III. INSURABLE INTEREST Flashcards
What is the definition of insurable interest?
Insurable interest, defined in its broadest sense, is that interest which the law requires a person making a contract of insurance to have in the thing or person insured so that the contract may escape the charge of a wagering contract.
What is the effect on an insurance contract if there is no insurable interest?
If there is no insurable interest, the contract is void.
Sec. 25. Every stipulation in a policy of insurance for the payment of loss whether the person insured has or has not any interest in the property insured, or that the policy shall be received as proof of such interest, and every policy executed by way of gaining or wagering, is void.
What does the doctrine of insurable interest require/
The doctrine of insurable interest requires that there be some significant relationship between the insured and the person, the object, or the activity that is the subject of an insurance.
What are the two purposes of the insurable interest?
The requirement of insurable interest was devised to meet two purposes: (1) to prevent the contract from being a mere wager; and (2) to provide a measure of the limits of recovery.
What is the cestui que vie?
The cestui que vie is the person upon whose life an insurance is taken.
RA 10607. Sec. 10. Every person has a insurable interest in the life and health:
[…].
RA 10607. Sec. 10. Every person has a 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 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.
RA 10607. Sec. 14. An insurable interest in property may consist in:
(a) […];
(b) […]; or
(c) […].
RA 10607. Sec. 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.
True or False. 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 insurable.
False. RA 10607. Sec. 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.
What is a wagering contract?
A wagering contract is a contract of insurance which gives to the insured more than indemnity for his actual loss. A wagering contract is void for being contrary to law and public policy.
When must insurable interest in the property exist in property insurance?
According to Sec. 19 of RA 10607, “An interest in property insured must exist when the insurance takes effect, and when the loss occurs.”
When must insurable interest exist in insurances upon the life or health of a person?
According to Sec. 19 RA 10607, “[I]nterest 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.”
When does a double insurance exist?
According to Sec. 95 RA 10607, “A double insurance exists where the same person is insured by several insurers separately in respect to the same subject and interest.”
According to Carale, double insurance exists where there are two or more insurers insuring the same insured, covering the same subject matter and interest, and against the same risk.
What is over-insurance?
Over-insurance exists where the value of the insurance exceeds the value of the insurable interest. It does not necessarily mean that there should be two or more insurers involved. Over-insurance may occur even if there is only one insurer involved.
