RFBT-04

• Insurance contract


  An agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event
• Suretyship


  A contract where a person binds himself solidarily to the creditor to fulfill the obligation of the debtor in case the latter should fail to do so
• A contract of suretyship shall be deemed to be an insurance contract, within the meaning of the Insurance Code, only if made by a surety who or which, as such, is doing an insurance business
• Uberrimae Fides Contract


  • The contract of insurance is one of perfect good faith, not for the insured alone, but equally so for the insurer
• Contract of Indemnity


  • The insured is entitled to recover only the amount of total loss sustained, and the burden is upon him to prove the amount of such loss
• Risk Distributing Device


  • The risk of economic loss is distributed among a large group of people bearing the same risk
• Aleatory


  • The obligation of the insurer to pay the proceeds of the insurance arises only upon the happening of an event which is uncertain
• Contract of Adhesion


  • An insurance contract is a ready-made form of contract, which the other party may accept or reject, but which the latter cannot modify
• Personal


  • The law presumes that the insurer considered the personal qualification of the insured in approving the insurance application
• Voluntary


  • A contract of insurance is not compulsory, and the parties may incorporate such terms and conditions as they may deem convenient
• Synallagmatic


  • Both the insured and insurer have reciprocal obligations of equal value to each other
• Elements of an insurance contract

  • The insured has an insurable interest
  • The insured is subject to a risk of loss by the happening of the designated peril
  • The insurer assumes the risk
  • Such assumption of risk is part of a general scheme to distribute actual losses among a large group of persons bearing a similar risk
  • In consideration of the insurer's promise, the insured pays a premium
• Classes of insurance contracts under the Insurance Code

  • Life insurance
  • Non-life insurance
• Types of life insurance

  • Individual life
  • Group life
  • Industrial life
• Types of non-life insurance

  • Marine insurance
  • Fire insurance
  • Casualty
• Microinsurance


  A financial product or service that meets the risk protection needs of the poor
• Variable insurance


  Any policy or contract on either a group or on an individual basis issued by an insurance company providing for benefits or other contractual payments or values thereunder to vary so as to reflect investment results
• Insurable interest (life insurance)


  That interest which the insurer is required to have in the person of the insured
• Persons who have insurable interest in life

  • The insured themselves, their spouse, and children
  • Any person on whom they depend wholly or in part for education or support, or in whom they have a pecuniary interest
  • Any person under a legal obligation to them for the payment of money, or respecting property or services, of which death or illness might delay or prevent the performance
  • Any person upon whose life any estate or interest vested in them depends
• Measure of insurable interest (life)

  Positive: will you be benefited if the person does not die

  Negative: the amount of loss and effect of that loss, or the amount by which you will be indemnified
• No insurable interest: Art. 2012 of the Civil Code provides that anyone who is forbidden from receiving any donation under Art. 739 cannot be named beneficiary of a life insurance policy by a person who cannot make any donation to him
• Insurable interest (property)


  Any interest therein, or liability in respect thereof, and it may consist in: an existing interest, an inchoate interest founded on existing interest, or any expectancy coupled with an existing interest
• In general, a person has an insurable interest in the property, if he derives pecuniary benefit or advantage from its preservation or would suffer pecuniary loss, damage or prejudice by its destruction whether he has or has no title in, or lien upon, or possession of the property
• Examples of insurable interest in property


  • Stockholder
  • Contractor of a building
• Insurable interest on mortgaged property

  Mortgagor: as owner, has an insurable interest to the extent of its value, even though the mortgage debt equals such value

  Mortgagee: has an insurable interest in the mortgaged property to the extent of the debt secured; such interest continues until the mortgage debt is extinguished
• Loss Payable Mortgage Clause


  The mortgagor secures an insurance over the property and designates the mortgagee as the beneficiary (or assigns the policy of insurance to the mortgagee), the insurance is deemed to be upon the interest of the mortgagor
• Effects of change of interest in insured property

  • General rule: a change of interest in any part of a thing insured unaccompanied by a corresponding change of interest in the insurance suspends the insurance to an equivalent extent, until the interest in the thing and the interest in the insurance are vested in the same person

  Exceptions: a change of interest in the thing insured after the occurrence of an injury which results in a loss, a change of interest in one or more of several distinct things, separately insured by one policy, a change of interest by will
• Mortgagor


  The person who gives a mortgage
• Mortgagee


  The person to whom a mortgage is given
• The insurance is deemed to be upon the interest of the mortgagor, who does not cease to be a party to the original contract
• Any act of the mortgagor, prior to the loss, which would otherwise avoid the insurance, will have the same effect, although the property is in the hands of the mortgagee
• Any act which, under the contract of insurance which is to be performed by the mortgagor, may be performed by the mortgagee
• General rule on change of interest in insured property

  A change of interest in any part of a thing insured unaccompanied by a corresponding change of interest in the insurance suspends the insurance to an equivalent extent, until the interest in the thing and the interest in the insurance are vested in the same person
• Exceptions to the general rule on change of interest

  • A change of interest in the thing insured after the occurrence of an injury which results in a loss
  • A change of interest in one or more of several distinct things, separately insured by one policy
  • A change of interest by will or succession on the death of the insured
  • A transfer of interest by one of several partners, joint owners or owners in common, who are jointly insured, to the others
  • When a policy is so framed that it will inure to the benefit of whomsoever, during the continuance of the risk, may become the owner of the interest insured
• When there is an express prohibition against alienation in the policy, in case of alienation, the contract of insurance is not merely suspended but avoided
• Perfection of a contract of insurance


  A contract of insurance is a consensual contract which is perfected by the meeting of the minds between the insured and the insurer
• The mere submission of an application without the corresponding approval, even if no memorandum or rejection as provided, does not result in a perfected contract of insurance
• Premium


  The consideration paid by the insured to the insurer for undertaking the assumption of the risk covered by the insurance contract
• As a general rule, there can be no binding contract of insurance if there is no payment of the premium
• Exceptions to the general rule on premium payment

  • Whenever a grace period provision applies as provided under Section 77 of the Insurance Code
  • If there is an agreement to grant the insured credit extension of the premium due under Section 72 of the Insurance Code
  • If the parties intended the policies to be valid despite payment of insurance premiums in installment
  • If the insurer granted a credit term for the payment of the premium and loss occurs before the expiration of the term, recovery on the policy should be allowed
  • When the parties are barred by estoppel