IV.
(10%)
Alfredo took out a policy to insure his commercial building against fire. The broker for the insurance company agreed to give a 15-day credit within which to pay the insurance premium. Upon delivery of the policy on May 15, 2006, Alfredo issued a postdated check payable on May 30, 2006. On May 28, 2006, a fire broke out and destroyed the building owned by Alfredo.
(a) May Alfredo recover on the insurance policy?
(b) Would your answer in (a) be the same if it was found that the proximate cause of the fire was an explosion and that fire was but the immediate cause of loss and there is no excepted peril under the policy?
(c) If the fire was found to have been caused by Alfredo’s own negligence, can he still recover on the policy?
Reason briefly in (a), (b) and (c).
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1 comment:
IV.
a.
It depends. Alfredo may recover on the insurance policy if the policy delivered to him contains an acknowledgment of the receipt of premium. Such acknowledgment is conclusive evidence of the payment of premium and is binding on the insurer. Otherwise, Alfredo may not recover because the delivery of checks produces the effect of payment only when the check is encashed. Generally, non-payment of premiums bars recovery on the policy.
b.
Yes, because the cause of the loss was still the fire. Whether or not explosion started or caused the fire is not important as explosion is not an excepted peril under the policy.
c.
Yes, as long as Alfredo’s act constituting the negligence does not violate the terms of the insurance contract. The reason is that one of the principal reasons a person procures insurance is to protect himself against the consequences of his own negligence.
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