Insurance Code: P.D. 612 R.A. 10607 Atty. Jobert O. Rillera, CPA, REB, REA
Insurance Code: P.D. 612 R.A. 10607 Atty. Jobert O. Rillera, CPA, REB, REA
P.D. 612
R.A. 10607
2.Voluntary
– the parties may incorporate such terms and conditions as they
may deem convenient.
3.Aleatory
– it depends upon some contingent event.
4.Unilateral
– imposes legal duties only on the insurer who promises to
indemnify in case of loss.
CHARACTERISTICS OF AN
INSURANCE CONTRACT
5.Conditional
– It is subject to conditions the principal one of which is the
happening of the event insured against.
6.Contract of indemnity
– Except life and accident insurance, a contract of insurance is a
contract of indemnity whereby the insurer promises to make good
only the loss of the insured.
7.Personal
– each party having in view the character, credit and conduct of the
other
REQUISITES OF A CONTRACT
OF INSURANCE
1. A subject matter which the insured has
an insurable interest.
2. Event or peril insured against which
may be any future contingent or unknown
event, past or future and aduration for the
risk thereof.
3. A promise to pay or indemnify in a fixed
or ascertainable amount.
4. A consideration known as “premium”.
5. Meeting of the minds of the parties.
There are six (6) major
principles of insurance
a. Indemnity
b. Contribution
d. Subrogation
e. Proximate Cause
f. Insurable Interest
INDEMNITY
The purpose of the insurance contract is to
restore the insured to the same financial
condition he was in at the time of the loss.
This principle is more applicable in
property insurance than life insurance. In
property insurance, the total sum insured
serves as a cap to the potential liability of
the insurer and not the amount of liability
itself in case of a loss. The amount of the
indemnity is subject to evaluation by the
insurer in order to determine the actual
extent of loss of the insured.
INDEMNITY
It is the basis of all property insurance. The
insured who has insurable interest over a
property is only entitled to recover the amount
of actual loss sustained and the burden is upon
him to establish the amount of such loss
Rules:
a.Applies only to property insurance except when
the creditor insures the life of his debtor.
b.Life insurance is not a contract of indemnity.
c.Insurance contracts are not wagering contracts.
(Sec. 4)
Optimus Prime insured his property against
fire for Php 4,000,000.00. The property was
totally burned and the value of the house
was determined to be Php 3,500,000.00
only.
Reason:
An insurance contract is an aleatory
contract. The insurer relies on the
representation of the applicant, who is in the
best position to know the state of his health.
How is materiality determined?
It is to be determined not by the event, but solely by the probable and
reasonable influence of the facts upon the party to whom the communication
is due, in forming his estimate of the disadvantages of the proposed contract,
or in making his inquiries.
It depends.
b. If the proceeds are more than the total amount of this credit,
the mortgagor has no right to collect the balance.
d. If the proceeds are less that the total amount of credit, the
mortgagee can still recover from the mortgagor for deficiency.
Purpose:
It is intended to give temporary insurance protection
coverage to the applicant pending the acceptance or
rejection of his application.
Duration:
Not exceeding 60 days unless a longer period is
approved by Insurance Commissioner (Sec. 52).
Riders
Printed stipulations usually attached to the
policy because they constitute additional
stipulations betweenthe parties. (Ang Giok
Chip vs. Springfield, 56 Phil. 275)
Endorsements
Any provision added to the contract altering its
scope or application.
POLICY OF INSURANCE
The written instrument in which a contract of
insurance is set forth.
What are the two (2) essential
policy conditions which if violated
will void the entire policy?
a) Willful concealment or
misrepresentation by the insured of any
material fact or circumstance concerning
the subject thereof or the interest of the
insured therein; and
b) Any fraud or false swearing by the
insured relating thereto.
What is the difference between
suretyship and insurance?
In suretyship, three persons or entities are
involved: the surety, the principal and the
obligee. In insurance, there are only two: the
insurer and the insured.
In insurance, there is a theoretical
distribution of losses over a group or
classification of risks, the insurance company
assuming the losses of the individual insured.
In suretyship, no losses is anticipated as the
surety guarantees the obligation of the
principal.
In property insurance, is the insured
entitled to a return of premium if he
should decide to discontinue his
policy?
Yes, to a proportionate amount
corresponding to the unexpired term of
the policy; generally under the short
period scale provided for in the policy
How soon may the amount of any loss or damage for
which an insurer may be liable under a non-life policy
be paid? If the insurer refuses or fails to; pay the
claim within the time prescribed by law, may the
insured collect interest for the duration of the delay?