Flashcards Studio

Facts: A mid-sized beverage bottling plant applies for property and business-interruption insurance for its facility with Insurer Co. The applicant knowingly withholds disclosure that in the previous policy year the plant’s coverage with a different insurer was canceled due to material misstatement of its inventory value and a separate fire claim that was denied for suspected fraud. The current policy is issued and premiums are paid. After a major fire damages the plant, Insurer Co. denies the claim on the ground of concealment. (a) State the controlling doctrine on concealment under the Insurance Code (PD 612, as amended by RA 10607) and list its essential elements. (b) Apply those elements to the facts: was there concealment? was the concealed fact material to the risk? was there intent to defraud? and what is the permissible remedy for the insurer (e.g., rescission ab initio vs denial of the claim).