Under the Insurance Code, a contract of insurance is an agreement whereby one undertakes for a
consideration to indemnify another against loss, damage or liability arising from an unknown or
contingent event.
Characteristics of the Insurance Contract:
CI, AC, RDD, PC, CUGF, CC,UC, NCA, ConC
1. Contract of Indemnity
2. Aleatory contract
3. Risk Distributing Device
4. Personal Contractt
5. Contract of Utmost good faith
6. Consensual Contract
7. Unilateral Contract
8. Normally Contract of Adhesion
9. Conditional contract
Elements of a Contract of Insurance
InS-PAR
1. The insured has an Insurable interest
2. The insurable interest is Subject to a risk of loss by the happening of the designated peril
3. The insurer’s Promise is in consideration of the payment of a premium
4. The insurer Assumes th risk
5. Such assumption of risk is part of a Risk distribution scheme
Insurable Interest
GR: an insurable interest is the interest which a perso is deemed to have in the subject matter of the
insured.
Interest refers to that relation or connection with, or concern in, a life or property, such that the
interested person will derive pecuniary benefit or advantage from pecuniary benefit, or advantage from
the preservation of the subject matter insured and will suffer pecuniary loss or damage from its
destruction, termination , or injury by the happening of the event insured against.
The insurable interest need not always be pecuniary in nature as in life insurance as the expectation of
benefit from the continued life of a person need not necessarily be of pecuniary nature.
Insurable interest in property vs insurable interest in life
As to extent: IIL is unlimited,IIP is limited to the actual value of the interest thereon
As to time when insurable interest must exist: In life insurance, it is enough that the insurable interest
exists at the time the policy takes effect and need not exist at the time of the loss; property insurance,
it is necessary that the insurable interest exists when the insurance takes effect and when the loss
occurs, but need not exist in the meantime.
As to expectatation of benefit to be derived: In life insurance, the expectation of the benefit to be
derived need not have any legal basis; in property insurance, there must be legal basis.
As to the beneficiary’s interest: The beneficiary must have insurable interest over the thing insured in
property insurance. In life insurance, the beneficiary need not have insurable interest over the life of the
insured if the insured himself secured the policy. However, if the life insurance was obtained by the
beneficiary, the latter must have insurable interest over the life of the insured.
CONCEALMENT- a neglect to communicate that which a party knows and ought to communicate.
REPRESENTATIONS: are factual statements made by the insured at the time of or prior to issuance of the
policy to give information to the insurer and otherwise induce him to enter into the insurance contract.
