Quiz #1

Characteristics of an Insurance Contract

Definition of Insurance Contract (1) Voluntary
An insurance contract is an agreement whereby one undertakes, for a consideration, to indemnify (2) Aleatory
another against loss, damage or liability arising from a contingent or unknown event (3) Consensual
(4) Conditional
Doing or Transacting an Insurance Business (5) Personal
(1) Making or proposing to make, as an insurer, any insurance contract (6) Contract of indemnity
(2) Making or proposing to make, as a surety, any contract of suretyship as a vocation and not (7) Property in legal contemplation
merely incidental to the legitimate business or activity of the surety (8) Unilateral
(3) Doing any kind of business, including a reinsurance business, specifically recognized as
constituting the doing of an insurance business within the meaning of this Code Requisites of an Insurance Contract
(4) Doing or proposing to do any business in substance equivalent to any of the foregoing in a (1) A subject matter in which the insured has an insurable interest
manner designed to evade the provisions of this Code (2) Event or peril insured against which may be any (future) contingent or unknown event, past
or future, and a duration for the risk thereof
Functions of Insurance (3) A promise to pay or indemnify in a fixed or ascertainable amount
(1) Principal function: risk bearing (4) A consideration for the promise, known as the premium
(2) Subsidiary functions (5) A meeting of the minds of the parties upon all the foregoing essentials
(a) Stimulates business enterprises (6) Competent to enter into a contract
(b) Encourages business efficiency and enterprises (7) Not contrary to law
(c) Promotes loss-prevention (8) Not contrary to public policy
(d) Encourages savings
(e) Solves social problems Elements of Insurance Contract
(3) Indirect functions (1) The insured possesses an interest capable of pecuniary estimation (insurable interest)
(a) Investment of funds (2) The insured is subject to a risk of loss through the destruction or impairment of that interest
(b) Use of reserve funds by the happening of designated perils
(c) Effect on prices (3) The insurer assumes the risk of loss
(d) As a basis of credit (4) Such assumption of risk is part of a general scheme to distribute actual losses among a large
group of persons bearing a similar risk
What may be Insured (5) As consideration for the insurer’s promise, the insured makes a ratable contribution
Sec 3: Any contingent or unknown event, whether past or future, which may damnify a person having (premium)
insurable interest, or create a liability against him, may be insured against, subject to the provisions of
this chapter. Main Classification of Insurance
(1) Insurance against loss or impairment of property interest
The consent of the spouse is to necessary for the validity of an insurance policy taken out by a married (2) Insurance against loss of earning power due to death, accidental injury, ill-health, sickness,
person on his/her life or that of his/her children. old age, or any other disability
(3) Insurance to against contingent liability to make payment against another
All rights, title and interest in the policy of insurance taken out by an original owner on the life or
health of the person insured shall automatically vest in the latter upon the death of the original owner, Insurable Interest
unless otherwise provided for in the policy. Sec 10: Every person has an insurable interests in the life and death:
(1) Of himself, his spouse and of his children
Insurance Taken by a Minor (2) Of any person on whom he depends wholly or in part for education or support, or in whom
(Deleted portion) Any minor of age 18 years or more, may, notwithstanding such minority, contract for he has a pecuniary interest
life, health, and accident insurance, with any insurance company duly authorized to do business in the (3) Of any person under a legal obligation to him for the payment of money, respecting
Philippines, provided the insurance is taken on his own life and the beneficiary appointed is the property or services, of which death or illness might delay or prevent the performance
minor’s estate or the minor’s father, mother, wife, child, brother or sister. (4) Of any person upon whose life any estate or interest vested in him depends

The married woman or the minor herein allowed to take out an insurance policy may exercise all the General Classes of Life Policies
rights and privileges of an owner under a policy. (1) Insurance upon one’s life
 (2) Insurance upon life of another I, (state your name), do solemnly swear that I will maintain my allegiance to the Republic of the
(3) Philippines; I will support its Constitution and obey laws as well as the lawful orders of the duly
Classification of Insurance Contracts under the Code constituted authorities therein; I will do no falsehood, nor consent to doing of any in court; I will not
(1) Life insurance contracts wittingly nor willingly promote or sue any groundless, false, or unlawful suits, or give aid or consent
(2) Non-life insurance contracts to the same; I will delay no man for money or malice, and will conduct myself as a lawyer according
(3) Contracts of suretyship or bonding to the best of my knowledge and discretion with all good fidelity as well as to the courts as to my
clients; and I impose upon myself this voluntary obligations without any mental reservation or purpose
Types of Life Insurance of evasion. So help me God.
(1) Individual life
(2) Group life
(3) Industrial life

Types of Non-Life Insurance

(1) Marine
(2) Fire
(3) Casualty

Persons Obliged to Support Each Other (Art 195 FC)

(1) The spouses
(2) Legitimate ascendants and descendants
(3) Parents and their legitimate children and the legitimate or illegitimate children of the latter
(4) Parents and their illegitimate children and the legitimate or illegitimate children of the latter
(5) Legitimate brothers and sisters, whether of full or half-blood

Parties to an Insurance Contract

Sec 6: Every corporation, partnership, or association duly authorized to transact insurance business as
elsewhere provided in this Code, may be an insurer

Parties in a Contract of Insurance

(1) Insurer – assumes or accepts the risk of loss and undertakes for a consideration to
indemnify the insured on the happening of a specified contingent event
(2) Insured – in whose favor the contract is operative and who is indemnified against

Who may be an Insurer

(1) Foreign or domestic insurance company or corporation
(2) Individual, partnership or association

Capacity of Party Insured

(1) Natural person
(a) Must be competent to make a contract
(b) Must possess insurable interest in the subject of insurance
(c) Not a public enemy
(2) Juridical person – may take out insurance on property owned by it

Lawyer’s Oath