induced by any just grounds of disbelief in the facts necessary to be certified or testified.[14]


[1] P.D. 612 (Insurance Code), as amended, Section 85. Conversely, such stipulation is valid if the transfer is made after the loss.

[2] Ibid. Section 86.

[3] Ibid.

[4] INSURANCE CODE, as amended. Section 87.

[5] Ibid. Section 88.

[6] Ibid. Section 89.

[7] Ibid. Section 90.

[8] Ibid.

[9] Ibid. Section 91.

[10] Ibid.

[11] INSURANCE CODE, as amended. Section 92.

[12] Ibid. Section 93.

[13] Ibid. Section 94.

[14] Ibid.

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