Double Insurance

Presented by:
Kent Wilson Andales
Marc Angelo Bantug
Rafael Andrei La Madrid
Rolan Jeff Lancion
Mark Gabriel Maranga
Sec 95. A double insurance exists where the same person is insured by
several insurers separately in respect to the same subject and interest.
Definition
In insurance contracts, the terms additional insurance, other insurance and
double insurance are used interchangeably, although there is a technical
difference in their meanings.
There is co-insurance by two (2) or more insurers hence it is also known as coinsurance.
Requisites: (PISIR)
(a) The person insured is the same
(b) Two (2) or more insurers insuring separately
(c) There is identity of subject matter
(d) There is identity of interest insured
(e) There is identity of risk or peril insured against.
Examples:

Juan insures his house against fire with ABC Insurance and XYZ Insurance
Company. There is double insurance because all the requisites are present.
The subject matter insured is the house of Juan. The interest insured is Juans
interest in the house.
Don Pepot mortgages his house to Jay. Insurance taken by Don Pepot and
another taken by Jay on the same house. In this example, there is no double
insurance because it is not on the same insurable interest.
No double insurance if the mortgagor and the mortgagee separately insures
the mortgaged property. The two (2) insurance policies do not involve the
same interest.
Mr. Pedro owns a house and he insures it with Any Insurance Corp against fire
for P500, 000 and with Matulungin Insurance Company against flood for P600,
000. There is no double insurance because although the same person and
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subject are involved in both insurance policies, the peril insured against are
different.
Double Insurance in Life Insurance
There can be double insurance in life insurance but there can never be overinsurance. The life of a person can be insured for any amount and it would still be
inadequate because of the intrinsic value of life.
Over Insurance by Double Insurance
There is over-insurance if the insured takes out an insurance over the property
insured in an amount which is in excess of the value of his insurable interest.
Instances:
(a) Over-insurance may exist even if there is only one insurer and one policy.
Example:
Mr. Green owns a house valued at P1,000,000, there is over-insurance if he
insures it with XYZ Corp. for P10,000,000.
(b) Over-insurance may likewise exist if there is double insurance.
Example:
Mr. Bryant owns a condominium unit valued at P800,000 and he insures it
with Lakers Insurance Company against fire for P500,000 and with Clippers
Corp against fire for P500,000.
(c) There can be under insurance even if there is double-insurance.
Example:
Mr. Irving owns a condominium unit valued at P500,000 and he insures it with
Cavaliers Corp against fire for P200,000 and Nuggets Life Insurance Comp.
against fire for P100,000.
The taking of another insurance without over-insurance is not a ground to rescind
the policy under Sec. 64 (f).
Double insurance vs over insurance
Double insurance
There may be no over insurance
as when the sum total of the
amounts of the policies issued
does not exceed the insurable
interest of the insured.
Always several insurers

Over insurance
The amount of the insurance is
beyond the value of the insureds
insurable interest.

There may be only one insurer.

*Double insurance and over insurance may exist at the same time or neither may
exist at all.

Examples:
Jojos insurable interest in a house is P1,000,000 and he insured it with Jolly
Insurance company for P10,000,000, in this case there is over insurance but not
double insurance.
Jojo insured his house with Jolly Insurance company for P 500,000 and Happy
Insurance Company for P500,000, in this case there is double insurance and not
over insurance.
If Jojo procures only one policy for the amount of P1,000,000 from Joy Insurance
Company, there is neither double insurance.
Binding effects of stipulation against double insurance.
Legal Basis:
Sec 75. A policy which contains no stipulation against additional insurance is not
invalidated by the procuring of such insurance.
Invariably, policies of fire insurance contain a stipulation or condition that they shall
be avoided if additional insurance is procured on the property without the insurers
consent.
A. Additional insurance obtained by the insured
The provision known as additional or other insurance clause and is
intended to prevent an increase in the moral hazard. This is valid and
reasonable and in the absence of consent, waiver or estoppel on the
part of the insurer, a breach thereof will prevent a recovery on the
policy.
In order to constitute a violation, the other insurance must be upon the
same subject matter, same interest and risk.
B. Additional insurance obtained by a third person
Good faith or bad faith of the insured is usually immaterial.
Insurance obtained by a third person without the knowledge or consent
of the insured will not affect his rights under the policy in the absence
of ratification.
No General Prohibition against double insurance
The implication of the rules on double-insurance under the Insurance Code is that
double-insurance is not prohibited.
Exception:
Discovery of other insurance coverage the makes the total insurance in excess of
the value of the property insured.

Two conditions that should be present: (a) another insurance coverage is discovered
(b) the total insurance is in excess of the value of the property insured.
There is a great temptation upon dishonest person, whose property is insured up to
its full value or above it, to bring about its destruction and the same considerations
undoubtedly tend to lessen the care that may be exercised by the honest in
preventing loss.
Other Insurance clause
Taking of another insurance policy over the same property may also be prohibited.

Alternative forms
(1) A condition that states that procurement of additional insurance without the
consent of the insurer renders the policy ipso facto.
(2) A provision that requires the insured to disclose the existence of any other
insurance on the property. Otherwise, the contract may be avoided for
material concealment.
(3) A warranty that there is no other existing insurance over the same property.
Purpose
To prevent over-insurance and thus avert the perpetration of fraud.
Validity
The law authorizes insurance companies to terminate the contract at any time, by
giving notice and refunding a ratable proportion of the premium.
An additional insurance unless consented to or unless a waiver was shown, ipso
facto avoided the contract and the fact that the company had not after notice of
such insurance, cancelled the policy, did not justify the legal conclusion that it had
elected to allow it to continue in force.
Sec 96. Where the insured in a policy other than life is over insured by
double insurance:
"(a) The insured, unless the policy otherwise provides, may claim
payment from the insurers in such order as he may select, up to the
amount for which the insurers are severally liable under their
respective contracts;
"(b) Where the policy under which the insured claims is a valued
policy, any sum received by him under any other policy shall be

deducted from the value of the policy without regard to the actual
value of the subject matter insured;
"(c) Where the policy under which the insured claims is an unvalued
policy, any sum received by him under any policy shall be deducted
against the full insurable value, for any sum received by him under
any policy;
"(d) Where the insured receives any sum in excess of the valuation
in the case of valued policies, or of the insurable value in the case of
unvalued policies, he must hold such sum in trust for the insurers,
according to their right of contribution among themselves;
"(e) Each insurer is bound, as between himself and the other
insurers, to contribute ratably to the loss in proportion to the
amount for which he is liable under his contract.

Application of Sec 96:

This section will apply if there was prior consent of the insurers in taking the
insurance or double insurance is not prohibited in the policy even if the total
coverage is in excess of the value of the property.
Under par (b), the insurer will already deduct the amount that was previously
received by the insurer.
Under par (c), under the old law it provides that where the policy under which the
insured claims is an unvalued policy he must give credit as against the full insurable
value, for any sum received by him under any policy. It is now modified that in an
unvalued policy, any sum received by him under any policy shall be deducted
against the full insurable value, for any sum received by him under any policy
Under par (e), it governs the liability of the insurers among themselves where the
total insurance taken exceeds the loss. If the loss is greater than the sum total of all
the policies issued, each insurer is liable for the amount of his policy.
Rules for payment of claims where is over-insurance by double insurance.

This section is aboutPrinciple of contribution which requires each insurer to

contribute ratably to the loss or damage considering that the several insurances
cover the same subject matter and interest against the same peril.
Cases
Geagonia vs CA
Facts:
Armando Geagonia is the owner of Norman's Mart located in the public market of
San Francisco, Agusandel Sur. On December 22, 1989, he obtained from Country
Bankers Insurance Corporation fire insurance policy No. F-14622 2 for P100,000.00.
The period of the policy was from December 22, 1989 to December 22, 1990 and
covered the following: "Stock-in-trade consisting principally of dry goods such as
RTW's for men and women wear and other usual to assured's business." Geagonia
declared in the policy under the subheading entitled CO-INSURANCE that Mercantile
Insurance Co., Inc. was the co-insurer for P50,000.00. From 1989 to 1990, Geagonia
had in his inventory stocks amounting to P392,130.50, itemized as follows: Zenco
Sales, Inc., P55,698.00; F. Legaspi Gen. Merchandise, 86,432.50; and Cebu Tesing
Textiles, 250,000.00 (on credit); totalling P392,130.50. The policy contained the
following condition, that "the insured shall give notice to the Company of any
insurance or insurances already effected, or which may subsequently be effected,
covering any of the property or properties consisting of stocks in trade, goods in
process and/or inventories only hereby insured, and unless notice be given and the
particulars of such insurance or insurances be stated therein or endorsed in this
policy pursuant to Section 50 of the Insurance Code, by or on behalf of the
Company before the occurrence of any loss or damage, all benefits under this policy
shall be deemed forfeited, provided however, that this condition shall not apply
when the total insurance or insurances in force at the time of the loss or damage is
not more than P200,000.00." On May 27, 1990, fire of accidental origin broke out at
around 7:30 p.m. at the public market of San Francisco,Agusan del Sur. Geagonia's
insured stocks-in-trade were completely destroyed prompting him to file with
Country Bankers a claim under the policy. On December 28, 1990, Country Bankers
denied the claim because it found that at the time of the loss.
Geagonia's stocks-in-trade were likewise covered by fire insurance policies
GA-28146 and GA-28144, for P100,000.00 each, issued by the Cebu Branch of the
Philippines First Insurance Co., Inc. (PFIC). These policies indicate that the insured
was "Messrs. Discount Mart (Mr. Armando Geagonia, Prop.)" with a mortgage clause
reading ""MORTGAGEE: Loss, if any, shall be payable to Messrs. Cebu Tesing
Textiles, Cebu City as their interest may appear subject to the terms of this policy.
CO-INSURANCE DECLARED: P100,000. Phils. First CEB/F-24758" The basis of
Country Bankers' denial was Geagonia's alleged violation of Condition 3 of the
policy. Geagonia then filed a complaint against Country Bankers with the Insurance
Commission (Case 3340) for the recovery of P100,000.00 under fire insurance policy
F-14622 and for attorney's fees and costs of litigation. He attached his letter of
January 18, 1991 which asked for the reconsideration of the denial. He admitted in
the said letter that at the time he obtained Country Bankers's fire insurance policy
he knew that the two policies issued by the PFIC were already in existence;
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however, he had no knowledge of the provision in Country Bankers' policy requiring

him to inform it of the prior policies; this requirement was not mentioned to him by
Country Bankers' agent; and had it been so mentioned, he would not have withheld
such information. He further asserted that the total of the amounts claimed under
the three policies was below the actual value of his stocks at the time of loss, which
was P1,000,000.00.
In its decision of June 21, 1993, the Insurance Commission found that
Geagonia did not violate Condition 3 as he had no knowledge of the existence of the
two fire insurance policies obtained from the PFIC; that it was Cebu Tesing Textiles
which procured the PFIC policies without informing him or securing his consent; and
that Cebu Tesing Textile, as his creditor, had insurable interest on the stocks. These
findings were based on Geagonia's testimony that he came to know of the PFIC
policies only when he filed his claim with Country Bankers and that Cebu Tesing
Textile obtained them and paid for their premiums without informing him thereof.
The Insurance Commission ordered Country Bankers to pay Geagonia the sum of
P100,000.00 with legal interest from the time the complaint was filed until fully
satisfied plus the amount of P10,000.00 as attorney's fees. With costs. Its motion for
the reconsideration of the decision having been denied by the Insurance
Commission in its resolution of August 20, 1993, Country Bankers appealed to the
Court of Appeals by way of a petition for review (CA-GR SP 31916). In its decision of
December 29, 1993, the Court of Appeals reversed the decision of the Insurance
Commission because it found that Geagonia knew of the existence of the two other
policies issued by the PFIC. His motion to reconsider the adverse decision having
been denied, Geagonia filed the petition for review on certiorari.
Issue: WONthere is double insurance in the case at bar so as to deny Geagonia
from recovering on the insurance policy
Held: NO.
Condition 3 of the private respondent's Policy No. F-14622 is a condition which is not
proscribed by law. Its incorporation in the policy is allowed by Section 75 of the
Insurance Code15 which provides that "[a] policy may declare that a violation of
specified provisions thereof shall avoid it, otherwise the breach of an immaterial
provision does not avoid the policy." Such a condition is a provision which invariably
appears in fire insurance policies and is intended to prevent an increase in the
moral hazard. It is commonly known as the additional or "other insurance" clause
and has been upheld as valid and as a warranty that no other insurance exists. Its
violation would thus avoid the policy. 16 However, in order to constitute a violation,
the other insurance must be upon same subject matter, the same interest therein,
and the same risk. 17
As to a mortgaged property, the mortgagor and the mortgagee have each an
independent insurable interest therein and both interests may be one policy, or
each may take out a separate policy covering his interest, either at the same or at
separate times. 18 The mortgagor's insurable interest covers the full value of the
mortgaged property, even though the mortgage debt is equivalent to the full value
of the property. 19 The mortgagee's insurable interest is to the extent of the debt,
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since the property is relied upon as security thereof, and in insuring he is not
insuring the property but his interest or lien thereon. His insurable interest is prima
facie the value mortgaged and extends only to the amount of the debt, not
exceeding the value of the mortgaged property. 20 Thus, separate insurances
covering different insurable interests may be obtained by the mortgagor and the
mortgagee.
A mortgagor may, however, take out insurance for the benefit of the mortgagee,
which is the usual practice. The mortgagee may be made the beneficial payee in
several ways. He may become the assignee of the policy with the consent of the
insurer; or the mere pledgee without such consent; or the original policy may
contain a mortgage clause; or a rider making the policy payable to the mortgagee
"as his interest may appear" may be attached; or a "standard mortgage clause,"
containing a collateral independent contract between the mortgagee and insurer,
may be attached; or the policy, though by its terms payable absolutely to the
mortgagor, may have been procured by a mortgagor under a contract duty to insure
for the mortgagee's benefit, in which case the mortgagee acquires an equitable lien
upon the proceeds. 21
In the policy obtained by the mortgagor with loss payable clause in favor of the
mortgagee as his interest may appear, the mortgagee is only a beneficiary under
the contract, and recognized as such by the insurer but not made a party to the
contract himself. Hence, any act of the mortgagor which defeats his right will also
defeat the right of the mortgagee. 22 This kind of policy covers only such interest as
the mortgagee has at the issuing of the policy. 23
On the other hand, a mortgagee may also procure a policy as a contracting party in
accordance with the terms of an agreement by which the mortgagor is to pay the
premiums upon such insurance. 24 It has been noted, however, that although the
mortgagee is himself the insured, as where he applies for a policy, fully informs the
authorized agent of his interest, pays the premiums, and obtains on the assurance
that it insures him, the policy is in fact in the form used to insure a mortgagor with
loss payable clause. 25
XXX With these principles in mind, we are of the opinion that Condition 3 of the
subject policy is not totally free from ambiguity and must, perforce, be meticulously
analyzed. Such analysis leads us to conclude that (a) the prohibition applies only to
double insurance, and (b) the nullity of the policy shall only be to the extent
exceeding P200,000.00 of the total policies obtained.
The first conclusion is supported by the portion of the condition referring to other
insurance "covering any of the property or properties consisting of stocks in trade,
goods in process and/or inventories only hereby insured," and the portion regarding
the insured's declaration on the subheading CO-INSURANCE that the co-insurer is
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Mercantile Insurance Co., Inc. in the sum of P50,000.00. A double insurance

exists where the same person is insured by several insurers separately in
respect of the same subject and interest. As earlier stated, the insurable
interests of a mortgagor and a mortgagee on the mortgaged property are
distinct and separate. Since the two policies of the PFIC do not cover the
same interest as that covered by the policy of the private respondent, no
double insurance exists. The non-disclosure then of the former policies was not
fatal to the petitioner's right to recover on the private respondent's policy.

UNION MANUFACTURING CO., INC. VS. PHILIPPINE GUARANTY CO.,

47 SCRA 271 (G.R. NO. L-27932) OCTOBER 30, 1972
FACTS:
On January 12, 1962, the Union Manufacturing Co., Inc. obtained certainl o a n s
f r o m t h e Re p u b l i c B a n k i n t h e t o t a l s u m o f 4 1 5 , 0 0 0 . 0 0 . To secure
the payment thereof, UMC executed real and chattel mortgage on certain
properties.The Republic Bank procured from the defendant Philippine
GuarantyCo., Inc. an insurance coverage on loss against fi re for
500,000.00over the properties of the UMC, as described in defendants cover
notedated September 25, 1962, with the annotation that loss or damage,
if any, under said cover note is payable to Republic Bank as its interest a y
appear,
subject
however
to
the
printed
conditions
of
s a i d defendants Fire Insurance Policy Form.On September 6, 1964, a fire occurred
in the premises of UMC and on October 6, 1964, UMC fi led its fi re claim with
the PGC Inc., thru its a d j u s t e r , H . H . B a y n e A d j u s t m e n t C o . , w h i c h w a s
d e n i e d b y s a i d defendant in its letter dated November 26, 1964 on the following
ground:Policy Condition No. 3 and/or the Other Insurance Clause of the policy was
violated because you did not give notice to us of the other insurancewhich you had
taken from New India for 80,000.00. Sincere InsuranceP25,000.00 and Manila
Insurance for 200,000.00 with the result
that these insurances of which we became aware of only after the
fi re,were not endorsed on our policy
.
ISSUE: Whether Republic Bank can recover.
HELD:
Without deciding- whether notice of other insurance upon the same
property must be given in writing, or whether a verbal notice is sufficientto render
an insurance valid which requires such notice, whether oral or written, we hold
that in the absolute absence of such notice when it is one of the conditions
specified in the fire insurance policy, the policy isnull and void. (Santa Ana vs.
Commercial Union Ass. Co., 55 Phil. 128).I f t h e i n s u r e d h a s v i o l a t e d o r
f a i l e d t o p e r f o r m t h e c o n d i t i o n s o f t h e contract, and such a violation
or want of performance has not been waived by the insurer, then the insured
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cannot recover. Courts are notpermitted to make contracts for the parties. The
functions and duty of thecourts consist simply in enforcing and carrying out the
contracts actuallymade.W h i l e i t i s t r u e , a s a g e n e r a l r u l e , t h a t
c o n t r a c t s o f i n s u r a n c e a r e construed most favorably to the insured, yet
contracts of insurance, likeother contracts, are to be construed according to the
sense and meaningof the terms which the parties themselves have used. If such
terms areclear and unambiguous they must be taken and understood in their
plain,ordinary and popular sense.The annotation then, must be deemed to be a
warranty that the propertywas not insured by any other policy. Violation thereof
entitles the insurer to rescind. The materiality of non-disclosure of other insurance
policies isnot open to doubt.The insurance contract may be rather onerous, but that
in itself does not justify the abrogation of its express terms, terms which the insured
accepted or adhered to and which is the law between the contracting
parties.
General Insurance & Surety Corp vs. Ng Hua
FACTS:

In 1952, petitioner General Insurance issued a fire policy to Ng Hua to

cover the contents of the Central Pomade Factory owned by him.
There was a provision in the policy that should there be any insurance
already effected or to be subsequently procured, the insured shall give notice
to the insurer.
Ng Hua declared that there was none. The very next day, the building and
the goods stored therein burned.
Subsequently, the claim of Ng Hua for the proceeds was denied by General
since it discovered that Ng Hua had obtained an insurance from General
Indemnity Company for the same goods and for the same period of time.
The face of the policy bore the annotation: Co-insurance Declared NIL.
CTA, favoring Ng Hua, declared that there is no co-insurance to speak of
because co-insurance exists only when a condition a condition of the policy
requires the insured to bear ratable proportion of the loss when the value of
the insured property exceeds the face value of the policy.

ISSUE:
Whether or not General Insurance can refuse to pay the proceeds?
HELD:
Yes, General Insurance can validly refuse to pay the proceeds.The terms of the
policy which required the insured to declare other insurances must be deemed a
warranty binding on both the insurer and insured. Ng Huas violation of the
statement entitles General Insurance the right to rescind the contract of insurance
as such misrepresentation is considered fatal.

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If co-insurance means that the CA says, the annotation served no purpose. It

would be even contrary to the policy itself, which in its clause no. 17 made the
insured a co-insurer for the excess of the value of the property over the amount of
policy.
ULPIANO STA. ANA VS COMMERCIAL INSURANCE CO. LTD. (G.R. No. L32889)

FACTS:

In 1923, Mr. Sta. Ana built a house in Pasig, in which he took a P3,000-fire
insurance policy in Phoenix Assurance Company for a period of one year
or until 1 October 1926.
In Nov. 1925, Sta. Ana mortgaged said house to the plaintiff Rafael Garcia
for P5,000, for a period of 2 years, whereby the policies issued by the Phoenix
Assurance Company and the Guardian Assurance Company were
endorsed to mortgagee, Rafael Garcia.
In Dec. 1925, Sta. Ana reinsured said house with the defendant companies,
the Globe and Rutgers Fire Insurance Company of New York and
Commercial Assurance Company, Limited of London.
In Sept. 1926, took out another insurance policy on the house for P6,000 in
the Filipinas Compania de Seguros.
At around 3AM of 1 Oct. 1926, 12 hours before the expiration of policies
issued by Phoenix Assurance and Guardian Assurance, a fire broke out in the
insured house.
Sta. Ana demanded for payment of policies in each of the companies, but
assurance companies refused payment on the following grounds: (a) claim
was fraudulent being in excess of the real value of the property; (b) none of
said companies had been informed of the existence of the other policies; and
(c) the fire was intentional.

ISSUE:
Whether or not the plaintiff (Ulpiano Sta. Ana) can claim the net proceeds from the
insurance companies?
HELD:
No, the plaintiff cannot claim net proceeds. Without deciding whether the notice of
other insurance companies upon the same property must be given in writing, or
whether a verbal notice is sufficient to render an insurance valid which requires
such notice, whether oral or written, SC held that in the absolute absence of such
notice when it is one of the conditions specified in the fire insurance policy, the

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policy is null and void. Since the policy is null and void, plaintiff cannot recover from
the defendants insurance companies.

Malayan Insurance Co. (Malayan) vs. Philippine First insurance Co.

(Philippine First) and Reputable Forwarder Services (Reputable)
Facts:
Wyeth Philippines, Inc. (Wyeth) and Reputable had an annual contract of carriage
wherein Reputable undertook to transport and deliver Wyeths products.
Under the contract, Reputable will answer to all risks and shall be liable to Wyeth.
Moreover, it required Reputable to secure an insurance policy of Wyeths goods.
Thus, Reputable insured the same from Malayan.
On the other hand, Wyeth procured an insurance policy from Philippines First to
secure its own products while being transported or shipped.
Reputable received from Wyeth 1,000 boxes of Promil infant formula to be delivered
to Mercury Drug, unfortunately, it was hijacked by highway robbers. Philippines First
paid Wyeth and demanded reimbursement from Reputable which the latter ignored.
Philippines First filed an action for a sum of money against Reputable and the latter
impleaded Malayan as co-defendant to collect the amount covered in the policy. RTC
rendered that Reputable is liable to Philippines First for the amount of indemnity to
Wyeth, and Malayan is liable to Reputable to the extent of the policy coverage. The
CA affirmed RTCs decision, Malayan appealed to the SC.
Issue:
Whether or not there is double insurance?
Held:
No, there was no double insurance because even though the two (2) policies were
issued over the same subject matter and covered the same peril insured against,
they were issued to two (2) different entities having different insurable interests.
Wyeth and Reputable separately insured the same goods.
Under Section 95 of the Insurance Code, there are five (5) requisites to be met for
double insurance to arise:
1.) The person/entity insured is the same;
2.) Two (2) or more insurers insuring separately;
3.) There is identity of subject matter;
4.) There is identity of interest insured;
5.) There is identity of risks or peril insured against.
In this case, the first (1st) and fourth (4th) requisites are absent.
Pioneer Insurance and Surety Corporation vs. Oliva Yap
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Facts:
Oliva Yap was the owner of a store in a two-storey building where she sold shopping
bags and footwear. Chua Soon Poon, her son-in-law, was in charge of the store.
Yap took out a Fire Insurance from Pioneer Insurance with a value of P25,000.00
covering her stocks, office furniture, fixtures and fittings.
Among the conditions in the policy executed by the parties are the following:
unless such notice be given and the particulars of such insurance or insurances be
stated in, or endorsed on this Policy by or on behalf of the Company before the
occurrence of any loss or damage, all benefits under this Policy shall be forfeited
Any false declaration or breach or this condition will render this policy null and void.
Another insurance policy for P20,000.00 issued by Great American covering the
same properties. The endorsement recognized co-insurance by Northwest for the
same value. Oliva Yap took out another fire insurance policy for P20,000.00 covering
the same properties from the Federal Insurance Company, Inc., which was procured
without notice to and the written consent of Pioneer.
A fire broke out in the building, and the store was burned. Yap filed an insurance
claim, but the same was denied for a breach. Oliva Yap filed a case for payment of
the face value of her fire insurance policy. The insurance company refused to pay
because she never informed Pioneer of another insurer. The trial court decided in
favor of Yap. Tshe CA affirmed.
Issue:
Whether or not Oliva Yap should be absolved from liability on the Pioneeer policy on
account of any violation of the co-insurance clause?
Held:
No, There was a violation. The insurance policy for P20,000.00 issued by the Great
American, ceased to be recognized by them as a co-insurance policy. Other
insurance without the consent of Pioneer would avoid the contract. The obvious
purpose of the aforesaid requirement in the policy is to prevent over-insurance and
thus avert the perpetration of fraud. The public, as well as the insurer, is interested
in preventing the situation in which a fire would be profitable to the insured. Double
insurance is not prohibited by law but it may be prohibited by other insurance
clause which is intended to prevent a moral hazard. It is valid and reasonable, a
breach thereof will prevent a recovery from the policy.

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