Insurance

Transpo

Corpo

Anti money laundering act

INSURANCE

- By contract of insurance, the Insurer agrees to indemnify the another (insured) against loss of
life, …against unknown or contingent event

Characteristics:

1. not a wagering contract (u expect to profit)

2. Risk-distributing scheme. It is not a risk-shifting device as guarantees or suretyships.

Risk shifting device. Contract of suretyship

Suretyship per se is not insurance business. But if u were an insurer and also wants to do suretyship.
Suretyship bec omes part of insurance business

Insurance fund ang gagamitin pambayad ng indemnity.

Insurer can REINSURE. May insure with another insurer known as Reinsurance

- so, in case of claim for insurance, the insurer can ask for indemnity from reinsurer

3.

Parties: Insurer and Insured

- Could be a partnership or corporation

License ng insurance – a.k.a. Certificate of Authority

- Not allowed pag walang certificate

- XPN ung mga dati pa, na still existing ngayon. (Insurance Life, Ltd)
- Allowed to Mutual benefit association

How to get? What could insurance salesman do

- Issued by insurance commissioner of certificate of authority

 - Pass the exam of ins

Who may be insured?

- Anybody having insurable interest in the thing and life insured

- The thing is the property – property insurance or non-life insurance
- If human life – aka life insurance
o Pay for indemnity if due to natural causes or accident

Property insurance examples

- Fire insurance.
- If to insure the life of Dog. Non-life ito

What is INSURABLE INTEREST

- A person who has such a relationship to the thing or life insured that he will benefit from its
preservation or damnified by its loss or destruction.
-

What may the insurable interest consist of:

Insurable Interest in Property Insurance

- Existing right, eg mortgagee

- Expectancy founded on an existing interest, eg purchaser of crops
- Inchoate right founded on an existing right, eg SHs of a corp.

Security by possession.

Personal propery act, wala ng chattel mortgage

Pwede ba painsure ang EXPECTED fruits from mango tree.

Inchoate right founded on an existing interest.

- U are selling house and lot

- Usap tayo. Price is 5M
- I said im interested, but as of now I only have 3M
- Enter nalang contract for payment of remaining balance on July 31, 2022
- Nakalagay din na no transfer of ownership in the meantime
- Pagkatapos ktang bayaran, pde ko ba ipainsure sayo binili ko sayo?
- Yes. Up to what amount? 3M bcoz that was the amount I have paid for it.
o Di pa nalipat ownership sa buyer
2 points in time:

1. at time of insurance taken

2. at the time of loss, although in the meantime it need not exist

"Section 19.

An interest in property insured must exist when the insurance takes effect, and when the loss
occurs, but need not exist in the meantime; and

interest in the life or health of a person insured must exist when the insurance takes effect, but
need not exist thereafter or when the loss occurs.

- Property insurance good only for 1 year. Di tiyak na same owner pa din
- Term is year to year

Example:

- Feb 1, 2021. U are the owner

- May u insure the house? Yes bcoz u have insurable interest as OWNER
- U insured ur house
- On June, 2021, badly needed ung money.
- Wala na insurable interest if pumirma ng deed of sale. U are no longer the owner since u sold
the property.
- If after u sign the deed of sale, nasunog ang bahay, may u recover from the insurer? No.
o While u may have insurable interest at the time u take the insurance coverage, u no
longer have insurable interest at the time of loss.
- Last Nov u were able to redeem the property
- But after buying, at saka nasunog, may u recover from insurer? Yes.
o Coz u have insurable interest at the time u take the insurance coverage, AND u have
insurable interest at the time of loss. Although in the meantime time since June, u don’t
have insurable interest.
- Basta coverage is 1 year
o 1 XPN: Heir’s bond. R 74 of ROC. 2 years all the time.
 Estate of a deceased may be settled extrajudicially.
 Estate includes personal properties, the heirs must execute an Heir’s bond
 Good for 2 years. Fixed in the Rules.
 So ito lang property insurance that has term longer than 1 year
o Yung normal is 1 year lang: year to year ang pag renew.
 Fire
 Casualty
 marine
Life insurance. On whose life do we have interest?

Section 10. Every person has an insurable interest in the life and health:
"(a) Of himself, of his spouse and of his children;
"(b) Of any person on whom he depends wholly or in part for education or support, or in
whom he has a pecuniary interest;
"(c) Of any person under a legal obligation to him for the payment of money, or respecting
property or services, of which death or illness might delay or prevent the performance; and
"(d) Of any person upon whose life any estate or interest vested in him depends.

- One’s life S10 (a)

- Spouse S10 (a)
- Decendants S10 (a)
- Another upon whom one depends for education or support , or in whom he has a pecuniary
interest S10 (b)
- Why no ascendants? Kasi high risk na. pero pde pumasok dun sa ‘Another upon whom one
depends for support’
- One who is obliged to pay him a sum of money or whose death may delay the performance of
an obligation, eg Debtors, obligors
- Another upon whose life an estate depends, eg usufructuary who sells his usufruct to another,
reservista in reserva troncal
o Usufructuary – another person who becomes entitled to receive the fruits.
o Rights of Usufructuary is property rights bcoz they arise from property
o Transferrable (since property rights). Ex. Right to receive rentals for the next for years.
 Unless there is restriction in the agreement.
- Ex. Deed of usufruct. 20k per month.
o 240k per year, 960k for 4 years
o Proposition, give me now 480k and ill assign to you my rights as usufractuary. So in 4
yrs, ull get 960k. but u will only give me now 480k.
o Deed of assignment.
o Dona Cristine insured the life of Usufructuary in case of his death.
o Glen suggested Dona Cristine the transact docs. But said that the investment is High Risk
o Kung ikaw si Dona Cristine
 Can insure the life of usufractuary. So that in case he dies, u collect from insurer.
- Reserva troncal
o Parties:
o Decendant – prepusitus
o Nagmana – ascendant
o But the prop of deceased came from father side.
o When prepositus died, nagmana ung mother (Reservista)
o Ano ang minana ni Reservista dun sa Prepositus?
 o It is ownership subject to Resolutory condition. The happening of which extinguishes the
obligation
o Reverts to the other line
o …
o Kung ikaw yung bumili ng prop na nakapangalan sa Reservista
o But in the title, may nakalagay na subject to Reserva Troncal
o So ano gawin? Insure the life of Reservista. So when Reservista dies, u may receive
indemnity from Insurer.

- In LIFE INSURANCE, when should insurable interest exist? At only when the insurance is TAKEN.
One time. Thereafter it need no longer exist
o Insure your spouse, kaw ang beneficiary.
o But nagsawa ang spouse sayo.
o After 10 eyars, Filed petition for declaration of nullity of marriage. Successful!
o What if namatay pero di na kayo ng asawa, macclaim pa? Yes. Basta tuloy tuloy lang
bayad ng premium.
 “Insurable interest in Life is only at the time the insurance is taken; thereafter,
it need no longer exist.”
o

How one get to be insured?

- Applicant files application from insurer

- All documents related to insurance, dapat pre-approve ng Insurance Commission, including na
ung application
- Truthful matters in appli form are called REPRESENTATIONS
- What if di mo sinabi ang totoo? Aka MISREPRESENTATION
- Concealment – knows and neglect to communicate
o Section 26. A neglect to communicate that which a party knows and ought to
communicate, is called a concealment.
o Effect of concealment:
- Effect of Misrepresentation or Concealment of a material fact on Contract of Insurance
o Entitles Insurer to RESCIND (or cancel) the policy
o Section 27. A concealment whether intentional or unintentional entitles the injured
party to rescind a contract of insurance
- Who determines materiality? (kasi sinabe misrep of a material fact)
o It is the insurer
o Materiality shall be determined shall be determined by the influence that the misrep or
concealment would have on the insurer in assessing the risk to assume.
o Section 31. Materiality is to be determined not by the event, but solely by the
probable and reasonable influence of the facts upon the party to whom the
 communication is due, in forming his estimate of the disadvantages of the proposed
contract, or in making his inquiries.
o No prob pag property kasi insurance coverage is 1 year lang
o If Misrep in Life Insurance, for as long as insured keep on paying the premium on
time, the policy shall be active.
- Within what period the insurer to contest? 2 years from issuance of policy or within 2 years
from date of last reinstatement.
- After, no longer contest the insurability of the coverage.
o Unless committed Fraud of the vicious type? Can be contested BEYOND 2 YEAR period
o

Instrument embodying written contract of insurance

- POLICY
- Should be printed

Kinds of Policy in Property Insurance

- Open – issued over things the value over which keeps on fluctuating. Ex. Grains
where parties agree on the maximum amount of insurance coverage and the premium is paid on
such amount, BUT the value of the thing insured is determined at the time of loss. This is availed
of when the prices of the object fluctuate.
- Valued policy – ex. Warehouse. or when the parties have already agreed on the value of the
thing insured; eg Car is valued at P1M. In case of loss, the indemnity shall be that agreed upon.
- If u insure the goods inside the warehouse
o 25M worth
o Said bayarin cash settlement for 23M.
o But Insured said that 25M binayad niya.
o Sino masusunod? Insurer. If u don’t want to accept the cash settlement of 23M, insurer
can still comply with its oblig of indemnifying you.
 Mamimili ng bigas in market in prevailing prices and deliver to u 10k sacks of
rice.
o If u are insured, can u insist on 25M as indemnity? No. if Property Insurance, insurer has
2 ways of settling a claim: (1) cash settlement; (2)
- Running – which contemplates successive insurance contracts where the insurance coverage
over goods sold are transferred to goods which serve as replenishment. Insurance coverage on
some things, after they have been disposed of, shall also apply to the replacements. eg.
Merchant on his inventory and structure; Grocery
o One taken by the merchant on his stocks of goods
o

In prop insu, premium be paid upon delivery of policy

Pde ba premiums be on Credit? Yes.

If premium would be on credit….for as long as premium would

ex. Rice dealer ka. With warehouse na ma

pag prop insurance, in Open policy, 2 way of settling a claim

- 1. Cash

After 1st year

Policies in life insurance

- Pde for a period – Term insurance

o 2 kinds of term insurance:
o Pag namatay within agreed period, oks lang
o 1. Stipulated period arrive. And alive. insured ceases to be insured. The policy expires
and the insured GETS NOTHING ON THE POLICY (cheapest form of life insurance)
o 2. Upon arrival of stipulated term. And insured survives the term. He gets the face
value of the police (aka Endowment plans). But, this is the most expensive insurance.
o
- Or lifetime – Whole life insurance. Insured keeps paying the premium When the insured dies.
Hanggang kalian? Keeps paying premium until age of 100
- So sa insurer, considered dead na.
- Insured will stop paying premiums
- So insured will get the face value of the policy.

OBLIGATION OF INSURED in Contract of Insurance

- Pay the stipulated Premiums

o Insurer – to indemnify the insured upon the happening of the risk insured against
- When should premiums be paid?
o Property – upon delivery of the Policy (like COD)
- May Premiums be ON CREDIT?
o YES
o These days, premiums may also be paid by credit card which is as good as cash.
According to the SC, it is not prohibited by law.
 o THUS, when the risk happens when the premium is not yet paid, the insurer is obliged to
pay as long as the premium is paid within the credit term.
o The insured must thus pay the premium first before he files his claim.
- WHAT IF ON CREDIT,
o Credit until March 31, 2022
o Loss already taken today and have not paid premium yet
o Will u be entitled to indemnity?
o When the risk happens when the premium is not yet paid, the insurer is obliged to pay
as long as the premium is paid within the credit term.
 So, nabigyan ka credit til Mar 31
 Wag ka muna file ng claim
 Bayarin mo muna ung premium

KAKAIBA NA CASE!!!

Masagana Telamart v UCPP general insurance?

- Textile business
- Insurance against fire
- Every year nagrenew ung policy. Yearly pagbayad ng premium
- Yearly din naman tinatanggap ung payment
- Before premium was actually paid, loss have taken place
- Masagana ordered Manager’s check to pay the premium. Di na sariling check.
- But the following day, Masagana filed its claim
- UCPP sinuli ung premium payment and denied the claim
o Contending that at the time of loss, there was yet no valid contract of insurance bcoz
premium was not yet actually paid
- Masagana filed with RTC
- RTC ruled in favor of Masagana
- UCPP appealed with CA which favored them
- Masagana filed MR, denied
- Filed Petition for Review with SC
- Initially, denied
- But on MR, reversed the Ruling of CA
o On principle of Estoppel – legal bar that will prevent
o No agreed credit period. But over number of years, payment was made by a particular
day.
o And UCPP was accepting payments by that particular date.
o Then the insurer was Estopped from refusing to pay the indemnity since the payment of
premium was made by that particular date.
- https://lawphil.net/judjuris/juri2001/apr2001/gr_137172_2001.html ???