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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
- Concealment is the neglect to communicate that which a party knows and ought to communicate.
- A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance.
- Each party to a contract of insurance must communicate to the other, in good faith, all facts within his knowledge which are material to the contract and as to which he makes no warranty, and which the other has not the means of ascertaining.
- An intentional and fraudulent omission, on the part of one insured, to communicate information of matters proving or tending to prove the falsity of a warranty, entitles the insurer to rescind. (Source: Sections 26-29, Insurance Code)
Concealment is the neglect to communicate that which a party knows and ought to communicate.
Each party to a contract of insurance must communicate to the other, in good faith, all facts within his knowledge which are material to the contract and as to which he makes no warranty, and which the other has not the means of ascertaining.
An intentional and fraudulent omission, on the part of one insured, to communicate information of matters proving or tending to prove the falsity of a warranty, entitles the insurer to rescind.
The law says:
“Section 26. A neglect to communicate that which a party knows and ought to communicate, is called a concealment.
Section 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance.” (Sections 26 and 27, Insurance Code)
The requisites of concealment are:
- That a party knows a fact which he neglects to communicate or disclose to the other;
- That such party concealing is duty-bound to disclose such fact to the other;
- That the fact concealed is material to the contract;
- That such party concealing makes no warranty of the fact concealed; and
- That other party does not have the means of ascertaining the fact concealed.
The law says:
“Section 28. Each party to a contract of insurance must communicate to the other, in good faith, all facts within his knowledge which are material to the contract and as to which he makes no warranty, and which the other has not the means of ascertaining.” (Section 28, Insurance Code)
Jurisprudence says:
“Proof of fraudulent intent is unnecessary for the recission of an insurance contract on account of concealment.” (The Insular Life Assurance Co., Ltd. V. Heirs of Alvarez, G.R. No. 207526, October 03, 2018)
What are the matters that need not be disclose except upon inquiry?
The law says:
“Section 30. Neither party to a contract of insurance is bound to communicate information of the matters following, except in answer to the inquiries of the other:
(a) Those which the other knows;
(b) Those which, in the exercise of ordinary care, the other ought to know, and of which the former has no reason to suppose him ignorant;
(c) Those of which the other waives communication;
(d) Those which prove or tend to prove the existence of a risk excluded by a warranty, and which are not otherwise material; and
(e) Those which relate to a risk excepted from the policy and which are not otherwise material.” (Section 30, Insurance Code)
What is the Test of Materiality?
The law says:
“Section 31. Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries.” (Section 31, Insurance Code)
Related article: When is there over-insurance?
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