Representation in Insurance

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How representation is made – A representation may be oral or written.[1] It may be made at the time of or before the issuance of the policy.[2] In the interpretation of a representation, the same rules as the language of contracts in general will be followed.[3]

Representation as to the future deemed a promise unless appearing otherwise – A representation as to the future is deemed a promise unless it appears that it was merely a statement of belief or expectation.[4]

Representation cannot qualify express provision of policy, but may qualify implied warranty – A representation cannot qualify an express provision in an insurance contract; however, a representation may qualify an implied warranty.[5]

Alteration or withdrawal of representation before effecting of insurance – Before the insurance is effected but not afterwards, a representation may be altered or withdrawn.[6]

Presumption of representation referring to date when insurance contract goes into effect – A representation is presumed to refer to the date on which the insurance contract goes into effect.[7]

When insured has no personal knowledge, not responsible for information communicated – The person insured who has no personal knowledge is not responsible for the truth of the information communicated in these cases: (a) he repeats information which he has upon the subject and which he believes to be true with the explanation that he does so on the information of others, or (b) he submits the information, in its whole extent, to the insurer.[8] This rule on non-liability does not apply if the information comes from an insured’s agent, whose duty it is to give such information.[9]

When representation is false – A representation is deemed false when the facts fail to correspond with its assertions or stipulations.[10]

Same; Rescission if representation is material – The injured party has the right to rescind the contract from the time when the representation becomes false provided such is a material point, whether affirmative or promissory.[11] The materiality of a representation is determined by the same rules as the materiality of a concealment.[12]

2-year incontestability clause – If a policy of life insurance made payable on the death of the insured has been in force during the lifetime of the insured for a period of two years from the date of its issuance or its last reinstatement, the insurer cannot prove that the said policy is void an initio or rescindable by reason of the fraudulent concealment or misrepresentation of the insured or his agent.[13]

[1] P.D. 612 (Insurance Code), as amended, Section 36.  The rules on representation applies as well to a modification of a contract of insurance as to its original formation (Section 47, Ibid.).

[2] Ibid. Section 37.

[3] Ibid. Section 38.

[4] Ibid. Section 39.

[5] Ibid. Section 40.

[6] Ibid. Section 41.

[7] Ibid. Section 42.

[8] Ibid. Section 43.

[9] Ibid. Section 43.

[10] Ibid. Section 44.

[11] INSURANCE CODE, as amended. Section 45. The right of rescission must be exercised prior to the commencement of an action on the contract (Paragraph 1, Section 48, Ibid.).

[12] Ibid. Section 46.

[13] Ibid. Paragraph 2, Section 48.

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