COMMERCIA INSURANCE CODE
L OF THE
PHILIPPINES
LAW REVIEW R.A. No. 10607
Atty. Diana A. Velasco
Definition/concept
Sec. 2. A contract of insurance is an agreement whereby
one undertakes for a consideration to indemnify another
against loss, damage or liability arising from an unknown
or contingent event.
"A contract of suretyship shall be deemed to be an
insurance contract, within the meaning of this Code, only
if made by a surety who or which, as such, is doing an
insurance business as hereinafter provided.
Elements
1. Insurable interest (Life: Section 10) (Property: Sections 13, 14, 15,
16, 17 & 18)
2. Risk of loss (Section 3)
3. Assumption of risk
4. Scheme to distribute losses
5. Payment of premiums (Section 77)
Insurable interest
viz risk of loss
Section 3. Any contingent or unknown event, whether
past or future, which may damnify a person having
an insurable interest, or create a liability against him,
may be insured against, subject to the provisions of
this chapter.
Insurable interest in life insurance
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.
Insurable interest in property insurance
Section 14. An insurable interest in property may consist in:
"(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.
Section 15. A carrier or depository of any kind has an insurable interest in a
thing held by him as such, to the extent of his liability but not to exceed the
value thereof.
"Section 16. A mere contingent or expectant interest in any thing, not
founded on an actual right to the thing, nor upon any valid contract for it, is
not insurable.
“Section 17. The measure of an insurable interest in property is the extent to
which the insured might be damnified by loss or injury thereof.
"Section 18. No contract or policy of insurance on property shall be
enforceable except for the benefit of some person having an insurable
interest in the property insured.
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.
Premium
Consideration paid to the insurer for undertaking to
indemnify the insured against a specified peril.
Characteristics
1. Risk – distributing
2. Contract of adhesion
3. Contract of indemnity
4. Oberamie fides
5. Personal
6. Aleatory
The obligation of the insurer to pay the proceeds of the
insurance arises only upon the happening of an event which
is uncertain, or which is to occur at an indeterminate future
time.
Section 6. Every corporation,
partnership, or association,
duly authorized to transact
Parties insurance business as
elsewhere provided in this
Code, may be an insurer.
1. Insurer (Section 6)
Section 7. Anyone except
2. Insured for life insurance (Section 10) a public enemy may be
insured.
3. Beneficiary
Beneficiary
The beneficiary is the person designated by the insured to receive
the proceeds of the insurance policy the moment risk attaches.
Who designates and who can be designated?
a. If a person insures his own life: he can designate any beneficiary
b. If a person insures another’s life, he can designate himself as
beneficiary
c. Illegitimate children as beneficiary
Void designations
Art. 739. The following donations shall be void:
(1) Those made between persons who were guilty of
adultery or concubinage at the time of the donation;
(2) Those made between persons found guilty of the same
criminal offense, in consideration thereof;
(3) Those made to a public officer or his wife, descedants
and ascendants, by reason of his office.
Nature of designation
Section 11. The insured shall have the right to change the
beneficiary he designated in the policy, unless he has
expressly waived this right in said policy. Notwithstanding the
foregoing, in the event the insured does not change the
beneficiary during his lifetime, the designation shall be
deemed irrevocable.
Forfeiture of designated beneficiary’s right to proceeds
Section 12. The interest of a beneficiary in a life insurance policy shall
be forfeited when the beneficiary is the principal, accomplice, or
accessory in willfully bringing about the death of the insured. In such a
case, the share forfeited shall pass on to the other beneficiaries,
unless otherwise disqualified. In the absence of other beneficiaries,
the proceeds shall be paid in accordance with the policy contract. If
the policy contract is silent, the proceeds shall be paid to the estate of
the insured.
Insurable interest and beneficiary in property insurance
"Section 13. Every interest in property, whether real or personal, or any
relation thereto, or liability in respect thereof, of such nature that a
contemplated peril might directly damnify the insured, is an insurable
interest.
"Section 14. An insurable interest in property may consist in:
"(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.
The Insurance Policy
Section 49. The written instrument in which a contract of
insurance is set forth, is called a policy of insurance.
Cover Notes
Section 52. Cover notes may be issued to bind insurance temporarily
pending the issuance of the policy. Within sixty (60) days after issue of a
cover note, a policy shall be issued in lieu thereof, including within its
terms the identical insurance bound under the cover note and the
premium therefor.
"Cover notes may be extended or renewed beyond such sixty (60) days
with the written approval of the Commissioner if he determines that such
extension is not contrary to and is not for the purpose of violating any
provisions of this Code. The Commissioner may promulgate rules and
regulations governing such extensions for the purpose of preventing
such violations and may by such rules and regulations dispense with the
requirement of written approval by him in the case of extension in
compliance with such rules and regulations.
Perfection of insurance contract
1. Cognition theory
2. Payment of premium: Mere submission of the
application without the corresponding approval of the
policy does not result in the perfection of the contract of
insurance
Kinds of policy
Section 59. A policy is either open, valued or running.
"Section 60. An open policy is one in which the value of the thing
insured is not agreed upon, and the amount of the insurance
merely represents the insurer’s maximum liability. The value of
such thing insured shall be ascertained at the time of the loss.
"Section 61. A valued policy is one which expresses on its face an
agreement that the thing insured shall be valued at a specific sum.
"Section 62. A running policy is one which contemplates successive
insurances, and which provides that the object of the policy may be
from time to time defined, especially as to the subjects of
insurance, by additional statements or indorsements.1âwphi1
When policy insurance is rescinded?
1. Concealment
2. Material misrepresentation
Concealment
"Section 26. A neglect to communicate that which a
party knows and ought to communicate, is called a
concealment.
"Section 27. A concealment whether intentional or
unintentional entitles the injured party to rescind a
contract of insurance.
Incontestability Period
"Section 48. Whenever a right to rescind a contract of insurance
is given to the insurer by any provision of this chapter, such right
must be exercised previous to the commencement of an action
on the contract.
"After a policy of life insurance made payable on the death of the
insured shall have been in force during the lifetime of the insured
for a period of two (2) years from the date of its issue or of its last
reinstatement, the insurer cannot prove that the policy is void ab
initio or is rescindable by reason of the fraudulent concealment or
misrepresentation of the insured or his agent.
Types of insurance contracts
Life Insurance
Individual Life - insurance on human lives and insurance appertaining thereto ot connected
therewith (Sec. 181, ICP);
Group Life - a blanket policy covering a number of individuals. Its most common form is an
insurance that provides life or health insurance coverage for the employees of a single
employer.
Industrial Life - a form of life insurance under which the premiums are payable either
monthly or oftener, if the face amount of insurance provided in any policy is not more than
500 times that of the current statutory minimum daily wage in the City of Manila and if the
words “industrial” policy are printed upon the policy as part of the descriptive matter (Sec.
235, ICP).
Non-life insurance/Property
1. Marine (Secs. 101 - 168, ICP);
2. Fire (Secs. 169 - 175, ICP);
3. Casualty (Sec 176, ICP).
NOTHING
FOLLOWS.
