Libro IV · Título II · Capítulo X Sección Segunda. Del seguro contra daños

Every economic interest that a person has in a loss not occurring may be protected by means of an insurance contract against damages.

If a thing belonging to another is insured for the interest that one has in it, it shall be considered that the contract is concluded also in the interest of the owner; but the latter may not benefit from the insurance except after the interest of the contracting party has been covered and after having restored to him the proportional part of the premiums paid.

The insurance of expected profits is lawful within the limits of a legitimate interest.

In the insurance on probable yields, the value of the interest shall be that of the yield that would have been obtained had the loss not occurred. To determine the compensable value, there shall be deducted the expenses that have not been caused yet, nor must be caused because the loss has occurred.

The insured sum shall set the limit of the liability of the insurer, if such sum is not higher than the real value of the insured things. The insured sum does not prove the value nor the existence of the insured things.

If an insurance is concluded for a sum higher than the real value of the insured thing, without intent (dolo) or bad faith of either of the parties, the contract shall be valid up to equaling the mentioned real value, and the insured sum may be reduced at the request of either of them. The insurer shall credit the insured with the excess of the premium paid with respect to that corresponding to the real value, for the period of the insurance remaining to elapse from the moment in which he receives the corresponding application of the insured.

If an insurance against the same risk and for the same interest is contracted with several insurers, the insured must bring to the knowledge of each of the insurers the existence of the other insurances within the five days following the conclusion of each contract.

The notice shall be given in writing, and shall indicate the name of the insurers and the insured sums.

If the amount of several insurances contracted in good faith exceeds the amount of the insured interest, each of the insurers shall be liable in the terms of his respective contract, until completing the entire amount of the damage.

The insurer who pays in the case of the preceding article, may recover it against all the others, in proportion to the sum respectively insured.

If any of the insurances is governed by foreign law, the insurer who may invoke it shall not have an action of recovery, if he does not prove that his own law establishes the system of distribution.

Whoever transfers an insured object, shall give the insurer notice of the transfer within the fifteen days following it; in the same act of the transfer, the existence of the insurance must be made known to the acquirer.

The rights and obligations that derive from the contract shall pass to the acquirer, except if within the fifteen days following the acquisition, he manifests his will not to continue the insurance.

For the premiums due and pending payment at the moment of the transfer, the previous owner and the acquirer shall be jointly and severally liable, and the latter with the right to recover against the transferor if he did not give him notice of the existence of the insurance. In such case, the transferor shall also be obliged to the payment of the subsequent premiums.

The preceding article shall not be applicable to the policies to order; but their holder may not exercise the rights corresponding to him, without having previously covered the premiums that result owed in the terms of the policy.

The creditors who have pledge, mortgage or any other privilege over the insured thing, shall have the right, if the encumbrances appear in the policy or have been brought to the knowledge of the insurer, to have the latter communicate to them any decision aimed at modifying, rescinding or terminating the contract, in order that they may exercise the rights of the insured.

When the loss occurs, the insured must execute all the acts that tend to avoid or diminish the damage.

The expenses shall be covered by the insurer, without it being able to reduce them from the compensation that corresponds; but if the insured sum is lower than the value of the insured object, they shall be borne proportionally between the insurer and the insured.

After the loss, the insured may only vary the state of the things with the consent of the insurer, except for reasons of public interest or to avoid or diminish the damage.

If the insured thing has been designated only by its genus, all those of the same genus that exist at the moment of the loss in the possession of the insured shall be considered insured, in the places or vehicles to which the insurance refers.

Except by agreement to the contrary, the insurer shall not be liable for losses and damages caused by inherent defect of the thing, earthquake or hurricane, foreign or civil war, or by persons who take part in strikes, riots or popular disturbances and other risks that require the payment of a special premium.

To fix the compensation that the insurer has to pay, the value of the insured interest at the moment of the occurrence of the loss shall be taken into account, for which the insured shall individualize and justify the existence and value of the insured things at the time of the loss.

When the insured interest consists in a thing not being destroyed or deteriorated, it shall be presumed that such interest is equivalent to that which the owner would have in the conservation of the thing.

Except by agreement to the contrary, if the insured sum is lower than the insured interest, the insurer shall be obliged to pay a sum that is in the same relation, with respect to the amount of the damage caused, as that which exists between the insured value and the full value of the insurable interest.

For the purposes of the compensation of the damage, the parties may fix, by express agreement, the value of the insured things; but if the insurer proves that at the moment of the loss the said value exceeds by more than twenty percent (20%) the real value of the insured object, he shall only be obliged up to the limit of the latter.

The insurer shall have the right to comply with his obligation to compensate, by means of payment in cash or the replacement or repair of the insured thing at his choice.

If the insured property is encumbered with a mortgage, pledge or other privilege, the corresponding creditors shall be subrogated by operation of law to the indemnity, up to the amount of the privileged credit.

However, payment made to another person shall be valid if it is made without opposition from the creditors, and the mortgage, pledge or privilege does not appear mentioned in the policy, nor have these encumbrances been communicated to the insurer.

The insurer that pays the indemnity shall be subrogated, up to the limit of the amount paid, to all rights and actions that correspond to the insured by reason of the damage suffered, except in the case where, the loss not having been intentional, the person obliged to make reparation is the spouse, an ascendant or a descendant of the insured.

If the damage is indemnified only in part, the insurer may enforce its rights in the corresponding proportion.

The provisions contained in this section are applicable to all damage insurance, even when not regulated in it, to the extent they do not conflict with its nature.

Likewise, any other class of risks arising from fortuitous events or accidents may be the object of insurance, provided the policies are issued in accordance with the provisions of this chapter, to the extent applicable.

If an insurance contract is entered into for a sum higher than the real value of the insured property, with intent (dolo) or bad faith of one of the parties, the other may claim or plead the nullity of the contract and demand compensation for the damages it has suffered.

Anyone who enters into an insurance contract unaware that prior insurance exists shall have the right to rescind or reduce the new insurance, provided it does so within fifteen days following the date on which it became aware of the prior insurance.

The premium shall cease to accrue, or where applicable shall be reduced, five days after the insured states to the insurer that it makes use of the right of rescission or reduction.

If the insured intentionally fails to give notice of the other insurance contracts taken out as provided for in article 923 of this Code, or if it takes them out to obtain an unlawful gain, the insurers shall be released from their obligations.

If, after the insurance contract has been entered into, the insured property perishes from a cause unrelated to the risk, or the risk ceases to exist, the contract shall be terminated by operation of law, and unless otherwise agreed, the premium shall be owed only for the period during which the insurance was in force, in accordance with the rate that should have been applied had the insurance been taken out for that period. If the effects of the insurance were to have begun at a time subsequent to the execution of the contract, and the risk disappeared in the interval, the insurer may only demand reimbursement of expenses.

In the event of a partial loss, the insurer shall thereafter be bound only for the amount by which the insured sum exceeds the indemnity paid, unless automatic reinstatement has been agreed.

If the insured fails to comply with the obligation to avoid or reduce the damage or to preserve the condition of the property, the insurer shall have the right to reduce the indemnity down to the amount to which it would have amounted had such obligation been fulfilled. The insurer shall be released from any obligation if the breach is committed with fraudulent purposes.

If the value of the insured object suffers a substantial decrease during the term of the contract, any of the contracting parties shall have the right for the insured sum and, proportionally, the premium to be reduced, when the other party so requests.

The insurer shall be released from its obligations to the extent that, by acts or omissions of the insured, it is prevented from being subrogated to the rights that the latter would have to demand compensation for the damage.

In fire insurance, the insurer shall be liable not only for the material damage caused by a fire or incipient fire to the objects included in the insurance, but also for salvage measures and for the disappearance of the insured objects occurring during the fire, unless it proves that such disappearance arises from theft or robbery.

The insurer shall not be liable for the losses or damage caused by the sole action of heat or by direct or immediate contact with fire, or with an incandescent substance, if there is no fire or incipient fire, that is, flames or combustion.

In fire insurance, the indemnifiable value shall be understood as:

1º.For merchandise, natural products and livestock, the market price on the day of the loss.

2º.For buildings, the reconstruction value, from which the depreciation suffered before the loss occurred shall be deducted.

3º.For furniture, objects of use, work instruments, machinery and equipment, the acquisition value of new objects, with an equitable deduction for the depreciation they may have suffered before the loss occurred.

Under this contract, all means employed for transport and transportable goods may be insured against the risks arising from transportation.

Unless otherwise agreed, insurers shall not be liable for the damage or loss occurring to the insured property due to inherent vice, its perishable nature, shrinkage, spillage or waste arising therefrom.

However, if a loss covered by the policy occurs, the insurers shall be liable for the loss, even when it is also due to the aforementioned causes, unless otherwise stipulated.

The term of the insurance on merchandise shall begin at the moment the merchandise is delivered to the carrier, and shall cease at the moment it is placed at the disposal of the consignee at the place of destination.

In transport insurance, the insured shall have no duty to communicate aggravations of the risk or to give notice of the transfer of the insured property.

In transport insurance, the expenses necessary for the salvage of the insured objects shall be understood to be included.

In transport insurance, article 906 of this Code shall not apply, unless at the time of entering into the contract the parties had news of the arrival, average or loss of the insured objects.

The news shall be presumed known, unless otherwise agreed, if such news has reached the place of domicile of the interested party.

If the insured knew the news, the insurer shall retain the right to the premium; if it were the insurer who knew it, in addition to returning the premium, it must pay the insured legal interest, without prejudice to the liability of the persons who acted on its behalf.

Unless otherwise agreed, in insurance of means of transport, any accident suffered by them shall give rise to the liability of the insurer for all damage suffered by the insured property.

Insurance on means of transport shall include, unless otherwise stipulated, integral parts and accessories.

Insurance for the transport of merchandise shall not cover losses occurring before the execution of the insurance contract.

The involuntary omission of a declaration in a periodic declaration policy shall not release the insurer from covering the risk on the omitted item, provided the policy covers all similar shipments made by the insured. The insured must submit the omitted declaration.

The insurer of means of transport shall not be liable for the mechanical damage suffered by navigation instruments, engines or other mechanisms, if such damage is not directly caused by an accident covered by the insurance.

The insurer of means of transport shall be liable, unless expressly provided otherwise in the policy, for the damage or losses caused by hidden defects of the property, unless it proves that the insured knew such defects or could have known them had it acted with ordinary diligence.

If the loss is due to a change of route or voyage, the insurer of means of transport, cargoes and other interests shall be liable only if the change was forced or was made to assist vehicles, vessels or persons in danger.

The change of the designated means of transport or an error in its designation shall not invalidate the insurance contract; but if they aggravate the risk, the insurer shall have the right to charge the corresponding difference in premium.

Unless otherwise agreed in the policy, the insurer shall be liable for the amounts with which the beneficiary must contribute to the general average.

While the means of transport is at rest, the insurer shall be liable only for the risk of fire.

The insurer shall be liable, unless otherwise agreed, up to the amount of the insured sum, for the amounts that the beneficiary owes to third parties for damage caused by the means of transport. The beneficiary must notify the insurer of the existence of the corresponding proceeding as soon as it becomes aware of it and may oppose the exceptions that pertain to the insured.

If the insurance expires while the means of transport is on the voyage, it shall be extended by operation of law until the twenty-fourth hour of the day on which the means of transport arrives at its final destination. The insured must pay the corresponding additional premium.

In insurance of means of transport by voyage, if a broader term is not stipulated in the policy, it shall begin at the moment the cargo is placed at the place of departure, and if there is none, from the moment it sets sail, casts off or begins the journey or the flight run, and it shall end at the moment it is parked, anchored or lands safely at the place of destination.

If within said term the loading of merchandise begins for a new voyage, with respect to which insurance has been taken out, the prior insurance shall cease upon the beginning of the new shipment.

If insurance is taken out when the voyage has already begun and the hour at which it will take effect is not stipulated, it shall be understood to take effect from the twenty-fourth hour of the day and place at which the contract was entered into.

In calculating the indemnity for damage to the means of transport, the difference in value between new and used must be established, according to the estimate of experts.

The value of the means of transport shall be considered to be the one it has on the market at the time the insurance is taken out.

The beneficiary may abandon the insured property to the insurer and demand the total amount of the insurance:

1º.If they are totally lost or if the means of transport is presumed lost or is rendered unable to move. The means of transport shall be presumed lost if thirty days elapse after the normal time for its arrival, without its reaching its destination or news of it being had.

2º.If, in the case of a means of transport, it is rendered unable to move as a result of the damage mentioned in article 956 of this Code, provided the cost of its repair reaches three fourths of its real value.

3º.If the damage suffered by the merchandise reaches three fourths of its value.

The declaration of abandonment must be communicated in writing to the insurer, within the four months following the loss.

The abandonment must be total and unconditional.

The insurer shall lose the right to object to the abandonment if it does not do so within fifteen days following the day on which it receives the declaration.

Ownership of the abandoned property shall transfer to the insurer, if the abandonment becomes final, from the moment the declaration was communicated to it.

The abandonment of the means of transport, under the terms of the preceding articles, shall give the right to collect the insurance on freight.

Personal insurance covering exclusively the risk of a voyage shall be valid only if the passenger's spouse, his or her relatives by consanguinity within the fourth degree or by affinity within the second, or persons who depend economically on the passenger are designated as beneficiaries.

In agricultural and livestock insurance, notice of the loss must be given precisely within the twenty-four hours following its occurrence.

The insurer shall be released from its obligations if the loss is due to failure to exercise ordinary care with the plantations or with the livestock.

Agricultural insurance may cover the expected profits of crops already made or to be made, agricultural products already harvested, or both at the same time.

In the first case, the policy must contain an indication of the area cultivated or to be cultivated, the product to be sown and the approximate date of harvest.

In the second case, the place where the products are stored.

In the event of partial destruction of agricultural products, the assessment of the damage shall be deferred, at the request of either party, until the harvest.

The insurer shall be liable for the death of livestock, even if it occurs within the month following the date of termination of the annual insurance, provided it is caused by a disease contracted during the term of the contract.

If the insured transfers one or several head of livestock, the acquirer shall not enjoy the benefits of the insurance, which shall be transferred only when the entire herd is transferred, with prior notice to the insurer and its acceptance.

In insurance against disease or death of livestock, the value of the interest shall be considered to be, in case of death, the sale value at the moment prior to the loss; in case of disease, that of the damage directly caused.

In civil liability insurance, the insurer undertakes to pay the indemnity that the insured owes to third parties as a consequence of a non-intentional act that causes them damage covered by the insurance contract.

Civil liability insurance attributes the right to the indemnity directly to the third party harmed, who shall be considered a beneficiary from the moment of the loss.

No acknowledgment of debt, settlement or any other legal act of a similar nature, made or arranged without its consent, shall be enforceable against the insurer that has entered into civil liability insurance.

The mere confession of a fact before the authorities shall not by itself create any obligation on the insurer.

The expenses arising from proceedings brought against the insured shall be presumed to be borne by the insurer, provided notice of the existence of the proceeding has been served on it.

Notice of the occurrence of a loss must be given when an event occurs that gives rise to or may give rise to liability.

In the case of a civil or criminal proceeding, the insured shall furnish the insurer with all data and evidence necessary for the defense, and if its liability is fully covered by the insurance, it shall be obliged to follow the insurer's instructions as to the defense, and to appoint as attorney-in-fact, with the powers necessary for the prosecution of the proceeding, the person the insurer designates to it in writing for that purpose.

If the third party is indemnified in whole or in part by the insured, the latter must be reimbursed proportionally by the insurer, provided it proves that it was legally obliged to pay.

Under this automobile insurance, the insurer shall indemnify the damage caused to the vehicle or its loss, the damages caused to the property of others and to third persons, arising from the use of the vehicle, or any other risk covered by the policy.

Unless otherwise agreed, insurance for damage to the insured automobile covers the damage caused by accidental overturning, collisions, fire, self-ignition, lightning and total robbery of the vehicle itself.

Automobile insurance for damage to the property of others covers the civil liability of the insured, caused by the use of the automobile in causing material damage to vehicles or other property.

Automobile insurance for running over of persons covers the civil liability arising from damages to third parties in their person, caused by the use of the insured automobile.

In no case shall damage to property of the insured, of its relatives or of persons under its custody be covered, with the exception of the insured automobile itself.

Unless otherwise agreed, the risks comprised in the following cases are excluded.

1º.Those occurring when the vehicle is outside the limits of the Republic of Guatemala.

2º.Damage to the person of the insured, of its companions or of the professional driver.

3º.The breaking of glass or parts of the mechanism of the automobile, due to improper use, overload or strain beyond the capacity of the vehicle.

4º.Those caused by serious violations of the traffic regulation, provided the violation directly influences the accident that causes the damage.

5º.Those caused by legally proven intoxication of the person who drives the insured automobile or by a person lacking a license to drive.

6º.Damage to special equipment.

7º.Loss of profits or income.

8º.Extraordinary risks, such as tremors, earthquakes, volcanic eruptions, hurricanes, war.

9º.Those caused by an individual directly in races or competitions.

10.Those caused by using the vehicle for instruction or teaching purposes.