INSURANCE REVIEWER

CONTRACT OF INSURANCE

An agreement whereby one undertakes for a
consideration to indemnify another against loss,
damage or liability arising from an unknown or
contingent event. (Sec. 2, par. 2, IC)
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Characteristics of Insurance

1. Aleatory

2. Unilateral

3. Personal

4. Consensual

5. Uberrimae Fidea

6. Executory and Conditional

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“DOING AN INSURANCE BUSINESS OR TRANSACTING AN

INSURANCE BUSINESS” (Sec. 2, par. 4)
1. Making or proposing to make, as insurer, any insurance
contract;
2. Making or proposing to make, as surety, any contract of
suretyship as a vocation, not as a mere incident to any other
legitimate business of a surety;
3. Doing any insurance business, including a reinsurance
business;
4. Doing or proposing to do any business in substance equivalent
to any of the foregoing
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Special Types of Insurance Contracts

1. Marine Insurance

2. Casualty Insurance

3. Fire Insurance

4. Life Insurance

5. Compulsory Third Party Liability Insurance

6. Microinsurance
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PARTIES TO INSURANCE CONTRACT

1. Insurer - Person who undertakes to indemnify another.

2. Insured - The party to be indemnified upon the occurrence of the

loss. He must have capacity to contract, must possess an insurable
interest in the subject of the insurance and must not be a public enemy.

3. Beneficiary - A person designated to receive proceeds of policy when risk

attaches.
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A. Requisites

There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established.

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B. Perfection
Consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the contract. The
offer must be certain and the acceptance absolute. A qualified
acceptance constitutes a counter-offer Acceptance made by letter or
telegram does not bind the offerer except from the time it came to his
knowledge. The contract, in such a case, is presumed to have been
entered into in the place where the offer was made.
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Cognition Theory

The theory being applied under the New Civil Code; New Civil
Code, Article 1318 New Civil Code, Article 1319 (1) New Civil
Code, Article 1319 (2)

[Insurance] contract is perfected the moment the offeror learns

of the acceptance of his offer by the other party.
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Rights of Policy Holders

1. Right to a financially sound and viable insurance company.

2. Right to access insurance companies’ official financial information.

3. Right to be informed of the license status of insurance companies,

intermediaries and soliciting agents.

4. Right to be offered a duly approved insurance product.

5. Right to be informed of the benefits, exclusions and other provisions under

the policy.
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6. Right to receive the policy. Policyholders shall have the right to receive the
policy within a reasonable period of time after payment of premium.

7. Right to confidentiality of information.

8. Right to efficient service from insurance companies, intermediaries and

soliciting agents.

9. Right to prompt and fair settlement of claims.

10. Right to seek assistance from the Insurance Commission.

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"Section 14. An insurable interest in property may consist in:

"(a) An existing interest;

"(b) An inchoate interest founded on an existing

interest; or

"(c) An expectancy, coupled with an existing interest

in that out of which the expectancy arises.
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GR: Policy is not valid and binding unless the premium is paid.

Exceptions:

1. When the grace period applies in case of life and industrial life policy;
2. When there is an acknowledgment in the policy or receipt that the premium has been
paid;
3. When there is an agreement that the premium shall be payable on installment;
4. When there is a credit extension; and
5. When the equitable doctrine of estoppel applies.
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Kinds of Property Insurance Policy

"Section 60. An open policy is one in which the value of the thing insured is not agreed
upon, and the amount of the insurance merely represents the insurer’s maximum
liability. The value of such thing insured shall be ascertained at the time of the loss.

"Section 61. A valued policy is one which expresses on its face an agreement that the
thing insured shall be valued at a specific sum.

"Section 62. A running policy is one which contemplates successive insurances, and
which provides that the object of the policy may be from time to time defined,
especially as to the subjects of insurance, by additional statements or indorsements.
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