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Chris Brown Outline RA 10607-The Insurance Code

H. Duty to Mitigate? "TITLE 11

Section 250. In case of any litigation for the
enforcement of any policy or contract of
insurance, it shall be the duty of the
Commissioner or the Court, as the case may
be, to make a finding as to whether the
payment of the claim of the insured has been
unreasonably denied or withheld; and in the
affirmative case, the insurance company shall
be adjudged to pay damages which shall
consist of attorneys fees and other expenses
incurred by the insured person by reason of
such unreasonable denial or withholding of
payment plus interest of twice the ceiling
prescribed by the Monetary Board of the
amount of the claim due the insured, from the
date following the time prescribed in Section
248 or in Section 249, as the case may be, until
the claim is fully satisfied: Provided, That failure
to pay any such claim within the time prescribed
in said sections shall be considered prima
facie evidence of unreasonable delay in



Section 437
"In addition to the foregoing, the Commissioner
shall have the following powers and functions:
"(o) To fix and assess fees, charges and
penalties as the Commissioner may find
reasonable in the exercise of regulation;

"In order to promote party autonomy in the

resolution of cases, the Commissioner shall
establish a system for resolving cases through
the use of alternative dispute resolution.


I Preliminary: What to Include in the Letter the
Insurance Co. sends to the Insured regarding
1. who the defense attorney is with her credibility "Section 51. A policy of insurance must specify:
2. maximum of policy limits
3. suggestion to hire a personal attorney "(a) The parties between whom the
depending of the facts, i.e. policy limits, assets of contract is made;
sophistication of client, etc. "(b) The amount to be insured except in
the cases of open or running policies;

"(c) The premium, or if the insurance is

of a character where the exact premium
is only determinable upon the
termination of the contract, a statement
of the basis and rates upon which the
final premium is to be determined;

"(d) The property or life insured;

"(e) The interest of the insured in

property insured, if he is not the
absolute owner thereof;

"(f) The risks insured against; and

"(g) The period during which the

insurance is to continue.

"Section 54. When an insurance contract is

executed with an agent or trustee as the
insured, the fact that his principal or beneficiary
is the real party in interest may be indicated by
describing the insured as agent or trustee, or by
other general words in the policy.

"Section 55. To render an insurance effected by

one partner or part-owner, applicable to the
interest of his co-partners or other part-owners,
it is necessary that the terms of the policy
should be such as are applicable to the joint or
common interest.

"Section 56. When the description of the

insured in a policy is so general that it may
comprehend any person or any class of
persons, only he who can show that it was
intended to include him, can claim the benefit of
the policy.

"Section 57. A policy may be so framed that it

will inure to the benefit of whomsoever, during
the continuance of the risk, may become the
owner of the interest insured.
II.. Conflicts of Interest Rule 15.03, Canon 15 of the Code of
A. Overview- here we are talking about when one Professional Responsibility provides that: A
party to a contract has different expectations lawyer shall not represent conflicting interests
than the other except by written consent of all concerned
given after a full disclosure of the facts.
1. conflict of interest = whenever one lawyer has
multiple clients and the representation of
In Hornilla v. Atty. Salunat, the Court discussed
one is or would be rendered less effective by the concept of conflict of interest in this wise:
reason of his or her representation of
another There is conflict of interest when a lawyer
2. the problem arises b/c the lawyer often has represents inconsistent interests of two or more
two duties: (1) to the insurance company and opposing parties. The test is whether or not in
(2) to the insured == the tripartite relationship behalf of one client, it is the lawyers duty to
G/R: The Lawyer always owes a fiduciary duty to fight for an issue or claim, but it is his duty to
the INSURED first. oppose it for the other client. In brief, if he
B. Basic Alternatives: to whom is Loyalty Owed? argues for one client, this argument will be
When the attorney represents both the insured opposed by him when he argues for the other
client. This rule covers not only cases in which
and the insurance company, there are three
confidential communications have been
ways to look at where the loyalty should lie: confided, but also those in which no confidence
(1) absolute loyalty to the insured has been bestowed or will be used. Also, there
(2) absolute loyalty to the insurer is conflict of interests if the acceptance of the
(3) representing the interest of both parties new retainer will require the attorney to perform
1. The Dual Representation Model here the an act which will injuriously affect his first client
attorney owes a duty to both the insurer and in any matter in which he represents him and
the insured also whether he will be called upon in his new
(a) consent is critical relation to use against his first client any
knowledge acquired through their connection.
(b) when the interest of the insurer and the Another test of the inconsistency of interests is
insured dont differ, the attorney treats the two whether the acceptance of a new relation will
as co-clients prevent an attorney from the full discharge of
(c) if the attorney subordinates anyone clients his duty of undivided fidelity and loyalty to his
interest to the other, it is a breach of duty client or invite suspicion of unfaithfulness or
(as well as an ethical violation under Professional double dealing in the performance thereof.
Rules of Responsibility)
(d) therefore, there must be consent from both
parties to continue this co-representation
for this model to work
Chris Brown

2. When Dual Representation is no longer

(a) the defense attorney must withdraw from
representing on of the parties with regard to
the subject matter pending in litigation
(b) the defense attorney must automatically with
draw from representing the insured and
has an undivided loyalty to the INSURED
3. Assessing the Dual Representation and One-
Client Model this is focusing on the duty
dilemma especially when you take into account
that normal the attorney is getting paid by
the insurer
G/R: The insured is entitled to have all necessary
steps taken to provide a fully adequate
defense and the attorney should represent under
the guise that there is no insurance there
at all, i.e. no insurance company
However, if dual representation no longer is
possible, some suggest the One-Client Model
because of the problems associated with the dual
(a) the model gives no guidance how to resolve
(b) gives no weight to the fact that most
insurance defense attorneys practice in large
volumes, i.e. making it hard to ignore the fact
that the insurance company pays the
(c) its not really being fair to the insured who
pays a premium for a full defense when the
attorney is also going to have interest in the
insurers rights
G/R remains the same: At a minimum, the
attorney owes an absolute duty of loyalty to
If the Insurer and Insureds interests conflict, G/R:
the insured is entitled to reject counsel
appointed by the insurer and select his own
attorney and control the defense with the
insurance company bearing the costs.
NOTE: the Insurer hates this b/c:
(1) when insurer looses control of the defense,
costs go up
(2) attorney may still conduct litigation in a
manner hoping to impress the insurance
company in the hopes of getting future business
from them

4. Why Someone purchases Insurance: GENERAL PROVISIONS

primary purpose of liability is to "Section 2. Whenever used in this Code, the
indemnify insured against any judgments following terms shall have the respective
(2) INDEMNIFY ONLY INSURANCE = (moral meanings hereinafter set forth or indicated,
unless the context otherwise requires:
hazard) the only goal here is to make
sure the judgment does not exceed the limits of "(a) A contract of insurance is an
the policy agreement whereby one undertakes for
(3) INTEREST PROTECTION PERSPECTIVE = here a consideration to indemnify another
insured purchases liability for against loss, damage or liability arising
from an unknown or contingent event.
two reasons: (1) to be protected from any
judgment brought by claim of a third party
"A contract of suretyship shall be
and (2) be protected from the financial costs deemed to be an insurance contract,
associated with defending such claims within the meaning of this Code, only if
made by a surety who or which, as
such, is doing an insurance business as
hereinafter provided.


"Section 3. Any contingent or unknown event,

whether past or future, which may damnify a
person having an insurable interest, or create a
liability against him, may be insured against,
subject to the provisions of this chapter.

"The consent of the spouse is not necessary for

the validity of an insurance policy taken out by
a married person on his or her life or that of his
or her children.

"All rights, title and interest in the policy of

insurance taken out by an original owner on the
life or health of the person insured shall
automatically vest in the latter upon the death
of the original owner, unless otherwise provided
for in the policy.

"Section 4. The preceding section does not

authorize an insurance for or against the
drawing of any lottery, or for or against any
chance or ticket in a lottery drawing a prize.

"Section 5. All kinds of insurance are subject to

the provisions of this chapter so far as the
provisions can apply.