General Provisions Flashcards
What is the principle behind insurance?
Insurance is based upon the principle of aiding another from a loss caused by an unfortunate event.
What are the present laws that govern insurance
The laws we have to know are, of course, RA 10607 and Articles 2011-2012, 2021-2027 and 2166 of the New Civil Code
How do we construe the provisions of the Insurance Code (IC)?
Since our present IC is based mainly on the Insurance Act, which in turn was taken verbatim from the law
of California (except for Chap V, which was taken from the law of NY), the courts should follow in fundamental
points, at least, the construction placed by California Courts on California law (and the construction placed by
the NY Courts on NY law).
What is a contract of insurance?
Section2. 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.
What does the term doing insurance business include?
The term doing an insurance business or transacting an insurance business within the
meaning of this Code, shall include:
(a) Making or proposing to make, as insurer, any insurance contract;
(b) Making, or proposing to make, as surety, any contract of suretyship as a vocation and not
as merely incidental to any other legitimate business or activity of the surety;
(c) 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;
(d) Doing or proposing to do any business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of this code.
What are the characteristics of an insurance contract?
A contract of insurance has the following characteristics:
1. Consensual - perfected by the meeting of the minds of the parties
2. Voluntary - it is not compulsory and the parties may incorporate such terms and conditions as they may deem convenient which will be binding provided they are not against the law or public policy
3. Aleatory - depends upon some contingent event
4. Executed - as to the insured after the payment of the premium
5. Executory - as to the insurer as it is not executed until payment for a loss
6. Conditional - subject to conditions the principal one of which is the happening of the event insured against
7. Personal - each party in the contract have in view the character, credit and conduct of the other
How are insurance contracts classified?
Insurance contracts are classified as follows?
1) Life insurance contracts
a) Individual (Sections 179-183, 227)
b) Group Life (Sections 50 and 228)
c) Industrial Life (Sections 229-231)
2) Non-Life Insurance Contracts
a) Marine (Sections 99-166)
b) Fire (Sections 167-173)
c) Casualty (Section 174)
3) Contracts of Suretyship and bonding (Sections 175-178)
How are insurance contracts construed?
Ambiguities or obscurities must be strictly interpreted against the party that caused them. As the insurance policy is prepared solely by the insurer, the ambiguities shall be construed against it and in favor
of the insured. (Qua Chee Gan)
Does the fact that no profit was derived from the transaction nor a separate consideration
received therefore mean that no insurance business was transacted?
No. Fact that no profit is derived from the contract or transaction or that no separate or direct
consideration is received for such contract or transaction is NOT deemed conclusive to show that no insurance business was transacted.
Will any suretyship agreement amount to an insurance contract?
No. In order for a suretyship agreement to come under the purview of the Insurance Code, the Surety undertaking to ensure the performance of the obligations must be registered with the Insurance Commissioner and must have been issued by the latter with a certificate of authority. Furthermore, the person acting as a surety is habitually engaged as such for a livelihood.
