POLICY

• It is a written instrument where the terms and conditions of the contract are set forth.
• Must be in printed form which may contain blank spaces and any word, phrase, clause,
mark, sign, symbol, signature, number, or word necessary to complete the contract of
insurance shall be written on the blank spaces provided therein(Sec. 50)
• The policy is not necessary for the perfection of the contract but the law provides that
no policy of insurance shall be issued or delivered unless previously approved by the
commission (Sec. 232)

CREATION OF INSURANCE CONTRACTS

Application
• Offer of the person who seeks to procure and insurance policy
• Contains information and declarations that constitutes the representations of the
applicant

Binding Receipts
• Provisional or temporary insurance contract and conditional and therefore does not
insure by itself in LIFE insurance

Cover Notes
• Issued to bind temporarily pending the issuance of the policy (Sec. 52)

Basic Contents of a Policy

• Parties
• Amount of insurance except in open or running policies

Cases:
1. Misamis Lumber Corporation v. Capital Insurance and Surety – Whether he
insurer is liable for the amount in excess of the authorized limit.

Ruling: No. Under the civil code of the Philippines, If the terms of a contract are clear
and leave no doubt upon the intention of the contracting parties, the literal meaning of
its stipulations shall control. Thus, as repeatedly established by the court in
jurisprudence, one cannot go beyond the clear and express conditions of the insurance
policies
 2. Fortune Medicare Inc. v. Amorin- Whether or not Fortune Care is liable to pay the
total amount of professional fees which Amorin had paid

Rule:
Yes. As Established by the Supreme Court, the purposes of determining the liability of
a health care provider to its members, It held that a health care agreement is in the
nature of non-life insurance, which is primarily a contract of indemnity. Once the
member incurs hospital, medical or any other expense arising from sickness, injury or
other stipulated contingent, the health care provider must pay for the same to the
extent agreed upon under the contract.

When the terms of insurance contract contain limitations on liability, courts should
construe them in such a way as to preclude the insurer from non-compliance with his
obligation. Being a contract of adhesion, the terms of an insurance contract are to be
construed strictly against the party which prepared the contract

• Rate of premium
• Property or life insured
• Interest of the insured in the property if he is not the absolute owner
• Risk insured against
• Period during which the insurance is to continue

KINDS OF POLICIES
1. Open Policy – value of the thing insured is not agreed upon, but left to be ascertained
at the time of loss
2. Valued Policy – definite valuation is agreed by both parties, and written on the face of
the policy
3. Running Policy – contemplates successive insurances and which provides that the
subject of the policy may from time to time be defined

Note: Life insurance policies are always value

CANCELLATION OF NON-LIFE POLICY

Grounds:
• Non- payment of premium
• conviction of a crime out of acts increasing the hazard insured against
• fraud or material misrepresentation
• Willful or reckless acts or omissions incleasing the risk insured against
• physical changes in the property insured making it uninsurable
 • determination by the insurance Commissioner that the Policy would violate the
Insurance Code

CANCELLATION OF NON-LIFE POLICY

Requirements:
1. Prior Notice to the insured
2. Notice must be based on the occurrence after effective date of the policy of one or
more of the grounds
3. notice must be in writing, mailed or delivered to the insured at the address Shown in
the policy
4. Notice must state the grounds relied upon and upon request of the insured, furnish
facts on which cancellation is based

REINSTATEMENT
LALICAN vs THE INSULAR LIFE - Whether or not Eulogio had an existing insurable
interest in his own life until the day of his death in order to have the insurance policy
validly reinstated.

Ruling: No, Here, there was no full actual compliance with the conditions of reinstatement of
policy. While it is true that there was application and payment, the policy could only be
considered reinstated after it had been processed and approved.

Under law and Jurisprudence, the stipulation in a life insurance policy giving the insured the
privilege to reinstate it upon written application does not give the insured absolute right to
such by the mere filing of an application. The insurer has the right to deny the reinstatement
if it is not satisfied as to the insurability or ability to pay incurred debt by the insured. Thus,
After the death of the insured the insurance Company cannot be compelled to entertain an
application for reinstatement of the policy because the conditions precedent to reinstatement
can no longer be determined and satisfied.

Insurable Interest property:

• Where different persons have different interests in the same property, the insurance taken by one in
his own right and in his own interest does not in any way insure to the benefit of another

• A contract of insurance made for the insurer's (insured) indemnity only, as where there is no
agreement, express or implied, that it shall be for the benefit of a third person, does not attach to or
run with the title to the insured property on a transfer thereof personal as between the insurer and
the insured.