PROFESSIONAL ELECTIVE 3: Special Commercial Laws
Insurance Code ………………………………………………………………………………………………………………………………………………………………………………………………………………………………
d. Such assumption is part of a
general scheme to distribute
● PD 612 - 18 December 1974
actual losses among large group
● RA 10607 - 15 August 2012
of persons bearing somewhat
what similar risks
Contract of Insurance - Insurance
e. Premium** - as consideration for
Code, Sec. 2 (a)
the insurer’s promise, the insured
1. An agreement;
makes this rateable contribution
2. Whereby one undertakes for a
to a general insurance fund
consideration;
3. To indemnify another against
*Insurable Interest
loss, damage, or liability
- A person is deemed to have an
4. Arising from an unknown or
insurable interest in the subject
contingent event*
matter insured where he has a
relation or connection with or
Note: Essentially, insurance contract is a
concern in it that he will derive
conditional obligation
pecuniary benefit or advantage
from its preservation and will
*Contingent event
suffer pecuniary loss or damage
- an unknown past event is one
from its destruction, termination
which had already happened, but
or injury by the happening of the
one is unaware if it happened or
event insured against
not.
- A past event may be designated
**Premium
event only in cases where it has
- The consideration paid to an
happened already but the parties
insurer for undertaking to
do not know about it
indemnify the insured against a
specified peril.
ELEMENTS OF AN INSURANCE CONTRACT
Non-payment of 1st premium -
……………………….
(Consent, Object/subject matter, Cause)
prevents the contract from becoming
a. Insurable interest* - the insured
binding notwithstanding the acceptance
must possess an interest of some
of the application or the issuance of the
kind susceptible of pecuniary
policy.
estimation.
b. Risk of loss - the insured is
INSURANCE AS A…………………………………….
subject to a risk of loss through
RISK-DISTRIBUTING DEVICE……………..
the destruction or impairment of
A contract of insurance is primarily a
that interest by the happening of
risk-distributing device, a mechanism
designated perils;
by which all members of a group
c. The insurer assumes the risk of
exposed to a particular risk contribute
loss
premiums to an insurer. From these
PROFESSIONAL ELECTIVE 3: Special Commercial Laws
contributory funds are paid whatever - Not be a public enemy
losses occur due to exposure to the peril (citizen or subject of a
insured against. country with whom the
Philippines is at war)
Note: Insurance contract does NOT
cover suicide or any self-harm. RULE FOR MARRIED PERSONS
The consent of the spouse is NOT
PARTIES TO AN IC ……………………………………………………………………………………………………………………………………………………………………………………………………………………………… necessary for the validity of an
a. INSURER insurance policy taken out by a married
- The party who assumes or person on his or her life or that or his or
accepts the risk of loss her children or that of her husband.
and undertakes for a (Typically applies for wives)
consideration to indemnify
the insured or to pay him a SUBJECT MATTER OF AN IC ………………………………………………………………………………………….
certain sum on the a. Any contingent or unknown
happening of a specified event, whether past or future,
contingency or event; which may damnify (cause
damage to) a person having an
- They must have:
insurable interest; or
1. Sufficient capital at
b. Any contingent or unknown
least 1B
event, whether past or future,
2. Certificate of Authority
which may create a liability
from the Insurance
against the person insured
Commission (renewed
every 3 years)
PERFECTION OF AN IC ……………………………………………………………………………………………………………………………………….
A contract of insurance must be
b. Insured
assented to by both parties, either in
- The person in whose favor
person or through their agents and so
the contract is operative
long as an application for insurance has
and who is indemnified
not been either accepted or rejected, it
against or is to receive a
is merely a proposal or an offer to make
sum upon the happening
a contract.
of a specified event.
CHARACTERISTICS, NATURE &
- They must:
.......................................................................
PRINCIPLES OF AN IC
1. Be competent to enter
……………………………………………………………………………………………………………………………………………
into a contract; ● CONSENSUAL - perfected by the
- Possess an insurable meeting of the minds of the
interest in the subject of parties
the insurance; and ● VOLUNTARY - not compulsory
and the parties may incorporate
PROFESSIONAL ELECTIVE 3: Special Commercial Laws
such terms and conditions as DESIGNATION OF BENEFICIARY…………
they may deem convenient which GR: When one insures his own life, he
will be binding. may designate any person as the
● ALEATORY - one of the parties or beneficiary, whether or not the
both reciprocally bind themselves beneficiary has an insurable interest in
to give or to do something in the life of the insured.
consideration of what the other
shall give or do upon the XPN: Persons specified in Art. 739 of the
happening of an event which is CC CANNOT be designated:
uncertain, or which is to occur at a. Those made between persons
an indeterminate time. who were guilty of adultery
(married woman) or
Insured - payment of premium concubinage (for married man)
Insurer - payment of proceeds (conviction is not a condition
precedent);
● UNILATERAL - is executed as to
b. Those made between persons
the insured after the payment of
found guilty of the same criminal
the premium. It is executory as to
offense, in consideration thereof;
the insurer since it is not
executed until payment for a loss. c. Those made to a public officer
● PERSONAL - each party takes or his wife, descendants or
into account the character, credit ascendants by reason of his
and conduct of the other office.
● CONDITIONAL - insurer’s
liability is based on the Right of Insured to Change
happening of the event insured Beneficiary in Life Insurance
against. GR: The insured shall have the right to
change the beneficiary he designated in
UBERRIMAE FIDES CONTRACT…………… the policy
- The contract of insurance is one XPN: If the insured expressly waived his
of perfect good faith not for the right to change the beneficiary, this
insured alone, but equally so for makes the latter an irrevocable
the insurer. beneficiary. But despite the waiver, he
- FULL DISCLOSURE can still change the beneficiary,
provided that he obtains the
CONTRACT OF ADHESION………………………… beneficiary’s consent.
- In case of doubt, ambiguity,
uncertainty, insurance contracts FORFEITURE BY BENEFICIARY OF…….
are interpreted against the INTEREST IN INSURANCE POLICY……
insurer. The interest of a beneficiary in a life
insurance policy shall be forfeited when
PROFESSIONAL ELECTIVE 3: Special Commercial Laws
the beneficiary is the principal, withholding of material
accomplice, or accessory in willfully information or facts within the
bringing about the death f the insured; assured’s knowledge or
in which event, the share forfeited shall presumed knowledge?
be paid as follows:
1. To the other beneficiaries if not ● Misrepresentation - a factual
disqualified; statement made by the insured
2. If no other beneficiaries, in at the time of, or prior to, the
accordance with the policy issuance of the policy, to give
contract; (e.g. to the contingent information to the insurer and
or substitute of beneficiaries) otherwise induce him to enter
3. If the policy contract is silent, to into the insurance contract.
the estate of the insured.
(Insurance Code, Sec 12) - Representation fails to
correspond with the facts
INSURANCE POLICY……………………………… - False on an important point.
- A written document issued by the
insurer to the insured, embodying
the terms and conditions of their
contract of insurance
- The policy is not necessary for
the perfection of the contract.
The policy is only the formal
written instrument evidencing the
contract. It is required, however,
that all policies issued or
delivered must be in the form
previously approved by the
Insurance Commission.
RESCISSION OF INSURANCE………………
CONTRACTS………………………………………………
● Concealment - neglect to
communicate that which a party
knows and ought to
communicate
- Was the insurer misled or
deceived into entering a contract
obligation or in fixing the
premium of insurance by
