Insurance Lecture

RA 10607 INSURANCE LAW (COMMERCIAL LAW REVIEW BY ATTY CENIZA) up to contestability period daw exam
INSURANCE LAW
The terms "ACCIDENT" AND "ACCIDENTAL", as used in
insurance contracts, have NOT ACQUIRED ANY
GOVERNING LAW
TECHNICAL MEANING, AND ARE CONSTRUED BY THE
The Insurance Code (RA 10607)
COURTS IN THEIR ORDINARY AND COMMON
-- signed into law last August 15, 2013
ACCEPTATION. Thus, the terms have been taken to
-- published in The Philippine Star, September 5, 2013
mean that which happen by chance or fortuitously,
without intention and design, and which is
WHAT IS A CONTRACT OF INSURANCE?
unexpected, unusual, and unforeseen)
A "contract of insurance" is an agreement whereby
one undertakes for a consideration to indemnify
IN CASE OF AMBIGUITY IN THE TERMS OF THE
another against loss, damage or liability arising from
INSURANCE CONTRACT, HOW WilL SUCH AMBIGUITY
an unknown or contingent event. (Sec.21a, R.A.
BE RESOLVED?
10607)
Such ambiguity shall be resolved liberally in favor of
the insured and strictly against the insurer.
ELEMENTS OF CONTRACT OF INSURANCE (PARIS)
RATIONALE OF THE RULE
There must be payment of consideration for the
insurer's promise to indemnify the insured, known The reason for rule is that the insured usually has no
as PREMIUM. voice in the selection or arrangement of words
employed, and language of the contract is selected
Insurer has ASSUMED THE RISK OF LOSS. great care and deliberation by experts and legal
advisers employed by and acting exclusively in the
Insured is subject to RISK OF LOSS, DAMAGE OF interest of the insurer. (Gulf Resorts Inc vs Phil
LIABILITY. (LDL) Charter Insurance 485 SCRA 551)
Insured must possess an interest of some kind on the PARTIES OF AN INSURANCE CONTRACT
person or thing insured which is generally susceptible 1) Insurer
to pecuniary estimation, known as INSURABLE 2.) Insured
INTEREST.
3.) Beneficiary
Such assumption of risk is part of the general SCHEME
TO DISTRIBUTE LOSSES. WHAT IS THE REASON FOR THE RULE AGAINST
INSURING PUBLIC ENEMIES?
CHARACTERISTICS OF INSURANCE (CAPUI) The purpose of war is to cripple the power and
Insurance contract is a CONDITIONAL contract resources of the enemy and it is inconsistent that one
country would destroy its enemy but only to repay
Insurance contract is an ALEATORY contract such destruction due to the insurance it issued
against its enemy.
Insurance contracts is a PERSONAL contract
WHO IS A PUBLIC ENEMY?
Insurance contract is a contract of UTMOST good faith A public enemy is a nation or its citizen who is at war
(uberrimae fidei)
with the Philippines
Insurance contract is a contract of INDEMNITY
WHO IS A BENEFICIARY?
(applies only to property insurance NOT TO LIFE
INSURANCE) the person or party entitled to receive the benefits
under the policy issued by the insurer.
HOW ARE TERMS IN INSURANCE CONTRACTS
INTERPRETED? WHAT ARE THE TYPES OF BENEFICIARY IN A LIFE
Terms in insurance contracts are interpreted in their INSURANCE POLICY?
plain, ordinary and popular sense. (POP) REVOCABLE BENEFICIARY – is the beneficiary
designated in the policy whose designation is not
(SIDE NOTE: Simon De La Cruz vs. The Capital Ins. and permanent and may be revoked by the insured.
Surety Inc., G.R. No. L-21574, June 30, 1966
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In this case, the insured has not waived his right IRREVOCABLEproceeds shall go to the legal
to change the beneficiary that he designated in the representatives of the beneficiary
policy.
WHAT IS THE RULE IN THE EVENT THE BENEFICIARY
IRREVOCABLE BENEFICIARY – is the beneficiary KILLS THE INSURED?
designated in the policy whose designation is The INTEREST of a beneficiary in a life insurance policy
permanent and may not be revoked by the insured. shall be FORFEITED when the beneficiary is the
principal, accomplice, or accessory in willfully about
In this case, the insured has expressly waived his right the death of the insured; in which event, the nearest
to change the beneficiary which he designated in the relative of the insured shall receive the proceeds of
policy. said insurance if not otherwise disqualified. (Sec.12)
WHAT IS THE RULE ON THE DESIGNATION OF WHAT IS INSURABLE INTEREST?

BENEFICIARY? Insurable interest is the interest that a person has
Anyone maybe designated as beneficiary in a life over certain persons or things where he has such
insurance contract except those who are forbidden by relation or connection with, wherein he derive
law to receive donation. (Art. 2012 New Civil Code) pecuniary benefit or advantage from its preservation
or will suffer pecuniary loss or damage from its
destruction upon the happening of the event insured
against.
UNDER ART. 739 OF THE CIVIL CODE, THE
FOLLOWING DONATIONS SHALL BE VOID: INSURABLE INTEREST IS INDISPENSABLY NECESSARY.
(1) Those made between persons who were guilty of  to prevent insurance policies from being executed
adultery or concubinage at the time; as a gaming or wagering contract
(2) Those made between persons found guilty of the  strengthen the principle that insurance contracts
same criminal offense, in consideration thereof; are contracts of indemnity
(3) Those made to a public officer or his wife,
descendants and ascendants, by reason of his TO WHOM DOES A PERSON HAVE INSURABLE
office. INTEREST?
(a) Of himself, of his spouse and of his children;
WILL COMMISSION OF ADULTERY OR CONCUBINAGE (b) Of any person on whom he depends wholly
BE SUFFICIENT GROUND TO DENY A BENEFICIARY OF or in part for education or support, or in whom he has
HIS LIFE INSURANCE CLAIM? a pecuniary interest;
Yes, persons who are guilty of adultery or (c) Of any person under a legal obligation to him
concubinage are prohibited from becoming a for the payment of money, or respecting property
beneficiary in a life insurance policy. or services, of which death or illness might delay
or prevent the performance; and
SUPPOSED A BENEFICIARY IS CHARGED FOR (d) Of any person upon whose life any estate or
ADULTERY OR CONCUBINAGE, IS CONVICTION interest vested in him depends.
NECESSARY BEFORE SHE CAN BE DENIED THE
BENEFITS OF THE LIFE INSURANCE POLICY? WHEN MUST INSURABLE INTEREST IN LIFE
No, conviction is not required. INSURANCE EXIST
The guilt of the insured and the beneficiary may be Insurable interest in the life or health of a person
proved by preponderance of evidence (Art 739, New insured must exist when the insurance takes effect,
Civil Code) but need not exist thereafter or when the loss occurs.
(Sec. 19)
WHAT IS THE RULE WHEN THE BENEFICIARY
PREDECEASED THE INSURED?
IF REVOCABLE  proceeds shall go to the estate of
the insured
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IS A BENEFICIARY IN A LIFE INSURANCE POLICY GOOD LUCK SA EXAMS 
REQUIRED TO HAVE INSURABLE INTEREST ON THE
LIFE OF THE INSURED?
No, the law does not require that the beneficiary must
have insurable interest on the life of the insured.
Thus, the insured may designate anyone, even a

stranger to be his beneficiary.
WHAT CONSIST INSURABLE INTEREST IN PROPERTY?

(a) An existing interest;
(b) An inchoate interest founded on an existing
interest; or
(c) An expectancy, coupled with an existing interest in
that out of which the expectancy arises.
WHEN MUST INSURABLE INTEREST IN PROPERTY

INSURANCE EXIST
Insurable interest in the property insured must exist
when insurance takes effect, and when the loss
occurs, but not exist in the meantime. (Sec. 19)
VALIDITY OF STIPULATION IN THE POLICY WAIVING

INSURABLE INTEREST- Invalid
Every stipulation in a policy of insurance for the
payment of loss whether the person insured has or
has not any interest in the property insured or that
the policy shall be received as proof of such interest is
void. (Sec. 25)
INSURABLE INTEREST IN LIFE INSURANCE AGAINST

INSURABLE INTEREST IN PROPERTY INSURANCE
LIFE PROPERTY
INSURANCE INSURANCE
Measure of not exclusively exclusively
indemnity pecuniary pecuniary
Time when when the when the

present insurance takes insurane takes
effect but need effect, and
not exist when the loss
thereafter or occurs but
when the loss need not to
occurs exist in the
meantime
CONCEALMENT
A neglect to communicate that which a party knows
and ought to communicate is called a concealment
(Sec 26)
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RA 10607 INSURANCE LAW (COMMERCIAL LAW REVIEW BY ATTY CENIZA) up to contestability period daw exam

WHAT IS THE RULE ON THE DESIGNATION OF WHAT IS INSURABLE INTEREST?

Thus, the insured may designate anyone, even a

WHAT CONSIST INSURABLE INTEREST IN PROPERTY?

WHEN MUST INSURABLE INTEREST IN PROPERTY

VALIDITY OF STIPULATION IN THE POLICY WAIVING

INSURABLE INTEREST IN LIFE INSURANCE AGAINST

Time when when the when the

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