Property insurance: Protection at all costs
Developing Asia is the most natural disaster-prone region in the world, according to the Asian Development Bank (ADB) in its working paper series, entitled “Natural Disasters, Public Spending, and Creative Destruction: A Case Study of the Philippines.”
The Global Facility for Disaster Reduction and Recovery —a partnership consisting of 38 countries and seven international organizations—reported that the Philippines alone had been beset with 565 natural calamities, such as cyclones, floods, landslides, tsunamis, volcanic eruptions and wildfires since 1990, with an estimated damage of $23 billion. An average of 20 typhoons reportedly make landfall in the Philippines every year, each getting stronger and more distressing than its predecessor.
For instance, Super Typhoon Mangkhut caused extensive damage upon its landfall in the Cagayan Province in 2018. Said Save the Children’s Jerome Balinton about the damage: “House after house had been flattened or badly damaged, with roofs or walls missing. Large trees have been uprooted from the ground and power poles bent right over, leaving power lines strewn across the ground.”
“There’s no harm in hoping for the best as long as you’re prepared for the worst,” said American novelist Stephen King. Thus, it may be high time to consider having your commercial establishment or home insured.
In this regard, the Insurance Code states that a person may have his property insured if his interest thereon or liability in relation thereto was of such nature that the contemplated peril might directly damnify said property. Such interest must exist when the insurance takes effect, and when the loss occurs, but need not exist in the meantime.
No insurance policy may be enforced except for the benefit of the person having an insurable interest in the property insured. Moreover, the measure of an insurable interest in property is only to the extent to which the insured might be damnified by loss or injury thereof.
A particular property may be insured against loss by natural calamities only when specified in the insurance policy. Thus, a person may avail himself of a fire insurance policy, which, despite its title, shall include insurance against loss by fire, lightning, windstorm, tornado or earthquake and other allied risks, when such risks are covered by extension to fire insurance policies or under separate policies.
A fire insurance, which does not specify the perils excluded therefrom, may be classified as an “all-risks policy,” which covers all risks whatsoever, including those which happen by chance or fortuitously, without intention to design, and which is unexpected, unusual and unforeseen, such as natural calamities.
In order to claim proceeds under an “all-risk” fire insurance policy, the Supreme Court held in Jimenez v. Court of Appeals that the person having insurable interest thereof merely has the burden of proving the condition of the property insured and the fact of loss or damage during the period of the policy. Thereafter, the burden shifts to the insurer to show that the natural calamity causing damage to such property is an “excluded peril” from the policy.
Altering the use or condition of the property from that which is stated in a fire insurance policy, by means within such person’s control, and which increases the risk, entitles the insurer to rescind said policy. Neither the alteration of such use or condition, which does not increase the risk, nor the insured’s acts after the fire insurance policy has been executed, would affect said policy.
If the insured property were not valuated in said policy with an “all-risk coverage”, the measure of indemnity is the expense it would be to the insured at the time the risk commenced to renovate it in its condition before its damage. But, if there were such valuation, the effect shall be the same as in a policy of marine insurance.
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