Insurance

BUSINESS LAW GROUP 9

 Contents
01. Concept of Insurance
02. Elements of an Insurance Contract
03. Characteristics and Nature of Insurance Contracts
04. Classes
05. Variable Contracts
06. Insurable Interest
07. Perfection of the Contract of Insurance
08. Rescission of Insurance Contracts
09. Claims Settlement and Subrogation

CONTENTS PAGE 02
 REPUBLIC ACT NO. 10607

Insurance

SECTION 2. Insurance is a contract whereby one undertakes for a

consideration to indemnify another against loss, damage, or liability arising
from an unknown or contingent event.

CONCECPT OF INSURANCE PAGE 03

 Elements of an
Insurance Contract
1. Legal capacity of contracting parties.
2. The insured is subject to a risk of loss by the happening of the
designated peril and the insurer assumes the risk
3. The insured has an insurable interest;
4. Premium
ELEMENTS OF AN INSURANCE CONTRACT PAGE 04
 Characteristics and Nature
of Insurance Contracts
1. Risk Distributing Device - not risk-shifting, distribute potential liability
2. Contract of Adhesion - drafted by one party, little opportunity to bargain/alter
3. Aleatory Contract - value to either or both parties depends on chance or future events
4. Contract of Indemnity - insurers pay no more than the loss suffered
5. Uberrima Fides Contract - utmost good faith, disclose all material facts relative to the risk
6. Personal Contract - personal obligation, only binds the parties
7. Executory and Conditional - partial performance due to payment of premium (executory)
- happening of risk covered (conditional)

CHARACTERISTICS AND NATURE OF INSURANCE CONTRACTS PAGE 05

 REPUBLIC ACT NO. 10607

Marine Insurance
SECTION 101. Marine Insurance includes:
(a) Insurance against loss of or damage to:
(1) Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, effects, disbursements, profits,
moneys, securities, choses in action, instruments of debts, valuable papers, bottomry, and respondentia interests
and all other kinds of property and interests therein, in respect to, appertaining to or in connection with any and all
risks or perils of navigation, transit or transportation, or while being assembled, packed, crated, baled,
compressed or similarly prepared for shipment or while awaiting shipment, or during any delays, storage,
transhipment, or reshipment incident thereto, including war risks, marine builder’s risks, and all personal property
floater risks;
(2) Person or property in connection with or appertaining to a marine, inland marine, transit or transportation
insurance, including liability for loss of or damage arising out of or in connection with the construction, repair,
operation, maintenance or use of the subject matter of such insurance (but not including life insurance or surety
bonds nor insurance against loss by reason of bodily injury to any person arising out of ownership, maintenance,
or use of automobiles);
CLASSES PAGE 06
 REPUBLIC ACT NO. 10607

Marine Insurance
(3) Precious stones, jewels, jewelry, precious metals, whether in course of transportation or
otherwise; and
(4) Bridges, tunnels and other instrumentalities of transportation and communication (excluding
buildings, their furniture and furnishings, fixed contents and supplies held in storage); piers,
wharves, docks and slips, and other aids to navigation and transportation, including dry docks
and marine railways, dams and appurtenant facilities for the control of waterways.
(b) Marine protection and indemnity insurance, meaning insurance against, or against legal
liability of the insured for loss, damage, or expense incident to ownership, operation, chartering,
maintenance, use, repair, or construction of any vessel, craft or instrumentality in use of ocean
or inland waterways, including liability of the insured for personal injury, illness or death or for
loss of or damage to the property of another person.
CLASSES PAGE 07
 REPUBLIC ACT NO. 10607

Marine Insurance

IN SUMMARY OF SECTION 101 OF RA. NO. 10607:

Marine Insurance is an insurance against risks connected with navigation, to

which a ship, cargo, freight, or other insurable interest in a moveable
property may be exposed to.

CLASSES PAGE 07
 REPUBLIC ACT NO. 10607

Fire Insurance

SECTION 169. As used in this Code, the term fire insurance shall include
insurance against loss by fire, lightning, windstorm, tornado or earthquake
and other allied risks, when such risks are covered by extension to fire
insurance policies or under separate policies.

CLASSES PAGE 08
 REPUBLIC ACT NO. 10607

Casualty Insurance
SECTION 176. Casualty insurance is insurance covering loss or liability
arising from accident or mishap, excluding certain types of loss which by law
or custom are considered as falling exclusively within the scope of other
types of insurance such as fire or marine. It includes, but is not limited to,
employer’s liability insurance, motor vehicle liability insurance, plate glass
insurance, burglary and theft insurance, personal accident and health
insurance as written by non-life insurance companies, and other
substantially similar kinds of insurance.
CLASSES PAGE 09
 REPUBLIC ACT NO. 10607

Life Insurance
SECTION 181. Life insurance is insurance on human lives and insurance appertaining thereto or
connected therewith.
Every contract or undertaking for the payment of annuities including contracts for the payment
of lump sums under a retirement program where a life insurance company manages or acts as a
trustee for such retirement program shall be considered a life insurance contract for purposes
of this Code.
SECTION 182. An insurance upon life may be made payable on the death of the person, or on his
surviving a specified period, or otherwise contingently on the continuance or cessation of life.
Every contract or pledge for the payment of endowments or annuities shall be considered a life
insurance contract for purposes of this Code.

CLASSES PAGE 10
 HEALTH INSURANCE: covers the cost of medical expenses incurred by the policyholder due
to illness or injury.
PROPERTY INSURANCE: provides coverage for damage or loss of property, such as homes,
cars, and other personal belongings.
LIABILITY INSURANCE: provides protection against claims made by other parties for injury or
damage caused by the policyholder.
BUSINESS INSURANCE: covers a variety of risks faced by businesses, including property
damage, liability, and loss of income.
DISABILITY INSURANCE: provides income replacement for the policyholder in the event that
they become disabled and unable to work.
TRAVEL INSURANCE: provides coverage for unexpected events that may occur while
traveling, such as medical emergencies, trip cancellations, or lost luggage.
PET INSURANCE: covers the cost of veterinary care for pets, including accidents, illnesses,
and routine care.
CLASSES PAGE 11
 REPUBLIC ACT NO. 10607

Variable Contracts
SECTION 238. (b) The term variable contract shall mean any policy or contract on either a
group or on an individual basis issued by an insurance company providing for benefits or
other contractual payments or values thereunder to vary so as to reflect investment results
of any segregated portfolio of investments or of a designated separate account in which
amounts received in connection with such contracts shall have been placed and accounted
for separately and apart from other investments and accounts. This contract may also
provide benefits or values incidental thereto payable in fixed or variable amounts, or both. It
shall not be deemed to be a security or securities as defined in The Securities Act, as
amended, or in the Investment Company Act, as amended, nor subject to regulations under
said Acts.
VARIABLE CONTRACTS PAGE 12
 REPUBLIC ACT NO. 10607

Insurable Interest

SECTION 12. Every interest in property, whether real or personal, or any

relation thereto, or liability in respect thereof, of such a nature that a
contemplated peril might directly damnify the insured, is an insurable
interest.

INSURABLE INTEREST PAGE 13

 Perfection of the
Contract of Insurance
Signed insurance application is merely an offer to enter into a
contract

Cognition Theory - the contract is perfected from the moment the

acceptance comes to the knowledge of the insurer

PERFECTION OF THE CONTRACT OF INSURANCE PAGE 14

 Rescission of Insurance
Contracts

The insurer has the right to rescind the policy under the following grounds:

1. Concealment; and
2. Misrepresentation

RESCISSION OF INSURANCE CONTRACTS PAGE 15

 Claims Settlement and
Subrogation
Claims settlement and subrogation are two important aspects of insurance
contracts.
Claims settlement - refers to the process of resolving claims made by the
insured for losses covered under the insurance policy. The insurer will
investigate the claim to determine whether the loss is covered under the policy
and the amount of the loss. If the claim is found to be valid, the insurer will pay
the insured the amount specified in the policy, up to the policy limit.
CLAIMS SETTLEMENT AND SUBROGATION PAGE 16
 Claims Settlement and
Subrogation
Subrogation - refers to the right of the insurer to recover the amount paid to the insured
from a third party who may have caused the loss. For example, if a policyholder's car is
damaged in an accident caused by another driver, the insurance company may pay for
the damages and then seek reimbursement from the at-fault driver's insurance company.
Subrogation allows the insurer to recover the costs of the claim and helps to prevent the
policyholder from receiving a windfall by being compensated twice for the same loss.
The right of subrogation is typically included in insurance contracts and is an important
tool for insurers to manage their risk and control costs.
CLAIMS SETTLEMENT AND SUBROGATION PAGE 17
TAPOS NA!!!!