General Provisions History of Insurance Laws in the Philippines 1. 2. 3. 4.

Spanish Code of Commerce and the old Civil Code of 1889 Act 2427 Insurance Act, July 1, 1915 (American Regime) PD 612 instituted the Insurance Code, December 18, 1974 PD 1460 to consolidate and codify the laws on insurance, June 11, 1978 In the absence of applicable provisions in the Insurace Code and New Civil Code, California laws shall be applied. 1st: Marine Insurance, non-life (1829), 2nd: Sun Life Assurance, life (1898)

Insurance Contract An agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. Distributes the risk of loss among the insured

Elements 1. INSURABLE INTEREST insured possesses an interest of some kind susceptible of pecuniary estimation 2. SUBJECT TO RISK OR LOSS insured is subject to a risk or loss through the destruction or impairment of that interest by the happening of designated perils 3. RISK OF LOSS assumed by insurer 4. ASSUMPTION part of a general scheme to distribute actual losses among a large group of persons bearing somewhat similar risks 5. PREMIUM as consideration for the insurer s promise, ratable contribution to a general insurance fund Nature and Characteristics 1. ALEATORY liability of the insurer depends upon a contingent event. 2. INDEMNITY; INVESTMENT Indemnity for Non-Life for his actual loss; Investment for Life, as a measure of economic security. 3. PERSONAL personal contract 4. EXECUTORY & CONDITIONAL executed as to the insured after payment of premium; executor and condition as to the insurer because upon the happening of the peril and conditions have been met, he has the obligation to execute the contract by paying the insured. 5. UBERRIMAE FIDES perfect good faith, even more so for the insurer since it carries stricter responsibilities. 6. CONTRACT OF ADHESION insurance companies already have prepared agreements which the insured may not change; take it or leave it .

Doctrine of Estoppel Where inequitable conduct is shown by an insurance firm, it is stopped from enforcing forfeitures or exemptions in its favor When the insurance company had led the insured to believe that he could qualify and had entered a contract, he cannot contend later that the insured is not qualified.

Ambiguities Ambiguities or obscurities must be strictly interpreted against the party that caused them. As insurance policies are always prepared by the insurer, ambiguities shall be construed against it and in favor of the insured.

When Contract of Suretyship is an Insurance Contract A contract of suretyship is an agreement whereby the surety guarantess the performance by obligor of an obligation or undertaking in favor of the obligee. If such surety makes or proposes to make suretyship contracts as a vocation and not as merely incidental to any other legitimate business or activity of the surety.

Doing an insurance business a. Making or Proposing to Make, as INSURER, any insurance contract; b. Making or Proposing to Make, as SURETY, any contract of suretyship as a vocation and not merely incidental to any other legitimate business or activity of the surety; c. Doing any kind of business including a reinsurance business, specifically recognized as constituting the doing of an insurance business d. Doing or Proposing to do any business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of the Code. - Lack of profit from the contract or transaction or that no separate or direct consideration is received shall not be deemed conclusive to show that no insurance business was transacted. What May be Insured A. Perils or Risks - Any contingent or unknown event , whether past or future, which may CAUSE DAMAGE to a person having an insurable interest; - Any contingent or unknown event, whether past of future, which may CREATE LIABILITY against the person insured. B. Damage marine insurance taken by the owner against perils of the sea C. Liability owner of the car against liability he may cause to 3rd persons D. Unknown Past Event marine insurance on Oct. 10, without knowing that it sunk on Oct. 9 E. Future Contingent Event insured vehicle F. Taken by a Married Woman does not need consent of her husband G. Taken by a Minor before, the legal age was 21; now 18, may take insurance w/o restrictions

Parties to the Contract INSURER party who agrees to indemnify another upon the happening of a specified contingency INSURED party to be indemnified in case of loss BENEFICIARY person who receives the benefits of an insurance policy upon its maturity