Dealing with the aftermath of volcanic unrest

Each volcano is an independent machine—nay, each vent and monticule is for the time being engaged in its own peculiar business, cooking as it were its special dish, which in due time is to be separately served,” said American geologist Clarence Dutton.

Picturesque Taal Volcano suddenly spewed ashes and magma on Jan. 12, 2020, almost three decades and two years after Pinatubo and Mayon have erupted, respectively. Residents were forced to evacuate the caldera they called home. National and local government units canceled work, classes and flights across neighboring regions and towns because of the prevailing ashfall. Lightning, smoke and thunder provided a “dramatic” backdrop for weekend weddings in Tagaytay City, and a bleak future for the household pets and livestock left behind.

Currently, the Philippine Institute of Volcanology and Seismology (Phivolcs) maintains its alert level 4 on the Taal Volcano—which means that hazardous eruption may occur within days.

With the impending eruption of Taal Volcano and the considerable number of active volcanoes in the Philippines, affected residents may consider insuring their properties from damage caused by their eruption and other similar calamities.

Such insurance shall be covered by a policy governed by the Insurance Code, in which the insurer undertakes for a consideration to indemnify the insured against loss, damage or liability arising from an unknown or contingent event.

An insurance policy shall specify: (a) the contracting parties; (b) the amount to be insured, except in the case 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 insured; (e) the interest of the insured in the 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.

Much like any other contract, property owners should carefully read the terms of the insurance policy before finally deciding to buy one. In this regard, in determining whether the insurer intended to protect the property from damage arising from a volcanic eruption, provisions and riders of an insurance policy should be examined and interpreted together, and cannot be taken piecemeal.

Thus, in Gulf Resorts Inc. and Philippine Charter Insurance Corp., the Supreme Court held that the earthquake shock coverage clause in the insurance policy only applies to certain swimming pools, and not to all insured properties.

As in the Gulf Resorts case, property owners should understand that insurance policies may not cover damage arising from a volcanic eruption. To be sure, in one case, the Supreme Court observed that insurance companies are generally willing to only assume ordinary risks or losses that may happen under ordinary conditions.

Insurance policies are entitled to protect themselves and maintain their stability to the interest of the people whom they insure and thus, should avoid extraordinary risks due to unusual and peculiarly destructive causes disproportionate to the amount of premium paid.

Nevertheless, said residents may find solace in current laws, such as Republic Act (RA) No. 766, in which property owners living on areas declared closed to human habitation due to its exposure to constant extreme danger from volcanic eruption shall be compensated for the loss of their properties by grants of public lands.

Such grants shall be determined by the value of the abandoned property, subject to the limitations provided in the Constitution and existing laws. Furthermore, property owners who are indigent or without property shall be prioritized in the distribution of lands in the government’s settlement projects.

Meanwhile, RA No. 656 seeks to protect national and local government units’ owned and rented buildings and properties stored therein from determined insurable risks by creating a property insurance fund.

Thus, every unit, except a municipal government below first class, is required to insure its properties with the fund and pay the premiums thereon, which shall not exceed the premiums charged by private insurance companies. Such property or part thereof as may not be insurable or acceptable for insurance may be insured with any private insurance company.