Bautista v. Capital Insurance - Insurance Policy

1 CA Rep. 228

Facts:

>  In 1952, a contract of insurance was entered by the parties, upon PIlar Bautista’s house.

>  The policy described the building as “occupied as dwelling only”.

>  There was a stipulation to the effect that any misrepresentation of material fact or misdescription of the property shall render the insurer not liable for its loss.

>  Before the policy was issued however, Manuel Leyson, Bautista’s lessee, subleased the ground floor to ONg, who used it as a factory for the manufacture of shoes. A month later, rubber heels, soles and canvass were stored therein.

>  Subsequently, the house was destroyed by fire.  Bautista filed her claims with Capital Insurance, but the latter denied her claim on the ground of breach of warranty.

>  Bautista said that the statement “occupied as dwelling only”  was not hers, but of the insurance agent, and that the policy was in English (which she did not understand) and was never read to her.

Issue:

Whether or not Capital may rescind the contract.

Held:

It can.

Bautista was bound to know the contents of the policy in accepting it.  In the absence of fraud, she is presumed to know the contents of the contract and to have assented to them.  Failure to read the policy is negligence, and the insured is regarded as having assumed the risk of the falsity or misstatements of its contents.