To be able to do insurance business
INSURANCE LECTURE – 3/16/2021
, whether a insurer or salesman of insurance,
the person may have been issued by the
Insurance commissioner a Certificate of
Authority
QUESTION: WHO MAY BE INSURED?
ANSWER: Any person having an insurable in
the thing or life insured, may be insured!
*If there is no insurable interest, there is no
valid contract of insurance;
*If the insurable interest ceases, contract of
insurance is gone
*Contract of insurance is not a wagering
contract but a contract of indemnity;
*Insurance is a contract of indemnity, and the
person insured wants to be put back in the
situation before an unknown event happen;
*INSURANCE IS NOT A RISK SHIFTING
DEVICE BUT RATHER A RISK
DISTRIBUTING SCHEME;
*Suretyship per se is not insurance;
*THING -- PROPERTY OR NON-LIFE
INSURANCE
*HUMAN LIFE--- LIFE INSURANCE
QUESTION: You have a pet dog and you
decided to insure your dog, WHAT KIND OF
INSURANCE?
ANSWER: PROPERTY INSURANCE
WHAT DO YOU MEAN BY INSURABLE
INTEREST?
A person has a relationship to thing or life
insured that he benefits from its preservation
but will be damnified by its loss or destruction.
*Insurable interest must exist at the time
insurance is taken;
IN PROPERTY INSURANCE, WHAT MAY
INSURABLE INTEREST MAY CONSIST OF:
1) Existing interest;
2) Expectancy but is founded on an
existing interest;
3) Inchoate right founded on an existing
interest;
_You have a condo unit, an you are
selling at 5M, THERE IS A BUYER BUT
THE BUYER HAS ONLY 3M AND
PROMISE TO PAY ON A LATER DATE;
**CAN OI INSURE THE CONDO UNIT?
YES, BUT ONLY UP TO 3M
Insurable interest in property must exist
at the time the insurance is taken and
also at the time of loss although in the
mean time it did not exist;
QUESTION: ON WHOSE LIFE DOES A
PERSON HAS A INSURABLE
INTEREST?
ANSWER:
1) On his own life;
2) On the life of his or her spouse;
3) On the life of his or her descendants;
4) On the life of his debtor and to those
who has obliged to perform an
obligation;
5) On the person on which his life
depends
DO YOU HAVE INSURABLE INTEREST
WITH YOUR SPOUSE? YES
However, over the years the relp turned sour,
the spouse filed annulment and the marriage
was annulled, IF YOU CONTINE TO PAY
PREMIUM DO YOU STILL HAVE
INSURANCE?
YES, as in life insurance, the insurable interest
must only exist at the time the insurance was
taken, thereafter it did not exist.
***NOTWITHSTANDING THE FACT THAT
THERE WAS ALREADY A DECLARATION OF
NULLITY; THE SPOUSE MAY STILL GET
FROM THE INSURER;
QUESTION: HOW DOES ONE GET TO BE
INSURED?
ANSWER: Apply for an insurance coverage.
*AN INSURANCE SALESMAN IS
CONSIDERED TO BE A PROFESSIONAL;
*The truthful matters provided in the
application form if insurance;
*Neglect to communicate what a person ought
to communicate is called concealment;
WHAT IS THE CONSEQUENCE OF
MISREPRESENTATION OR CONCEALMENT
OF A MATERIAL FACT?
Entitles the insurer to cancel the contract.
WHO DETERMINES MATERIALITY?
It is the insurer; because the law says
QUESTION: HOW DO YOU CALL THE
INSTRUMENT EMBODYING THE
CONTRACT OF INSURANCE?
ANSWER: POLICY.
*The law provides, before an insurer prints the
policy, a draft must be sent to the insurance
commissioner; so that there would be no
ambiguity in the policy.
IN PROPERTY INSURANCE, WHAT ARE THE
KIND OF INSURANCE
-OPEN – the parties agree on the maximum
insurance coverage; but the value of the
thing will be determined at the time of
loss; taken on thing the value of which was
changing
EX: rice dealer, the warehouse is valued at 2M,
then the rice dealer may insure at the
maximum of 2M.
The warehouse is for rice, and its capacity is at
10, ooo sacks, and each sack is at 2500
therefore the insurance maximum is at 25M.
However, there was fire, and the rice was
damaged. HOW MUCH CAN I CLAIM WITH
THE INSURER? 23m
TAKE NOTE: In PROPERTY INSURANCE -
There are 2 ways in settling claim; paying in
cash or delivering to the insured the same thing
of the same kind and quality.
-VALUED – at the very beginning, the insurer
and the insured already agreed on the value of
the thing insured;
-RUNNING – it is one taken out by
merchants on their inventory of goods, it
contemplates a successive insurance coverage;
HINDI BA NAPAKAMAHAL NAMAN NUN,
BAWAT DELIVERY IKUKH NG INSURANCE
COVERAGE?
*the insurance coverage shall continue over the
replenishment;
*INSURANCE IN PROPERTY
INSURANCE IS GOOD ONLY FOR 1
YEAR;
*Short Term Policy – those insurance
coverages over property that are less than 1
year;
QUESTION: WHAT IS THE KIND OF
INSURANCE IN LIFE INSURANCE
ANSWER:
1) TERM INSURANCE – Parties agree
on a definite period of insurance
coverage;
a. Beneficiary gets nothing – if
the insured did not die
during the stipulated term;
b. If the insured dies within the
stipulated term, the
beneficiary gets indemnified,
but if the insured did not die,
the insured shall receive the
face value of the policy
(ENDOWMENT PLAN)
2) ORDINARY LIFE INSURANCE –
insured will be indemnified after
death;
*in life insurance, the insured pay
premium, if the insured dies, the
beneficiary will get indemnified
WHEN WILL HE STOP PAYING
PREMIUM?
 *DEPENDS ON THE AGREEMENT
WITH THE INSURER;
WHAT IS PREMIUM – it is the
amount agreed upon by the parties
for the insurer to take the risk of the
insured
WHAT IS THE OBLIGATION OF
INSURER IN A CONTRACT OF
INSURANCE?
WHAT IS THE OBLIGATION OF
INSURED?
-In property insurance, every year you
renew the insurance coverage;
BASIC RULE ON PREMIUM PAYMENT
ON PROPERTY INSURANCE
-premium should be paid upon delivery
of the policy; COD
-COULD PREMIUMS BE ON CREDIT?
Under the law, there is no credit,
however in a case decided by SC, there is
no prohibition on any law that there is
no credit on premium;
-LOSS TAKES PLACE TODAY, BUT
PREMIUM IS PAYABLE ON MARCH 31,
2021, CAN INSURED BE
INDEMNIFIED?
-If premium would be on credit, and loss
takes place before premium is actually
paid, for as long as the premium within
the credit term, the insurer would be
obliged to pay the indemnity.
UCPB GENERAL INSURANCE vs.
MASAGANA TELA MART – READ
 There was a customary date of
payment, there was loss before
payment of premium was made,
and MTM filed claim for payment
but UCPB denied the claim;
 RTC ruled in favor of MTM
obliging UCPB to pay MTM,, CA
reversed the ruling on the ground
that there was still no valid
contract of insurance as premium
was not yet paid.
 SC, initially dismissed, however on
MR SC reversed CA, on the ground
of principle of estoppel. For as
long as the insured has paid the
premium within the customary
date of payment, insurer still
entitled to payment
Q: Stable Insurance Co. (SIC) and St.
Peter Manufacturing Co. (SPMC) have
had a long-standing insurance
relationship with each other; SPMC
secures the comprehensive fire
insurance on its plant and facilities from
SIC. The standing business practice
between them has been to allow SPMC a
credit period of 90 days from the
renewal of the policy within which to pay
the premium.
Soon after the new policy was issued and
before premium payments could be
made, a fire gutted the covered plant and
facilities to the ground. The day after the
fire, SPMC issued a manager's check to
SIC for the fire insurance premium, for
which it was issued a receipt; a week
later SPMC issued its notice of loss. SIC
responded by issuing its own manager's
check for the amount of the premiums
SPMC had paid, and denied SPMC's
claim on the ground that under the
"cash and carry" principle governing fire
insurance, no coverage existed at the
time the fire occurred because the
insurance premium had not been paid.
Is SPMC entitled to recover for the loss
from SIC? (2003, 2013 Bar)
A: YES. St. Peter Manufacturing
Company is entitled to recover for the
loss from Stable Insurance Company.
Stable Insurance Company granted a
credit term to pay the premiums. This is
not against the law, because the standing
business practice of allowing St. Peter
Manufacturing Company to pay the
premiums after 60 or 90 days, was
relied upon in good faith by SPMC.
Stable Insurance Company is in estoppel
(UCPB General Insurance Company, Inc.
v. Masagana Telemart, Inc., G.R. No.
137172, April 4, 2001).