CASUALTY INSURANCE
pay damages, usually arising out of negligence or nuisance and occasionally, under contract.
SEC. 176. Casualty insurance is insurance covering loss or liability arising from accident or
mishap, excluding certain types of loss which by law or custom are considered as falling
exclusively within the scope of other types of insurance such as fire or marine. It includes, but
is not limited to, employers liability insurance, motor vehicle liability insurance, plate glass
insurance, burglary and theft insurance, personal accident and health insurance as written by
non-life insurance companies, and other substantially similar kinds of insurance.
CASUALTY INSURANCE DEFINED
Includes all forms of insurance against loss or liability arising from accident or mishap
excluding certain types of loss or liability which are not within the scope of other types of
insurance, namely: marine; fire; suretyship; and life
RISKS OR LOSSES COVERED
Section 176 defines casualty insurance by a process of elimination. Without the exclusion of the
other types of insurance, casualty insurance would apply to almost any kind of insurance.
(1) Accepting casualty to mean accident That is, a violent mishap proceeding from an
unknown or unexpected cause casualty insurance might be presumed to include any
loss or damage when an accident is the cause of the loss.
Thus, a casualty insurance policy excludes losses arising from accident which are within
the coverage of the other types of insurance mentioned.
(2) In burglary, robbery and theft insurance, the opportunity to defraud the insurer the
moral hazard is so great that insurer have found it necessary to fill up their policies with
many restrictions designed to reduce the hazard. Persons frequently excluded under such
provisions are those in the insureds service and employment. The purpose of the
exception is to guard against liability should the theft be committed by one having
unrestricted access to the property.
Except with respect to compulsory motor vehicle liability insurance, the Insurance Code
contains no other provisions applicable to casualty insurance or to robbery insurance in
particular.
TWO GENERAL DIVISIONS OF CASUALTY INSURANCE
(1) Insurance against specified perils which may affect the person and/or property of the
inured such as personal accident, robbery or theft, damage to or loss of motor vehicle,
insolvency of debtors, defalcation of employees
(2) Insurance against specified perils which may give rise to liability on the part of the
insured for claims for injuries to other or for damage to their property, such as
workmens compensation, motor vehicle liability, professional liability, products liability
LIABILITY INSURANCE DEFINED
A contract of indemnity for the benefit of the insured and those in privity with him, or
those to whom the law upon the grounds of public policy extends the indemnity against
the liability
Acuna. Ardiente. Gomez. Karunungan. Matobato. Monje. Noval. Palacol. Santiago. Santuyo
Under policies of this type, an indemnity is provided to the insured in respect of his legal liability to
LIABILTY INSURANCE
(1) Liability for quasi-delict of non-fulfillment of contract Liability is financial
responsibility that one party has to another party as a consequence of doing or failing to
do something.
(2) Liability for criminal negligence Liabilities arising out of acts of negligence which are
also criminal are also insurable on the ground that such acts are accidental. Thus, a motor
insurance policy covering the insureds liability for accidental injury caused by his
negligence, even though gross and attended by criminal consequences such as homicide
through reckless imprudence, will not be void as against public policy.
Liability consequences of deliberate criminal acts are not insurable. Thus, it was held that
a motorist guilty of a deliberate crime resulting in payment of damages to an injured third
party is not entitled to recover on policy. However, if he does not pay the damages, the
injured third party can recover against the insurer.
INSURABLE INTEREST IN LIABILITY INSURANCE
In liability insurance, questions of insurable interest are not particularly important. As a general rule,
liability insurance, like other forms of insurance, must be supported by an insurable interest in the
insured, although there is some authority to the contrary.
(1) The insurable interest is found in the interest the insured has in the safety of persons who
may maintain, or in the freedom from damage of property which may become the basis of
suits against him in case of their injury or destruction. The interest does not depend upon
whether the insured has legal or equitable interest in property, but upon whether he may
be charged by law with the liability against which insurance is taken out.
(2) Therefore, liability insurance assuming one qualifies as an insured is always
supported by an insurable interest.
WHEN LIABILITY INSURANCE IN POLICY PAYABLE
The general distinction between an insurance against liability and one against actual loss is that the
coverage or liability of the insurer under the first attaches when the liability of the insured to the
injured third party attaches, regardless of actual loss at that time, while under the second, an action
against the insurer does not lie until an actual loss is sustained by the insured.
In a third party liability insurance contract, the insurer assumes the obligation of paying the insured
third parties to whom the insured is liable. From the moment that the insured becomes liable to third
person, the insured acquires an interest in the insurance contract which may be garnished like any
other credit.
RIGHT OF INJURED PERSON TO SUE INSURER OF PARTY AT FAULT
The right of the person injured to sue the insurer of the party at fault (insured) depends on whether
the contract of insurance is intended to benefit third persons also or only the insured.
Page 1 | Chupapi Notes
 (1) Indemnity against third party liability Where the contract provides for indemnity
against liability to third persons, then third persons to whom the insured is liable, can sue
directly the insurer upon the occurrence of the injury or event upon which the liability
depends.
The purpose is to protect the injured persons against the insolvency of the insured who
causes such injury and to give him a certain beneficial interest in the proceeds of the
policy.
Where the contract is one of indemnity against liability, it becomes operative as soon as
the liability of the person indemnified arises irrespective of whether r not he has suffered
actual loss.
(2) Indemnity against loss or payment Where the contract is for indemnity against actual
loss or payment, then third persons cannot proceed against the insurer, the contract being
solely to reimburse the insured for liability actually discharged by him through payment
to third persons, said third persons recourse being thus limited to the insured alone. Prior
payment by the insured is necessary in order that the obligation of the insurer may arise.
BASIS AND EXTENT OF INSURERS LIABILITY
(1) Contract of insurance The direct liability of the insurer under indemnity contract
against third party liability does not mean that the insurer can be held solidarily liable
with the insured and/or the other parties found at fault. The liability of the insurer to the
third party is based on contract particularly, the insurance policy while that of the insured
is based on tort in accordance with the provisions of the Civil Code.
(2) Sum limited in the contract While in a solidary obligation the creditor may enforce the
entire obligation against one of the solidary debtors, in an insurance contract, the insurer
undertakes to indemnify the insured against loss, damage or liability arising from
unknown or contingent event. (Example: page 422)
ACCIDENT AND HEALTH INSURANCE
(1) Closely related purposes of coverages Accident insurance reimburse the insured for
pecuniary loss suffered as a result of injuries sustained in an accident.
Health insurance reimburses the insured for pecuniary loss rising out of disease-related
illness.
In both kinds of insurance, the insured is reimbursed for medical and hospital expenses
and, in the case of accident insurance and sometimes health insurance, earnings as a
result of the incapacity.
(2) Combination of coverages Also, accident insurance is frequently offered as a
supplement to life insurance. If death is caused by accident, many life policies pay
double indemnity, meaning proceeds twice the amount of the policys face value.
Accident insurance is also provided with other coverages, most prominently with motor
vehicle insurance.
Acuna. Ardiente. Gomez. Karunungan. Matobato. Monje. Noval. Palacol. Santiago. Santuyo
(3) Burden of proof In accident insurance, the insureds beneficiary has the burden of proof
in demonstrating that the cause of death is due to the covered peril. Once that fact is
established, the burden then shifts to the insurer to show any excepted peril that may have
been stipulated by the parties. An accident insurance is not thus to be likened to an
ordinary life insurance where the insureds death, regardless of the cause thereof, would
normally be compensable.
MEANING OF ACCIDENT AND ACCIDENTAL AS USED IN ACCIDENT POLICY
The terms accident and accidental, have not acquired any technical meaning. They are construed
by the courts in their ordinary and common acceptation. Thus, the terms have been taken to mean
that which happens by chance or fortuitously, without intention or design, and which is unexpected,
unusual and unforeseen.
(1) Happening from known or unknown cause unusual and unexpected
Accident:
- An event that takes place without ones foresight or expectation an
event that proceeds from an unknown cause, or is an unusual effect of a
known cause and not expected
- It is an event which happens without any human agency or, if happening
through human agency, an event which, under the circumstances, is
unusual to and not expected by the person to whom it happens
- It has also been defined as an injury which happens by reason of some
violence or casualty to the insured without his design, consent, or
voluntary cooperation
(2) Cause may be attributable to fault or negligence The terms do no exclude event
resulting in damage or loss due to the fault, recklessness or negligence of third parties.
The concept accident is not necessarily synonymous with the concept of no fault.
RULE AS TO DEATH OR INJURY RESULTING FROM ACCIDENTAL OR ACCIDENTAL
MEANS
(1) Terms considered as legally synonymous
(2) General rule Death or injury does not result from accident or accidental means within
the terms of an accident policy if it is the natural result of the insureds voluntary act,
unaccompanied by anything unforeseen except the death or injury.
(3) Exception There is no accident when a deliberate act is performed unless some
additional, unexpected, independent and unforeseen happening occurs which produces or
brings about the result of injury or death. In other words, where the death or injury is not
the natural or probable result of the insureds voluntary act, or if something unforeseen
occurs in the doing of the act which produces the injury, the resulting death is within the
protection of policies insuring against death or injury from accident.
Thus, in a case where the participation of the insured in a boxing contest was voluntary,
but the injury was sustained when he slid, giving occasion to the infliction by his
opponent of the blow that threw him to the ropes of the ring and without this unfortunate
incident, that is, the intentional slipping of the deceased, perhaps he could not have died,
the court held that his death may be regarded as accidental although boxing is attended
with some risk of external injuries.
Page 2 | Chupapi Notes
SUICIDE AND WILLFUL EXPOSURE TO NEEDLESS PERIL
Both are in pari matere because they both signify a disregard for ones life. The only difference is in
degree, as suicide imports a positive act of ending such life whereas the second act indicates a
reckless risking of it that is almost suicidal in intent.

Voluntary exposure to a known danger is generally held to negate the accidental character of
whatever followed from the known danger.

To illustrate: A person who walks a tightrope 1,000 meters above the ground and without any safety
device may not actually be intending to commit suicide, but his act is nonetheless suicidal. He would
thus be considered as wilfully exposing himself to needless peril.

But the mere act of the insured of pointing the gun to his temple, believing that the gun was not
loaded and the gun fired, when he pulled the trigger resulting in his death, was held an accident. The
insured was unquestionable negligent but it should not prevent his beneficiary from recovering from
the insurance policy.

MEANING OF INTENTIONAL AS USED IN ACCIDENT POLICY

Intentional as used in an accident policy excepting intentional injuries inflicted by the insured or
any other person, etc., implies the exercise of the reasoning faculties, consciousness, and volition.

Where a provision of the policy excludes intentional injury, it is the intention of the person inflicting
the injury that is controlling. If the injuries suffered by the insured clearly resulted from the
intentional act of a third person, the insurer is relieved from liability as stipulated. (Example: page
431)

EFFECT OF NO ACTION CLAUSE IN POLICY OF LIABILITY INSURANCE

Guingon vs. Del Monte: the policy requires that suit and final judgment be first obtained against the
insured; that only thereafter can the person injured recover on the policy; it expressly disallows
suing the insurer as a co-defendant of the insured in a suit to determine the latters liability to the
third person.

It was held that no action clause in the policy cannot prevail over the Rules of Court provisions
aimed at avoiding multiplicity of suits. (page 433: footnote)

Acuna. Ardiente. Gomez. Karunungan. Matobato. Monje. Noval. Palacol. Santiago. Santuyo Page 3 | Chupapi Notes