RA 10607- The Insurance Code
The law provides, “No contract of insurance
What is a contract of insurance?
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. [Sec. 2(a)]
Tip: Use the definition under the law.
“one” refers to the insurer
“another” refers to the insured/beneficiary
Against what? LOSS, DAMAGE OR LIABILITY
Who are the parties in a contract of insurance?
1.insurer
2. insured
3. beneficiary
What are the classes of insurance?
1. Marine 2. Fire 3. Casualty 4. Suretyship 5. Life 6.
Microinsurance 7. Compulsory motor vehicle
liability insurance 8. Compulsory insurance
coverage for agency-hired workers
ELEMENTS OFAN INSURANCE CONTRACT
What are the Elements of a Valid Contract?
1. CONSENT
2. OBJECT
3. Cause/Consideration
In a contract of insurance, who’s consent is
necessary?
A. The insurer and the insured
When you speak of object, what is the object of
a contract of insurance?
A. Any contingent or unknown event
What about the cause?
A. Payment of premium
Summary of the flow of the contract of insurance,
you start with a (1) CONTRACT as agreed upon
by the parties. Law requires there must be (2)
PAYMENT OF CONSIDERATION/PREMIUM, o/w it’s
Dico, JM
void.
shall be valid unless there is payment of
premium.” The insurer now shall issue a (3)
POLICY.
TAKE NOTE: Every contarct of insurance, there
must be payment of premium. O/w the contract
is not valid.
Where is this in the law?
"Section 77. An insurer is entitled to
payment of the premium as soon as the
thing insured is exposed to the peril insured
against. Notwithstanding any agreement
to the contrary, NO POLICY OR CONTRACT
OF INSURANCE ISSUED BY AN INSURANCE
COMPANY IS VALID AND BINDING UNLESS
AND UNTIL THE PREMIUM thereof has been
paid, EXCEPT in the case of a life or an
industrial life policy whenever the grace
period provision applies, or whenever
under the broker and agency agreements
with duly licensed intermediaries, a ninety
(90)-day credit extension is given. No
credit extension to a duly licensed
intermediary should exceed ninety (90)
days from date of issuance of the policy.”
Who can be insured? ANYONE. Except public
enemy
- “Insurable Interest of the Insured”
“beneficiary” refers to persons. The sdesignation
of the beneficiary may be REVOCABLE or
IIREEVCAOBLE
- Remember also the qualifications of a
beneficiary. As far as beneficiary is
concerned, there are disqualifications.
Can a paramour be a beneficiary? NO.
Any person prohibited from receiving donation is
disqualified to become beneficiaries in an
contract of insurance.
In other words, when one gets an insurance, the
beneficiary should not be dis from receiving a
donation, o/w he shall be also dis to become
beneficiary in a contract of insurance.

Let’s go back to basic:
Assuming that your insurance is valid (by paying
premium, the next step is that the insurer shall
issue a POLICY.
What is a policy?
An insurance policy is different from the contract
of insurance. The policy is the formal written
instrument evidencing the contract of insurance
entered into between the insured and the insurer.
[Sec. 232]
THE POLICY SETS FORTH THE TERMS AND
CONDITIONS OF THE CONTRACT OF INSURANCE.
What are different kinds of policy?
1. Open Policy
2. Valued Policy
3. Running Policy
Section 59. A policy is either open, valued or
running.
"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.
What is the basis of liabilities of parties? Look at
the policy.
Now, once there is the effected policy, what
happens next?
Dico, JM
You’ll do nothing. You’ll just wait for the
happening of the event or peril insured against
(LOSS, DAMAGE OR LIABILITY).
What if there is loss, damage or liability? What do
you do next?
A. File a NOTICE OF CLAIM. Notify the insurer.
If you are the insurer, what do you do upon
receiving of the notice of claim?
A. The insurer will pay for the loss, damage or
liability.
After payment, what will happen next?
A. The contract is satisfied. This is what we call
as “claims settlement.” The claim is now
settled once the insurer pays.
But the problem is there are violations on the part
of either the insured or insurer. This is the subject
of our study.
Why would the insurer not pay? They have
defenses to escape liability.
When you speak of liability insofar as the part of
the insurer, think of DEFENSES.
What are the defenses which the insurer may not
be liable?
RESCISSION OF INSURANCE CONTRACTS
1. Concealment
2. False Representation
(Misrepresentation/Omissions)
3. Breach of Warranties
Again, 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. MEMORIZE.
Distinguish Contract of Insurance and Contract of
Suretyship
Who is an insured? Insurer? Beneficiary?
Insurer or the party who assumes or accepts the
risk of loss and undertakes for consideration to
indemnify the insured or to pay a certain lump
sum on the happening of the event or peril
insured against. May be any person, partnership,
association, or corporation [Sec. 6]
Insured or the person in whose favor the contract
is operative and whose loss is the occasion for the
payment of the insurance proceeds by the
insurer.
Who may be considered as an insurer?
Section 6. Every corporation, partnership, or
association, duly authorized to transact
insurance business as elsewhere provided in this
Code, may be an insurer.
What about a professional reinsurer?
PROFESSIONAL REINSURER is an insurance
company whose major line of business is
reinsurance.
Section 97. A contract of reinsurance is one by
which an insurer procures a third person to insure
him against loss or liability by reason of such
original insurance.
"Section 98. Where an insurer obtains reinsurance,
except under automatic reinsurance treaties, he
must communicate all the representations of the
original insured, and also all the knowledge and
information he possesses, whether previously or
subsequently acquired, which are material to the
risk.
"Section 99. A reinsurance is presumed to be a
contract of indemnity against liability, and not
merely against damage. "Section 100. The
original insured has no interest in a contract of
reinsurance.
Are they insurer? Can they engage in insurance
business in the Philippines?
Take note of those who can be Insurer:
Every corporation, partnership, or association,
duly authorized to transact insurance business as
elsewhere provided in this Code, may be an
insurer.
Dico, JM
Take note of Section 190:
Section 190. For purposes of this Code, the term
insurer or insurance company shall include all
partnerships, associations, cooperatives or
corporations, including government-owned or -
controlled corporations or entities, engaged as
principals in the insurance business, excepting
mutual benefit associations. Unless the context
otherwise requires, the term shall also include
PROFESSIONAL REINSURERS defined in Section
288. Domestic company shall include companies
formed, organized or existing under the laws of
the Philippines. Foreign company when used
without limitation shall include companies
formed, organized, or existing under any laws
other than those of the Philippines.
What are the requirements for professional
insurers?
Section 288. Except as otherwise provided in this Code, no
partnership, association or corporation shall transact any
business in the Philippines as a PROFESSIONAL
REINSURER until it shall have obtained a (1) CERTIFICATE
OF AUTHORITY for that purpose from the Commissioner
upon application therefor and (2) PAYMENT BY SUCH
ENTITY OF THE FEES hereinafter prescribed. As used in this
Code, the term ‘professional reinsurer’ shall mean ANY
ENTITY THAT TRANSACTS SOLELY AND EXCLUSIVELY
REINSURANCE BUSINESS IN THE PHILIPPINES.
Let’s REPEAT.
Again when you talk of beneficiary, take note of
his /her: DESIGNATION (revocable/irrevocable)
AND QUALIFICATION/DISQUALIFICATION
FLOW/SUMMARY OF CONTRACT OF INSURANCE
1. Identify the Parties
2. Contract of insurance
3. Payment of Premium
Effect of non-payment of premium
Defenses of non-payment of premiums
4. Issuance of policy
 -sets forth the terms and conditions of a
contract of insurance

5. Wait for the happening of the loss, damage or

liability insured against

6. Upon the happening of loss, damage or

liability, file a notice of claim.

7. Payment by the Insurer

8. Settlement of Insurance

9. Defenses available to the insurer

Non-payment: What are the defenses available

to the insurer? Concealment, False
Representation, Breach of Warranties

As to the question whether the insurer is liable,

look at the policy if there are any violation of the
terms and conditions set forth therein.

What is the meaning of POLICY under the law?

Section 49. The written instrument in which a

contract of insurance is set forth, is called a policy
of insurance.

Assignment: Answer those matters contained in

the Syllabus. (Insurance). Also, MEMORIZE THE
SYLLABUS.

Next meeting, you must be able to identify

already. Example: What is an insurable interest for
life insurance?

TASKS:

1. MEMORIZE SYLLABUS: I. INSURANCE

2. Go through provisions of Insurance Code
and fill in the items in the syllabus.

Dico, JM