10607 "In the application of the provisions of this
Code, the fact that no profit is derived from
AN ACT STRENGTHENING THE INSURANCE the making of insurance contracts,
INDUSTRY, FURTHER AMENDING PRESIDENTIAL agreements or transactions or that no
DECREE NO. 612, OTHERWISE KNOWN AS "THE separate or direct consideration is received
INSURANCE CODE", AS AMENDED BY therefor, shall not be deemed conclusive to
PRESIDENTIAL DECREE NOS. 1141, 1280, 1455, 1460, show that the making thereof does not
1814 AND 1981, AND BATAS PAMBANSA BLG. 874, constitute the doing or transacting of an
AND FOR OTHER PURPOSES insurance business.

Be it enacted by the Senate and House of Representatives of "(c) As used in this Code, the
the Philippines in Congress assembled: term Commissioner means the Insurance
Section 1. Presidential Decree No. 612, as amended, is hereby
further amended to read as follows: "CHAPTER I
"Section 1. This Decree shall be known as ‘The Insurance "WHAT MAY BE INSURED
"Section 3. Any contingent or unknown event, whether past or
"Section 2. Whenever used in this Code, the following terms future, which may damnify a person having an insurable
shall have the respective meanings hereinafter set forth or interest, or create a liability against him, may be insured
indicated, unless the context otherwise requires: against, subject to the provisions of this chapter.

"(a) A contract of insurance is an agreement whereby "The consent of the spouse is not necessary for the validity of
one undertakes for a consideration to indemnify an insurance policy taken out by a married person on his or
another against loss, damage or liability arising from her life or that of his or her children.
an unknown or contingent event.
"All rights, title and interest in the policy of insurance taken
"A contract of suretyship shall be deemed to be an out by an original owner on the life or health of the person
insurance contract, within the meaning of this Code, insured shall automatically vest in the latter upon the death of
only if made by a surety who or which, as such, is the original owner, unless otherwise provided for in the policy.
doing an insurance business as hereinafter provided.
"Section 4. The preceding section does not authorize an
"(b) The term doing an insurance insurance for or against the drawing of any lottery, or for or
business or transacting an insurance business, within against any chance or ticket in a lottery drawing a prize.
the meaning of this Code, shall include:
"Section 5. All kinds of insurance are subject to the provisions
"(1) Making or proposing to make, as of this chapter so far as the provisions can apply.
insurer, any insurance contract;
"(2) Making or proposing to make, as surety, "PARTIES TO THE CONTRACT
any contract of suretyship as a vocation and
not as merely incidental to any other "Section 6. Every corporation, partnership, or association,
legitimate business or activity of the surety; duly authorized to transact insurance business as elsewhere
provided in this Code, may be an insurer.
"(3) Doing any kind of business, including a
reinsurance business, specifically recognized "Section 7. Anyone except a public enemy may be insured.
as constituting the doing of an insurance
business within the meaning of this Code; "Section 8. Unless the policy otherwise provides, where a
mortgagor of property effects insurance in his own name
"(4) Doing or proposing to do any business providing that the loss shall be payable to the mortgagee, or
in substance equivalent to any of the assigns a policy of insurance to a mortgagee, the insurance is
foregoing in a manner designed to evade the deemed to be upon the interest of the mortgagor, who does not
provisions of this Code. cease to be a party to the original contract, and any act of his,

of such nature that a contemplated peril might directly "Section 24. the proceeds shall be paid to the estate of the insured. the proceeds shall be paid in accordance with the policy contract. If the policy contract is "Section 23. "Section 16. by will or succession. or performed by the mortgagee therein named. "(a) An existing interest. or accessory in willfully bringing about the death "Section 22. with the same effect as if it had been performed by the mortgagor. "(d) Of any person upon whose life any estate or "Section 20. and. An insurable interest in property may consist in: been agreed that the insurance shall cease upon an alienation of the thing insured. but prevent the performance. A carrier or depository of any kind has an assent. will have the same effect. is to be performed by the mortgagor. does not affect "Section 12. absence of other beneficiaries. and need not exist thereafter or when the loss occurs. "Section 21. or owners in common. on the silent. In the avoid the insurance as to the others. at the time of his "Section 15. unless he has insurance. . not founded on an actual right to the thing. accident. although the property is in the hands of the mortgagee. An interest in property insured must exist when "(c) Of any person under a legal obligation to him for the insurance takes effect. The insured shall have the right to change the unaccompanied by a corresponding change of interest in the beneficiary he designated in the policy. but any act which. death of the insured. who are jointly insured. and health insurance. making a insurable interest in a thing held by him as such. accomplice. unless otherwise disqualified. the rights of said assignee. of which death or illness might delay or person insured must exist when the insurance takes effect. does not avoid an insurance even though it has "Section 14. A transfer of interest by one of several partners. until expressly waived this right in said policy. the acts of the mortgagor cannot affect of his liability but not to exceed the value thereof. and in the cases of life. sections. and his interest in the insurance passes to the person taking his interest "Section 13. The interest of a beneficiary in a life insurance the right of the insured to indemnity for the loss. after the occurrence of an injury which results in a loss. Except in the cases specified in the next four interest vested in him depends. a change of interest in any part of a thing insured "Section 11. the share forfeited shall pass on distinct things. is an insurable interest. A change of interest. A change of interest in one or more of several of the insured. Every interest in property. to the others. suspends the insurance to an equivalent extent. In such a case. policy shall be forfeited when the beneficiary is the principal. personal. which would otherwise avoid the insurance. If an insurer assents to the transfer of an insurance from a mortgagor to a mortgagee. and when the loss occurs. in the event the insured does not change the vested in the same person. but need the payment of money. joint owners. imposes further obligations on the assignee. does not to the other beneficiaries. pecuniary interest. damnify the insured. or in whom he has a having an insurable interest in the property insured. separately insured by one policy. of his spouse and of his children. beneficiary during his lifetime. the designation shall be deemed irrevocable. or respecting property or not exist in the meantime. nor upon any "INSURABLE INTEREST valid contract for it. does not avoid an insurance. "Section 10. "(a) Of himself. and interest in the life or health of a services. Every person has an insurable interest in the life "Section 17.prior to the loss. "Section 19. "(c) An expectancy. "Section 9. to the extent new contract with him. is not insurable. or any relation thereto. No contract or policy of insurance on property "(b) Of any person on whom he depends wholly or in shall be enforceable except for the benefit of some person part for education or support. whether real or in the thing insured. coupled with an existing interest in that out of which the expectancy arises. "Section 18. may be interest. Notwithstanding the the interest in the thing and the interest in the insurance are foregoing. or liability in respect thereof. A mere contingent or expectant interest in any "TITLE 3 thing. The measure of an insurable interest in property and health: is the extent to which the insured might be damnified by loss or injury thereof. under the contract of "(b) An inchoate interest founded on an existing insurance. A change of interest in a thing insured.

"(c) Those of which the other waives communication. An intentional and fraudulent omission. "TITLE 4 "CONCEALMENT "Section 34. "Section 33. is called a concealment. on the part of one insured. where they are distinctly implied in other facts of which information is communicated. either by the terms of insurance or by neglect to make inquiry as to such facts. "Section 40. "Section 31. or before. of a risk excluded by a warranty. general. The language of a representation is to be proving or tending to prove the falsity of a warranty. A neglect to communicate that which a party knows and ought to communicate. and "(e) Those which relate to a risk excepted from the policy and which are not otherwise material. or that the policy shall be contract. A representation may be made at the time of."Section 25. and which the other has not the means of ascertaining. even upon inquiry. "Section 35. "(a) Those which the other knows. information of his own "Section 27. except as prescribed by Section 51. A concealment whether intentional or judgment upon the matters in question. "Section 30. and of which the former has no reason to suppose him ignorant. all facts within his knowledge which are material to the contract and as to which "Section 36. A representation must be presumed to refer to the "(d) Those which prove or tend to prove the existence date on which the contract goes into effect. unintentional entitles the injured party to rescind a contract of insurance. issuance of the policy. is void. received as proof of such interest. entitles interpreted by the same rules as the language of contracts in the insurer to rescind. and all general usages of trade. Every stipulation in a policy of insurance for the facts upon the party to whom the communication is due. but not afterwards. equally with that of the other. "Section 42. "Section 37. "Section 32. and which may affect the political or material perils contemplated. in the exercise of ordinary care. The right to information of material facts may be waived. Materiality is to be determined not by the event. to communicate information of matters "Section 38. and every policy executed by way of gaming or wagering. other ought to know. but solely by the probable and reasonable influence of the . "TITLE 5 "REPRESENTATION "Section 28. unless it appears that it was merely a statement of in answer to the inquiries of the other: belief or expectation. the implied warranty. in good faith. A representation may be altered or withdrawn before the insurance is effected. Each party to a contract of insurance must communicate to the other. Neither party to a contract of insurance is bound to communicate. but it may qualify an "(b) Those which. "Section 41. Information of the nature or amount of the interest of one insured need not be communicated unless in answer to an inquiry. "Section 26. Neither party to a contract of insurance is bound "Section 39. in payment of loss whether the person insured has or has not any forming his estimate of the disadvantages of the proposed interest in the property insured. A representation may be oral or written. Each party to a contract of insurance is bound to know all the general causes which are open to his inquiry. and which are not otherwise material. A representation as to the future is to be deemed a to communicate information of the matters following. A representation cannot qualify an express provision in a contract of insurance. or in making his inquiries. he makes no warranty. "Section 29. except promise.

or if the insurance is of a character "Section 47. the injured party is entitled to rescind the contract from the time when the representation "(a) The parties between whom the contract is made. is called a policy of insurance. contents of such rider. Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this "(d) The property or life insured. and insured for a period of two (2) years from the date of its issue or of its last reinstatement. the policy. "Section 45. "After a policy of life insurance made payable on the death of the insured shall have been in force during the lifetime of the "(f) The risks insured against. or word necessary to Commissioner may promulgate rules and regulations complete the contract of insurance shall be written on the governing such extensions for the purpose of preventing such blank spaces provided therein. "(c) The premium. A policy of insurance must specify: whether affirmative or promissory. part of the contract of insurance and which is pasted or attached to said policy is not binding on the insured. mark. warranty or exclusively to the proper interest of the person in whose name endorsement is also mentioned and written on the blank spaces or for whose benefit it is made unless otherwise specified in provided in the policy. "Cover notes may be extended or renewed beyond such sixty (60) days with the written approval of the Commissioner if he "Section 50. violations and may by such rules and regulations dispense with the requirement of written approval by him in the case of "Any rider. clause. Cover notes may be issued to bind insurance temporarily pending the issuance of the policy. clause. or he may submit the information. signature. and which he believes to be be countersigned by the insured or owner. number. "(b) The amount to be insured except in the cases of "Section 46. The provisions of this chapter apply as well to a where the exact premium is only determinable upon modification of a contract of insurance as to its original the termination of the contract. basis and rates upon which the final premium is to be determined. and any word. "Section 52. by the same rules as the materiality of a concealment. Within sixty "TITLE 6 (60) days after issue of a cover note. The materiality of a representation is determined open or running policies. and in neither case is he responsible for its truth. a statement of the formation. clause. chapter. knowledge of a fact. clause. unless the "Section 53. phrase. which true. he may nevertheless repeat information warranty or endorsement issued after the original policy shall which he has upon the subject. if he is not the absolute owner thereof. the Commissioner. with the explanation that he does so on the information of countersignature shall be taken as his agreement to the others. the insurer cannot prove that the "(g) The period during which the insurance is to policy is void ab initio or is rescindable by reason of the continue. If a representation is false in a material point. "Section 49. a policy shall be issued in "THE POLICY lieu thereof. The written instrument in which a contract of insurance is set forth. unless it proceeds from an agent of the insured. The policy shall be in printed form which may determines that such extension is not contrary to and is not for contain blank spaces. such right must be exercised previous to the commencement of an action on the contract. "(e) The interest of the insured in property insured. When a person insured has no personal "Unless applied for by the insured or owner. in its whole extent. . to the insurer."Section 43. the purpose of violating any provisions of this Code. fraudulent concealment or misrepresentation of the insured or his agent. "Section 48. electronic form subject to the pertinent provisions of Republic Act No. any rider. warranty or endorsement purporting to be extension in compliance with such rules and regulations. clause. warranty or endorsement. the policy may be in is to give the information. otherwise known as the ‘Electronic Commerce "Section 44. "Section 51. The sign. 8792. including within its terms the identical insurance bound under the cover note and the premium therefor. symbol. A representation is to be deemed false when the Act’ and to such rules and regulations as may be prescribed by facts fail to correspond with its assertions or stipulations. The insurance proceeds shall be applied descriptive title or name of the rider. whose duty it "Notwithstanding the foregoing. becomes false.

after the effective date of the policy. agent or trustee as the insured. Any policy written for a "Section 63. and no notice of cancellation shall be effective unless it is based on the occurrence. valued or running. or by other general increasing the hazard insured against. relied upon. or agreement in any term of less than one (1) year shall be considered as if written policy of insurance. When an insurance contract is executed with an "(a) Nonpayment of premium. and the amount of the "(a) Which of the grounds set forth in Section 64 is insurance merely represents the insurer’s maximum liability. especially as to the policy or to condition its renewal upon reduction of limits the subjects of insurance. or "Section 57. property insured. but suspends it until the same person preceding section shall be in writing. the insurer will furnish the facts on which the "Section 61. continuation of the policy would violate or would may become the owner of the interest insured. shall be considered as if written for successive policy periods or terms of one (1) year. by additional statements or or elimination of coverages. "Section 58. No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured. place the insurer in violation of this Code. applicable to the interest of his co-partners or "(d) Discovery of willful or reckless acts or other part-owners. In case of insurance other than life.1âwphi1 entitled to renew the policy upon payment of the premium due on the effective date of the renewal. All notices of cancellation mentioned in the transfer the policy. it is necessary that the terms of the policy omissions increasing the hazard insured against."Section 54. or to his broker provided the broker is authorized in writing by the "Section 59. "Section 56. the fact that his principal or beneficiary is the real party in interest may be indicated by "(b) Conviction of a crime arising out of acts describing the insured as agent or trustee. "(c) Discovery of fraud or material misrepresentation. an agreement that the thing insured shall be valued at a specific sum. The mere transfer of a thing insured does not "Section 65. unless the insurer at least forty-five (45) days in advance of the end of "Section 62. should be such as are applicable to the joint or common interest. of one or more of the following: . A running policy is one which contemplates the policy period mails or delivers to the named insured at the successive insurances. When the description of the insured in a policy is so general that it may comprehend any person or any class of "(f) Discovery of other insurance coverage that persons. "(b) That. A condition. and shall state: "Section 60. "Section 64. the named insured shall be indorsements. words in the policy. stipulation. A valued policy is one which expresses on its face cancellation is based. An open policy is one in which the value of the thing insured is not agreed upon. during the continuance of the risk. policy owner to receive the notice of cancellation on his behalf. can claim the benefit of the policy. limiting the time for commencing an for a term of one (1) year. A policy is either open. the named insured at the address shown in the policy. upon written request of the named insured. Any policy written for a term longer action thereunder to a period of less than one (1) year from the than one (1) year or any policy with no fixed expiration date time when the cause of action accrues. "Section 55. "(e) Physical changes in the property insured which result in the property becoming uninsurable. To render an insurance effected by one partner or part-owner. "Section 66. mailed or delivered to becomes the owner of both the policy and the thing insured. only he who can show that it was intended to include makes the total insurance in excess of the value of the him. is void. and which provides that the object of address shown in the policy notice of its intention not to renew the policy may be from time to time defined. and The value of such thing insured shall be ascertained at the time of the loss. A policy may be so framed that it will inure to the "(g) A determination by the Commissioner that the benefit of whomsoever.