GENERAL CONCEPTS Flashcards
CONTRACT OF INSURANCE
An agreement whereby one
undertakes for a consideration to
indemnify another against loss, damage
or liability arising from an unknown or
contingent event
DOING AN INSURANCE BUSINESS OR
TRANSACTING AN INSURANCE
BUSINESS
- Making or proposing to make, as
* *insurer**, any insurance contract; - Making or proposing to make, as
surety, any contract of suretyship as
a vocation, not as a mere incident to
any other legitimate business of a
surety; - Doing any insurance business,
including a reinsurance business; - Doing or proposing to do any
business in substance equivalent to
any of the foregoing
CHARACTERISTICS OF AN INSURANCE
CONTRACT
- Consensual
- Voluntary
- Aleatory
- Unilateral
- Conditional
- Contract of indemnity
- Personal
5 CARDINAL PRINCIPLES IN INSURANCE
- Insurable Interest
- Principle of Utmost Good Faith
- Contract of Indemnity
- Contract of Adhesion
- Principle of Subrogation
Principle of Subrogation
It is a process of legal substitution
where the insurer steps into the shoes of
the insured and he avails of the latter’s
rights against the wrongdoer at the time
of loss.
REVERSE
It is a process of legal substitution
where the insurer steps into the shoes of
the insured and he avails of the latter’s
rights against the wrongdoer at the time
of loss.
Principle of Subrogation
PURPOSES OF SUBROGATION
- To make the person who caused the
loss legally responsible for it. - To prevent the insured from
receiving a double recovery from the
wrongdoer and the insurer. - To prevent tortfeasors from being
free from liabilities and is thus
founded on considerations of public
policy.
RULES OF SUBROGATION
- Applicable only to property insurance.
- Insured reced Indemnity fro the insurer from the loss
- There is Loss or injury arising from the risk insured againsted the covered by the loss
SUBROGATION NOT APPLICABLE
a. Where the insured by his own act
releases the wrongdoer or third party
liable for the loss or damage;
b. Where the insurer pays the insured the
value of the loss without notifying the
carrier who has in good faith settled
the insured’s claim for loss;
c. Where the insurer pays the insured for
a loss or risk not covered by the policy.
(Pan Malayan Insurance Company v.
CA, 184 SCRA 54)
d. In life insurance
e. For recovery of loss in excess of
insurance coverage
ELEMENTS OF AN
INSURANCE CONTRACT
- The insured possesses an insurable
interest susceptible of pecuniary
estimation; - The insured is subject to a risk of loss
through the destruction or
impairment of that interest by the
happening of designated perils; - The insurer assumes that risk of loss;
- Such assumption is part of a general
scheme to distribute actual losses
among a large group or substantial
number of persons bearing somewhat
similar risks; and (MEETING OF MINDS) - The insured makes a ratable
contribution (premium) to a general
insurance fund.
PERFECTION OF AN INSURANCE
CONTRACT
An insurance contract is a consensual
contract and is therefore perfected the
moment there is a meeting of minds with
respect to the object and the cause or
consideration.
AN INSURANCE CONTRACT IS PERFECTED THE MOMENT THE OFFEROR LEARNS OF THE ACCEPTANCE OF HIS OFFER BY THE OTHER PARY
POLICY OF INSURANCE
The written instrument in which a
contract of insurance is set forth.
CONTENTS OF INSURANCE
- Parties
-
Amount of insurance, except in open
or running policies; - Rate of premium;
- Property or life insured;
-
Interest of the insured in the
property if he is not the absolute
owner; - Risk insured against; and
- Duration of the insurance.
REVERSE
Persons entitled to recover on the
policy
The insurance proceeds
shall be applied exclusively to the proper
interest of the person in whose name or
to whose benefit it is made, unless
otherwise specified in the policy
KINDS OF POLICIES
- OPEN POLICY
- VALUED POLICY
- RUNNING POLICY