Samson Manufacturing, Inc. insured its own goods with Delilah Insurance for Php 2,000,000.00. The same goods were insured by Alibaba Shipping Co. with Assured Corp. for the same amount pursuant to its contract of carriage with Samson Manufacturing, Inc. Both policies warranted that no other insurance exists, and in case another insurance does exist, such would not void either policy, but in no case should the claim exceed the total amount of Php 2,000,000.00 at the time of loss. Is this a case of double insurance? Explain briefly. (5 points)
Suggested answer only. Not an official answer and not legal advice.
No, this is not a case of double insurance.
Under Section 95 of the Insurance Code (R.A. No. 10607) and Malayan Insurance Co., Inc. v. Philippine First Insurance Co., Inc., double insurance exists where the same person is insured by several insurers separately in respect to the same subject and interest. Thus, double insurance requires identity of the insured person and the interest insured.
Here, while both policies cover the same goods and risk, they were issued to distinct entities with separate insurable interests. Samson Manufacturing insured its ownership interest in its own goods. In contrast, Alibaba Shipping insured its distinct insurable interest over the safety of the goods as a carrier, which forms the basis of its potential legal liability.
Therefore, double insurance does not exist because the insured persons and their insurable interests are separate.
This is not an official scoring system and carries no weight with the Supreme Court or any bar review provider. It measures how much of the suggested answer's wording your response covers, not whether your reasoning is correct. For practice only.
Quick check
Under Section 95 of the Insurance Code, which of the following is an essential requisite of double insurance?
Double insurance requires identity of the insured person, subject matter, risk, and insurable interest.
Why does double insurance NOT arise when a cargo owner and a carrier separately insure the same goods?
Double insurance does not arise because the owner and carrier have separate and distinct insurable interests.
In Malayan Insurance Company versus Philippine First Insurance Company, what was the ruling regarding separate insurance policies?
Malayan Insurance established that policies issued to distinct entities covering separate interests do not constitute double insurance.
What insurable interest does a common carrier possess over goods entrusted to it for transport?
A common carrier has an insurable interest in the goods based on its liability for their safety during transit.
Which statute governs insurance contracts and double insurance rules in the Philippine jurisdiction?
Republic Act Number 10607, known as the Insurance Code, governs double insurance.
Learn more about these topics
1. Double Insurance Requisites
Under Section 95 of the Insurance Code (Republic Act Number 10607), double insurance exists where the same person is insured by several insurers separately in respect to the same subject matter and interest. The essential requisites for double insurance are: the person insured must be the same, two or more insurers must insure separately, the subject matter must be identical, the risk or peril insured against must be identical, and the insurable interest insured must be the same. The absence of any requisite prevents double insurance from arising.
2. Distinct Insurable Interests
In Malayan Insurance Company, Incorporated versus Philippine First Insurance Company, Incorporated, the Supreme Court clarified that different persons may have separate insurable interests in the same property. A owner of goods possesses an insurable interest based on legal title and economic ownership. Conversely, a common carrier possesses a distinct insurable interest in the safety of goods transported, grounded upon its statutory liability as a bailee. Insurance policies covering these separate interests do not constitute double insurance because the insured entities and their interests differ.
3. Over Insurance Comparison
Double insurance must be distinguished from over-insurance. Over-insurance occurs when the total face value of the insurance policies exceeds the actual value of the insurable interest in the property. Where separate policies cover distinct insurable interests held by different entities, the policies operate independently up to their respective policy limits without constituting double insurance. Consequently, a carrier and a property owner may separately insure their respective risks on the same cargo without violating statutory prohibitions or policy warranties against double insurance.