Insurance Law Title 4 Quiz & Flashcards on Concealment

Questions and Answers

What is concealment?

A neglect to communicate that which a party knows and ought to communicate; withholding any fact that is material to the risk.

What are the four primary concerns of the parties of an insurance contract?

The correct estimation of risk 2) The precise delimitation of risk 3) Control of the risk after it is assumed 4) Determining whether a loss occurred and its amount.

What are the devices for ascertaining and controlling risk and loss?

Concealment 2) Representations 3) Warranties 4) Conditions 5) Exceptions.

What are the devices of concealment and representations established for?

To enable the insurer to secure the same information regarding the risk. Signup and view all the answers

What are the devices of warranties and conditions established for?

Warranties and conditions address the facts that show the risk to be greater than intended. Signup and view all the answers

What is the device of exceptions established for?

To make the coverage indicated by the general description of the risk more definite by excluding certain specified risks. Signup and view all the answers

What are executory warranties and conditions for?

They ensure that certain conditions exist in the future, enabling the insurer to rescind the contract if risks increase. Signup and view all the answers

What are conditions precedent?

Conditions that require immediate notice of loss or injury, requiring detailed proofs of loss within a limited period. Signup and view all the answers

What are the requisites of concealment?

<ol> <li>A party knows the fact they conceal 2) Duty to disclose exists 3) No warranty of the fact concealed 4) The other party cannot ascertain the concealed fact.</li> </ol> Signup and view all the answers

What are the effects of concealment by the insured?

Failure to disclose conditions affecting the risk makes the contract voidable at the insurer's option. Signup and view all the answers

What is the essence if the concealment is only known to the insured?

The insurer relies on the information supplied by the insured, which must include all material facts. Signup and view all the answers

Can the insurer commit concealment?

Yes, the duty of disclosure is imposed on both the insured and insurer under utmost good faith. Signup and view all the answers

What is the essence of Section 27?

It allows the injured party the option to exercise the right of rescission due to concealment. Signup and view all the answers

Is it essential to prove fraud in concealment?

No, fraud is not required to rescind a contract based on concealment. Signup and view all the answers

What is violated in the existence of fraud in an insurance contract?

The duty of communication is violated by the fact of concealment, regardless of intent. Signup and view all the answers

What is the reason for the rule of non-necessity of proof of fraud in concealment?

To protect the insurer and honest policyholders against fraudulent claims. Signup and view all the answers

What is the basis and criterion vitiating the contract in cases of concealment?

Concealment misleads the insurer into accepting risks based on false premises. Signup and view all the answers

What is the rule of proof of fraud in the Philippines?

Fraud is not necessary for the insurer to be guilty of concealment. Signup and view all the answers

What is the duty of each party under Section 28?

Each party must communicate all facts in good faith that are material to the contract. Signup and view all the answers

What are examples of matters material to the contract under Section 28?

Hospitalization for medical conditions within the two weeks prior to applying for insurance. Signup and view all the answers

What is the test if the applicant is aware of matters material to the contract?

The applicant must disclose any circumstances that could influence the insurer's decision. Signup and view all the answers

What is the effect of failure of insurer to verify?

The insurer cannot avoid material concealment by claiming they could have discovered it. Signup and view all the answers

When would fraudulent intent be necessary under Section 29?

Fraudulent intent must be proven when non-disclosure relates to the falsity of a warranty. Signup and view all the answers

What is Section 30 of Insurance Law?

It clarifies what information parties are not obligated to communicate unless prompted by inquiries. Signup and view all the answers

Are matters making the subject of special inquiries material?

Yes, matters subject to inquiry must be fully disclosed; failure to do so can void the policy. Signup and view all the answers

When is the duty of disclosure not essential?

When no inquiries are made that require disclosure of otherwise material facts. Signup and view all the answers

How is materiality to be determined under Section 31?

Materiality is determined by the influence facts have on the party's decision-making. Signup and view all the answers

What is the test of materiality?

It looks at how knowledge of facts influences contract-making rather than just risk increase. Signup and view all the answers

What is the test of materiality from the standpoint of the insurer?

A fact is material if it influences the insurer's assessment of risk. Signup and view all the answers

When is concealment regarded as intentional?

When actions or failures indicate a subjective intention to conceal. Signup and view all the answers

Where is the fact concealed not material?

If the concealed fact did not affect the insurer's decision to create the contract. Signup and view all the answers

Distinguish the time before and after the information is acquired.

Before the contract is effective, there is a duty to disclose; after, there is no duty. Signup and view all the answers

What are matters each party bound to know under Section 32?

General causes that affect material perils are equally known to both parties. Signup and view all the answers

Can the right to information be waived under Section 33?

Yes, the right to information may be waived by terms of insurance or neglect to inquire. Signup and view all the answers

Is the disclosure of information of the nature or amount of the insured necessary under Section 34?

Not unless it is in response to an inquiry, except as prescribed by Section 51. Signup and view all the answers

Is it necessary to disclose opinion under Section 35?

Disclosure is not required unless specifically inquired about. Signup and view all the answers

Study Notes

Concealment in Insurance Law

Concealment is the neglect to disclose material facts relevant to an insurance contract, whether intentional or unintentional.
A party has a duty to communicate all material facts that could affect the risk.

Primary Concerns in Insurance Contracts

Accurate risk estimation is critical for determining premium rates and acceptance of the risk.
Precise definition of risk helps clarify the insurer's obligation to pay in case of a claim.
Maintaining control over the risk to manage any changes that could affect it post-contract.
Ability to ascertain whether a loss occurred and its amount.

Devices for Risk Management

Common devices to manage risk include concealment, representations, warranties, conditions, and exceptions.

Purpose of Warranties and Conditions

Warranties ensure that conditions affecting the risk are disclosed.
Exceptions clarify coverage provisions by explicitly defining risks that are not included, such as specific perils.

Conditions Precedent

Conditions that must be met for coverage, specifically to prevent fraudulent claims through timely notification of loss.

Effects of Concealment

The insured's failure to disclose known risks can render the insurance contract voidable at the insurer's discretion.
Insurance contracts are governed by the principle of utmost good faith (uberrimae fidae).

Insurer's Duty of Disclosure

Insurers also bear a duty to reveal material facts, potentially carrying more responsibility due to their negotiating power.

Section 27 Insights

Concealment provides grounds for rescission, but fraud does not need to be proven for the insurer to void a contract.

Duty of Truthfulness in Disclosures

Concealment, even without intent to deceive, violates communication duties critical to the contract's validity.

Materiality of Concealed Facts

Materiality is gauged by whether knowledge of the fact would influence the insurer's decision to accept a risk or set a premium.
Examples illustrate situations where undisclosed health conditions lead to claims denial, affirming materiality.

Timeframe of Disclosure Obligations

Disclosure is mandatory before a contract is in effect; post-contract, no additional facts need to be disclosed.

Waiving Right to Information

Rights to material facts can be waived through express terms or through implied neglect to inquire about material information.

Nature and Amount of Interest in Insurance

Disclosure of the interest in property insured is only necessary in response to an inquiry, with specific exceptions for non-absolute ownership situations.

Opinions and Speculation

Neither party is obligated to disclose personal judgments, feelings, or speculative information, even upon inquiry.

Test of Materiality

Materiality should consider its probable influence on the insurer's assessment and decisions regarding the risk.
Knowledge of risks must have substantial potential to affect contract terms or acceptance.

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Description

This quiz covers key concepts from Title 4 of Insurance Law, focusing on the principle of concealment. It explores the definition of concealment and its implications in insurance contracts. Additionally, it discusses the primary concerns of involved parties to enhance understanding of risk management.

Insurance Law Title 4 - Concealment Flashcards