INSURANCE LAW

Bicol College School of Law

Atty. Dane Neil G. Ani

Course Outline

I. Introduction
A. Laws governing insurance
B. General concept of insurance
C. Characteristics
1. risk distributing device
2. contract of adhesion
3. aleatory
4. contract of indemnity
5. uberrimae fides contract
6. personal
D. Elements of insurance
Cases: White Gold Marine Services vs. Pioneer Insurance, et al. (GR No. 154514, 28 July
2005); Verendia vs. CA (217 SCRA 417); Rizal Surety and Insurance Co. vs. CA (336 SCRA
12); Philamcare Health Systems Inc. vs. CA (379 SCRA 356); Fortune Insurance and Surety
Co., Inc. vs. CA (244 SCRA 308); Gulf Resorts Inc. vs. Philippine Charter Insurance Corp. GR
No. 155167, 16 May 2005; Manila Mahogany vs. CA (154 SCRA 650); Federal Express
Corporation vs. American Home Assurance Company and Phil-Am Insurance Company,
Inc., G.R. No. 150094, 18 August 2004); Eternal Gardens Memorial Park Corporation vs.
Phil. American Life Insurance Co., GR No. 166245, 09 April 2008

II. Contract of Insurance

A. Requisites of a contract of insurance
B. Perfection
C. Parties to a contract of insurance (Sec. 6 & 7, ICP)
1. rule on minors (Sec. 3, ICP)
2. rule on married women (Sec. 3, ICP)
D. Subject matter of insurance (Sec. 3 & 4, ICP)
E. Insurance not a wagering contract (Sec. 4, ICP)
Cases: Enriquez vs. Sun Life Insurance of Canada (G.R. No. 15895, Nov. 29, 1920); Great
Pacific Life Assurance Co. vs. CA (G.R. Nos. 31845 & 31873, April 30, 1979)

III. Insurable Interest

A. Concept of insurable interest in general
B. Reason for the requirement of insurable interest
C. Insurable interest in life insurance (Sec. 10, ICP)
D. Insurable interest in property insurance (Sec. 13 & 14, ICP)

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 1. Insurable interest in case of mortgaged property (Sec. 8, ICP)
a. standard or union mortgage clause
b. open or loss payable clause
2. Effect of change of interest in the thing insured (Sec. 20, 21, 22, 23, 24, 57 & 58, ICP,
Art. 1306, NCC)
Cases: Spouses Cha vs. CA, (August 18, 1997); Geagonia vs. CA, February 6, 1995); RCBC
vs. CA (289 SCRA 292); Gaisano Cagayan, Inc. vs. Insurance Company of North America,
G.R. No. 147839 (June 8, 2006).

IV. Devices for ascertaining and controlling risk and loss

A. Concealment
1. Concept (Sec. 26, ICP)
2. Duty to communicate (Sec. 28, ICP)
3. Test of materiality (Sec. 31, ICP)
4. Effect of concealment (Sec. 27 & 29, ICP)
5. Matters which need not be communicated (Sec. 30, 32, 34, & 35 ICP)
6. Waiver of information (Sec. 33, ICP)
B. Representation
1. Concept (Sec. 36, ICP)
2. Kinds of representation (Sec. 36, 37, 39, 42, ICP)
3. Test of materiality (Sec. 46, ICP)
4. Effect of alteration or withdrawal (Sec. 41, ICP)
5. Time to which representation refers (Sec. 42, ICP)
6. Effect when representation is obtained from third persons (Sec. 43, ICP)
7. When presumed false; effect of falsity (Sec. 44 & 45, ICP)
C. Remedies available in case of concealment or false representation
1. When rescission by the insurer may be exercised (Sec. 48, ICP)
2. When life insurance policy becomes incontestable (Sec. 48, ICP)
a. requisites for incontestability
b. theory and object of incontestability
c. defenses not barred by incontestability
D. Warranties
1. Concept; distinguished from representation
2. Kinds of warranties (express, implied, affirmative, promissory)
3. Time to which warranty refers (Sec. 68, ICP)
4. Effect of breach (Sec. 74, 75, & 76, ICP)
Cases: Great Pacific Life Assurance vs. CA (316 SCRA 678); Sun Life Assurance Co. of
Canada vs. CA (G.R. No. 105135, June 22, 1995); Philamcare Health Systems Inc. vs. CA
(379 SCRA 356); Vda de Canilang vs. CA (G.R. No. 92492, June 17, 1993); Tan vs. CA (June
29, 1989); Florendo v. Philam Plans, G.R. No. 186983, February 22, 2012

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V. The Policy of Insurance
A. Definition and form (Sec. 49-50, ICP)
B. Fine print rule
C. Contents of the policy (Sec. 51, ICP)
D. Papers attached to the policy and their binding effect (rider, warranties, clause,
endorsement)
E. Kinds of policy
1. open (Sec. 60, ICP)
2. valued (Sec. 61, ICP)
3. running (Sec. 62, ICP)
F. Cover notes (Sec. 52, ICP)
G. Cancellation of policy (Sec. 65-66, ICP)
H. Time to commence action on the policy; effect of stipulation (Sec. 63, ICP)
Cases: Pacific Timber Export Corporation vs. CA (112 SCRA 199); Great Pacific Life
Assurance Corporation vs. CA, 89 SCRA 543); PhilAm Life and General Insurance Co. vs.
Judge Valencia-Bagalacsa (GR No. 139776; August 1, 2002)

VI. Premium
A. Concept
B. Effect of non-payment of premium; Exceptions (Sec. 77, 78, ICP, Art. 1306, NCC)
C. When insured entitled to return of premiums (Sec. 79-84, ICP)
Cases: Makati Tuscany Condominium Corp. vs. CA (215 SCRA 462); UCPB General
Insurance vs. Masagana Telamart (June 15, 1999); UCPB General Insurance vs. Masagana
Telamart (356 SCRA 307); American Home Insurance vs. Chua (G.R. No. 130421, June 28,
1999); Tibay vs. CA (257 SCRA 126); Phil. Phoenix Surety & Ins., Co. vs. Woodworks, Inc.,
(92 SCRA 419)

VII. Persons entitled to recover on the policy and conditions to recovery

A. Beneficiary (Sec. 11-12, 53, 56, & 57 ICP)
B. Limitations on the appointment of beneficiary (Art 2012 & 739, NCC)
B. Rule where insurance is made by an agent or trustee (Sec. 54, ICP)
C. Rule where insurance if made by partner or part owner (Sec. 55, ICP)
D. Loss; Notice and proof of loss (Sec. 85-94, ICP)
Cases: Bonifacio Bros. Inc. vs. Mora (May 29, 1967); The Insular Life Assurance vs. Ebrado,
80 SCRA 181); Vda. de Consuegra vs. GSIS (37 SCRA 315); Asian Terminals, Inc. v. Malayan
Insurance, Co., Inc., (G.R. No. 171406, April 4, 2011)

VIII. Double Insurance

A. Definition and requisites (Sec. 95, ICP)
B. Distinguished from over-insurance
C. Stipulation against double insurance
D. Rules for payment where there is over-insurance by double insurance (Sec. 96, ICP)

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Cases: Malayan Insurance Co., Inc., v. Philippines First Insurance Co. Inc. and Reputable
Forwarder Services (G.R. No. 184300, July 11, 2012)

IX. Reinsurance
A. Definition (Sec. 97, ICP)
B. Nature (Sec. 99, ICP)
C. Distinguished from double insurance
D. Duty of reinsured to disclose facts (Sec. 98, ICP)

X. Marine Insurance
A. Definition
B. Scope of marine insurance (Sec. 101, ICP)
C. Risks or losses covered in marine insurance
1. perils of the sea vs. perils of the ship
2. “all risks” marine insurance policy
D. Insurable interest in marine insurance
1. ship owner’s insurable interest (Sec. 102, ICP)
a. rule where vessel is chartered (Sec. 108, ICP)
b. rule where vessel hypothecated by bottomry (Sec. 103, ICP)
c. insurable interest in freightage (Sec. 104-106, ICP)
2. charterer’s insurable interest (Sec. 108, ICP)
E. Concealment
1. Meaning of concealment in marine insurance
2. Duty to communicate (Sec. 111, ICP)
3. Opinions or expectations of third persons (Sec. 110, ICP)
4. When concealment does not vitiate the entire contract (Sec. 112, ICP)
F. Representations
1. Effect of false representation by the insured (Sec. 113, ICP)
2. Effect of false representation as to expectation (Sec. 114, ICP)
G. Implied Warranties in Marine Insurance
1. Seaworthiness (Sec. 113, ICP)
a. what constitutes seaworthiness (Sec. 116, 118, 119, ICP)
b. when complied with; Exceptions (Sec. 117, ICP)
c. rule where ship becomes unseaworthy in the course of the voyage (Sec. 120,
ICP)
2. Warranty that necessary documents are carried (Sec. 122, ICP)
3. Warranty against improper deviation
a. meaning of deviation (Sec. 125, ICP)
b. when proper (Sec. 126, ICP)
c. effect of improper deviation (Sec. 128, ICP)

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H. Loss
1. Kinds of losses (actual and constructive) (Sec. 129-131, ICP)
2. Right to payment upon an actual total loss (Sec. 137, ICP)
3. Scope of insurance against actual total loss (Sec. 137, ICP)
4. When constructive total loss exists (Sec. 133, ICP)
5. Concept of abandonment and its requisites (Sec. 141 - 157)
6. Average (Sec. 138, ICP)
a. Kinds of average (particular and general)
b. Requisites of general average
c. Insurer’s liability for general average
7. Measure of Indemnity (Sec. 158-168, ICP)
Cases: Roque vs. IAC (139 SCRA 596); Go Tiaco vs. Union Ins. Society of Canton (40 Phil
401); Cathay Insurance vs. CA (151 SCRA 710); Filipino Merchants Insurance Co. vs. CA
(179 SCRA 638); Oriental Assurance Corporation vs. CA (200 SCRA 459)

XI. Fire Insurance

A. Definition and scope of fire insurance (Sec. 169, ICP)
B. Risks or losses covered
C. Effect of alteration in the thing insured (Sec. 170, ICP)
F. Co-insurance clause (Sec. 174, ICP)

XII. Casualty Insurance

A. Concept (Sec. 176, ICP)
B. Third Party Liability insurance
C. Insurable interest
D. Meaning of “accident” and “accidental” in casualty insurance
E. Basis and extent of insurer’s liability
Cases: Finman General Assurance Co. vs. CA (September 2, 1992); Sun Insurance Office
Ltd. vs. CA (July 17, 1992); Biagtan vs. The Insular Life Assurance Co., Ltd., (44 SCRA 58)

XIII. Life Insurance

A. Definition (Sec. 180 - 182, ICP)
B. Kinds of life insurance
C. Liability of insurer in case of suicide (Sec. 183, ICP)
D. Right to assign life insurance policy (Sec. 184-185, ICP)
E. Measure of indemnity (Sec. 186, ICP)

XIV. Compulsory Motor Vehicle Liability Insurance

A. Reason for the requirement
B. Scope of coverage required

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 C. Persons subject to the requirement
D. No-fault indemnity claim (Sec. 378, ICP)
E. Notice of claim (Art. 384, ICP)
Cases: Vda. de Gabriel vs. CA (November 14, 1996); Vda. de Maglana vs. Hon.
Consolacion (August 6, 1992); Tiu vs. Arriesgado (GR No. 138060, 01 September 2004)

XV. Microinsurance (Sec. 187-188)

XV. Claims Settlement (Sec. 247-251)

A. Unfair claim settlement practices
B. Claims for life insurance policies
C. Claims for non-life insurance policies
D. Delay in payment of claims
Cases: Tio Khe Chio vs. CA (September 30, 1991); Finman General Assurance Corporation
(July 12, 2001); see again: Prudential Guarantee vs. Trans-Asia Shipping Lines, Inc. G.R. No.
151890, 20 June 2006