CONTRACT OF INSURANCE Is an agreement whereby one undertakes for a consideration to indemnify another aganist loss, damage or liabilities, arsing

from unknown or contingent events. ESSENTIAL ELEMENTS (SPEAR) 1. Scheme to distribute loss; 2. Payment of Premium 3. Existence of Insurable Interest 4. Assumption of Risk 5. Risk of Loss CHARACTERISTICS (CAPU-PURO-VIC) 1. Unilateral-imposes legal duty only on Insurer 2. Personal- Each party having in view of the character, credit and conduct of the other 3. Aleatory- parties reciprocally binds themselves 4. Contract of Indemnity- The insurer promises to make good if there is a loss or occurrence on the risk insured against 5. Uberrima Fides Contract- Utmost goodfaith 6. Property- Property in legal contemplation 7. Risk Distributing Device- serves to distribute the economic loss 8. Onerous- there is valuable consideration called premium 9. Consensual- perfected by mere consent 10.Voluntary- parties may incorporate terms and conditions as they may deem convenient 11.Conditional- depends upon the happening of the event insured against DISTINCTIONS OF LIFE AND PROPERT INSURANCE SUBJECT Matter Amount LIFE Life, Accident or Health Unlimited PROPERTY Anything other than Life, Accident or Health Extent to which the insured may be damnified by loss or injury

Partakes Effectivity

Partakes the nature of Investment At the time the insurance takes effect

thereof Partakes the nature of Indemnification At the time the insurance takes effect and at the time of loss

PARTIES TO THE CONTRACT OF INSURANCE 1. Insurer- a party who undertakes to indemnify for losses; 2. Insured- Person, Group, or Property for which an insurance policy is insured

3. Beneficiary- Third party, assigns or heirs

WHAT MAY BE INSURED 1. Contingent or unknown event 2. Part or Future events

WHO IS A PUBLIC ENEMY It designates a nation at war with the Philippines, and includes enemy member of such nation INSURABLE INTEREST It is the relationship or connection a person must have with the subject matter of an insurance policy in order to insure it. INSURABLE INTEREST IN LIFE INSURANCE MUST BE FOUNDED ON THE FOLLOWING: 1. Pecuniary 2. Contractual 3. By blood or Affinity

To expect some benefits or advantage

INSURABLE INTEREST IN PROPERTY MAY CONSISTS OF: 1. Existing interest 2. Inchoate Interest founded on an existing interest 3. An expectancy WHAT IS CONCEALMENT

Neglect to communicate that which the party knows and ought to communicate

WHEN IS THERE CONCEALMENT Exists where the assured had knowledge of the fact material to the risk, honesty, good faith and fair dealing require that he should communicate it to the insured, but he designedly and intentionally withholds the same.

EFFECT OF CONCEALMENT Grounds to void the contract.

SECTION 48- right to rescind the contract must be exercised previous to the commencement of an action on the contract.