Professional Documents
Culture Documents
ii.
iii.
iv.
v.
d) CODE of Commerce:
i.
R.A. 656 amended by P.D. 245 Property Insurance Law dealing with
government property.
ii.
iii.
E.O. 250 (July 25, 1987) increases, integrates and rationalizes the
insurance benefits of barangay officials, SP, SP, SB
iv.
Section 5 of the Insurance Code provides that it shall cover all kinds of insurance
issued. There are basically two types of insurance covered by the Insurance
Code:
a) Life Insurance; and
b) Non-life insurance.
The Code also covers the contract of surety.
If the Insurance Code or a special law does not specifically provide for a particular
matter in question, the provisions of the Civil Code on contracts shall govern
suppletorily.
Definitions and Concepts:
1. Insurance = a contract whereby one undertakes for a consideration to indemnify
another against loss, damage or liability arising from an unknown or contingent
event. (Sec. 2)
2. Events covered by Insurance:
General Rule: Only a future event can be governed by an insurance contract
(Sec. 3)
Exception: A past event may be covered by marine insurance if the loss of the
vessel in the past could not have been known by ordinary means of
communication, then it could be the subject of marine insurance (Section 109).
3. Parties in Insurance Contract:
An insurance is a contract, so the general rule is that only those having capacity
to contract may enter into such contract. Under Sec. 3, a minor above 18
years of age may enter into insurance contract, but his right to choose his
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beneficiary is limited to his estate, his parents, spouse, child, brother or sister.
This particular provision has become obsolete with the promulgation of R.A. 6809
providing for the age of minority to commerce at the age of 18 years.
4. Characteristics of Insurance Contract:
a) Aleatory = there is an element of risk. An aleatory contract is one where the
obligation depends upon the occurrence of an uncertain event or one certain
to happen but at an indeterminate time. The former takes place in a fire
insurance, and the latter in life insurance.
b) Contract of Indemnity = there is an exchange of value for value (quid pro
quo), particularly in property insurance.
c) Onerous = There is valuable consideration (premium).
d) Bilateral = Both parties are bound to do something.
e) Formal = As to form, an insurance contract is not consensual in nature
because a policy is required to be issued, and the premium must be paid.
NOTE: as far as fire insurance is concerned, the Insurance Commission uses
the term cash and carry: payment of premium as a fourth requisite of the
insurance contract. (Sec. 77).
EXCEPTION: Under Sec. 78 (it covers only life insurance): if in a policy, it is
provided that a certain amount is to be paid as premium and it is expressly
acknowledged therein that payment of premium has been received, then the
insurance company is still bound to pay the beneficiary, even though the
premium has not been actually paid. (Reason: Estoppel).
5. Interpretation of Insurance Contract = Being contracts of adhesion, the
general rule is that insurance contracts are to be construed liberally in favor of
the insured and strictly against the insurer resolving all ambiguities against the
latter.
Yet contracts of insurance are to be construed according to the sense and
meaning of the terms which the parties themselves have used.
Insurance Policy
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Non-payment of premium;
Conviction of crime increasing hazard;
Fraud or misrepresentation discovered;
Willful or reckless acts increasing the hazard;
Physical changes in property making it uninsurable or increasing
hazard;
If Insurance Commission decides continuation of policy would violate
Code.
Beneficiary Designation:
General Rule
Exception
The designation of common law wife as beneficiary is void. This need only be
proved by preponderance of evidence, no previous conviction is required (Insular
Life vs. Ebrada, 80 SCRA 181 (1977)
Nature of Beneficiary Designation:
The right to designate beneficiary means the right to change the beneficiary at
any time. This is the general rule: That designation of beneficiary is revocable (Sec.
11.)
It would be irrevocable only if there is an express stipulation in the policy to that
effect.
a) In taxation: under the NIRC, if there is an irrevocable designation of beneficiary,
when the insured dies the proceeds of life insurance will not be subject to estate
tax. If the designation is revocable, the proceeds will be subject to estate tax.
b) Section 12 = When an irrevocable beneficiary is designated, and he commits
acts of ingratitude that would disqualify him from inheriting, but the insured
cannot remove him as beneficiary.
But under Sec. 12, if the beneficiary is designated, whether revocable or
irrevocable, and subsequently he is found guilty of causing the death of
insured, that designation is void and proceeds will be paid to the heirs of
the insured.
c) Section 180: Cash Surrender Value = is only applicable in life insurance. Part
of the premium paid is set aside in a fund which is mandatory upon life insurance
companies.
The purpose of the reserve fund is in the event of many deaths and claims, the
insurer will be able to pay all the claims because it has the cash surrender
values.
The insured can also borrow on the cash surrender value, but if the designation
of the beneficiary is irrevocable, the consent of the beneficiary is required.
All these three (3) rights can be availed of by the insured and not by the beneficiary.
RIGHT OF SUBROGATION process of legal substitution
Purpose: to make the person who caused the loss, legally responsible for it and at the
same time prevent the insured from receiving a double recovery from the wrongdoer
and the insurer.
Applicable only to property insurance.
Classes of Insurance research
Parties to insurance
Insurable interest in general
What are to be insured
Concealment
Representation in relation to concealment
Elements of insurance contract