Section 873.- If, during the period of insurance, the insurable interest is substantially reduced, the assured is entitled to a reduction of the sum insured and of the premium.

The reduction of the premium shall take effect only for the future.

 

Section 874.- If the parties have valued the insurable interest, the insurer is entitled to a reduction of the amount of compensation only if he proves that the agreed valuation is substantially too high and returns a proportionate amount of the premiums with interest.

 

Section 875.- If the subject of insurance passes from the assured by will or operation of law, the rights under the contract of insurance are transferred with it.

Unless otherwise provided by the contract, if the assured transfers the subject of insurance and notifies the transfer to the insurer, the rights under the contract of insurance are transferred with it. If, by such transfer, the risk is substantially altered or increased, the contract of insurance becomes void.

 

Section 876.- If the insurer has been adjudged bankrupt, the assured may require proper security to be given him or he may terminate the contract.

If the assured is adjudged bankrupt, the same rules shall apply correspondingly; however when the whole amount of the premium has been paid for a certain period of time, the insurer cannot terminate the contract before such period expires.

 

Section 877.- The insurer is bound to pay compensation for :

(1)   The actual amount of the loss ;

(2)   The damage caused to the insured property by reasonable measures taken for preventing the loss ;

(3)   All reasonable expenses incurred for preserving the insured property from the loss.

The actual amount of the loss shall be valued at the place where, and at the time when, the loss occurred. The sum insured is presumed to be a correct basis for such valuation.

The compensation cannot exceed the sum insured.

 

Section 878.- The expenses for valuation of the loss must be borne by the insurer.

 

Section 879.- The insurer is not liable if the loss or other event specified in the contract is caused by the bad faith or the gross negligence of the assured or the beneficiary.

The insurer is not liable for loss resulting directly from the inherent vice of the subject of insurance unless otherwise provided.

 

Section 880.- If the loss is caused by the act of a third person, the insurer who pays compensation is subrogated, up to the amount paid by him, to the rights of the assured and of the beneficiary against such third person.

If the insurer has paid part only of the compensation, he cannot exercise his right to the prejudice of the right of the assured or of the beneficiary to claim from the third person for the remainder of the loss.