INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
Contract of Insurance [Sec. 2a of the Insurance Code] Doing Insurance Business [Sec. 2b of the Insurance Code]
- an agreement whereby one undertakes for a
consideration to indemnify another against loss, damage or 1. Insurer: doing or proposing to make an insurance
liability arising from an unknown or a contingent event. contract
2. Surety: doing or proposing to make a contract of
● The object and purpose of the contract is: suretyship as a vocation and not merely incidental
1) Assumption of risk; and 3. Business: doing any kind of business, including
2) Indemnification of loss, damage or liability reinsurance business, specifically recognized as
constituting as doing an insurance business
● Payment of premium, profit or direct/separate 4. Business: doing or proposing to do any kind business
consideration does not conclusively negate the in substance equivalent to the foregoing
contract to be classified as an insurance contract. → An entity, for the purpose of being sued,
despite being unregistered before the SEC. Insurance
● Contract of Suretyship - whereby one party or the by estoppel
surety binds himself solidarily with the principal debtor
[New Civil Code] Contracts distinguished from an insurance contract
- Deemed as an insurance contract only if made
by a surety doing or transacting an insurance 1. Warranty - promise of manufacturers, contractors or
business. [Sec. 2a of the Insurance Code] distributors to replace or redo a work or product if
defective.
● Variable Contracts - policy or contract on an individual - Exception: If the promise is made by a third
or group basis for benefits or contractual person to compensate expenses by virtue of
payments/values that reflect as separate investment the defective product/work.
results.
- Variable Life Insurance: is a contracts 2. Law firm contracts - firm promises to undertake any
containing both life insurance and an suit for or against them in consideration of periodical
investment component. It is composed of units payments.
with a varying value or unit pricing which
constitutes as the investment part, and an 3. HMO Product - products such as health cards issued
death benefits as part of its life insurance by an HMO organized to provide or arrange health care
coverage.
S.Y. 2024 - 2025 | 2nd Semester Gas Notes
INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
services through participating physicians for its enrolled
members.
Ge=
- Exception: if the HMO product’s principal object
and purpose is assumption of risk and
indemnification of loss such as when the
insurable interest was the
policyholder/beneficiary was his own heath
[Philamcare Health Systems v. CA]
4. Pre-need Plans - contracts, agreements, deeds or
plans which provide performance of future services,
payment of monetary considerations or delivery of
other benefits to plan holders at an agreed maturity
date in exchange of cash/installment amounts.
S.Y. 2024 - 2025 | 2nd Semester Gas Notes
INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
Jan. 20, 2025 What law governs insurance contracts? Governed by
special laws more specifically RA 10607 (Insurance Code) or
PRELIMS!! Civil Code.
● Multiple Choice
What if neither Insurance Code nor Civil Code have
General Principles provisions governing a certain case?
1. Insurance Code (lex specialis)
Risk Management 2. Civil Code (lex generalis)
To manage risk, people devised several methods to control or 3. Suggested California Law. Because Insurance Code is
minimise their liability: patterned from US Law or more specifically state of
California.
- Risk Avoidance: person would not put himself in a risky
situation. Distinction between insured and ensured.
- Risk Retention: the person himself will shoulder the 1. Insured: person/entity covered by insurance policy.
cost. 2. Ensured: to make sure that something will happen or
- Risk Transfer: another person or an individual will be certainty
shouldering the loss. Differs from insurance because
an insurer requires a juridical entity Are health cards issued by employers considered
- Loss Control: mixture of avoiding and retaining the risk insurance contracts?
or loss - As a rule, no. The medical service of accredited
- Insurance: agreement whereby someone will physicians or health institutions is being availed.
undertake for a consideration to indemnify a person
against loss, damage, liability arising from an unknown HMO as distinguished from Insurance.
or contingent event a. HMO provide medical services through participating
- Not gratuitous, but onerous physicians
- Suspensive condition b. Insurance undertake to indemnify expenses.
Nature and purpose of an insurance contract
Problem #1
- Checks are not legal tender unless encashed,
deposited or impaired by creditor.
S.Y. 2024 - 2025 | 2nd Semester Gas Notes
INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
- Yes, there is already a perfected contract (cause, - Choice communicated through what was stipulated in
object, contract) means the insurance contract already the contract. Notice can be sent electronically
takes place.
Characteristics of the Contract
Problem #2 False
- Payment of premium is not sine quat non. No premium 1. Aleatory [Art. 2010 of NCC]
or profit, does not negate the existence of an insurance - Can also be considered commutative (exchange of
contract [Insurance Code] equivalence) because it is what was agreed.
2. Personal
Problem #3 Yes
- Mere issuance despite single constitutes insurance How is Consent manifested in consensual contracts?
business. Enriquez v. Sunlife
- Both parties accepting or having knowledge of what
Problem #4 Yes was being offered in its entirety. Cognition Theory
- Bancassurance: Insurance companies infiltrating banks - Unread text message does it constitute knowledge?
to sell insurance
3. Uberrimae Fidae - good faith
Elements of an Insurance Contract aside from Art. 1318 of a. Sec. 27 concealment intentional or
NCC unintentional will allow injured party to receive
contract of insurance.
Insurable Interest
What can be insured by an insurer? [Sec. 3] 4. Adhesion Contrcact
- Unknown event whether past or future - One party has no participation in the formulation. Role
Risk of Loss is to deny or agree to the contract as a whole by
- Actual risk only. Speculative risk cannot be insured. signing.
Insurer assumes risk
- The insurer would suffer the loss a. Why is an insurance contract an adhesion contract?
- Because it must be pre approved by insurance
Nature of option to rebuild clause in Insurance Code commission before selling
- Alternative obligation, which upon option is
communicated or notified becomes a pure obligation.
S.Y. 2024 - 2025 | 2nd Semester Gas Notes
INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
1377 of NCC Juridical Capacity must be possessed before entering into an
Ambiguity - interpretation or ruling should not favor the one insurance contract
who cause obscurity. Kinds of Incapacity
● Absolute - prevented totally
How should indemnity be applied in ICs? Only value of the ● Relative - on several reasons only
loss.
Why only the value of the loss? Solutio indebitti. When is consent to a contract considered voidable?
- Consent obtained through duress
How does subrogation in IC works?
Insurer steps into the insured’s shoes. SImulated Contracts - contracts that are only entered to give
the impression that there is a transmission or establishment of
Can the insured recover from the party at fault? rights
If not fully covered.
Minority = voidable, valid until annulled.
Can the insurer’s right of subrogation be destroyed? Exception (Espiritu v. CA): when the minority actively
Quitclaims. misrepresented himself, and the other party relied
XPN to xpn: passive
Parties to the Contract
Wife or spouse does not require consent of the other spouse
Distinction between Assignment and Subrogation to enter into a trade.
Assignment Art. 1624/1625 Art. 73 of FC - unless husband seriously objects.
Public Enemy - refers to a State or its citizen at war with the
Parties to the Contract Philippines.
● Insured - refers to the person, company or
organization
● Insurer -
S.Y. 2024 - 2025 | 2nd Semester Gas Notes
INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
MIDTERMS EXAM DISCUSSION On November 12, Juan died. Purita filed a claim for the
proceeds of the policy as the beneficiary. Pedro, brother of
Q: Rescission is invoked the contract did not exist at all Juan and his only living relative, opposed the claim on the
A: False ground that the same falls under void donation considering the
illicit relation. Can Purita claim under the insurance policy?
Q: If there is a breach of warranty there need not be a causal
connection between the breach and the cause of the loss
A: True
Q: Materiality of the facts concealed does not depend on the
state of mind of the insured
A: True
Q: If the policy is voidable, the insured will be entitled to a
return of the premium
A: False
Q: Consent is necessary to transfer to someone else the policy
A: False
1. Yes, they have separate and distinct interests as owner
and creditor.
Jacob obtained a life insurance policy for P1M irrevocably 2. No law prohibiting double insurance. Moreover, there is
designating Diwata, a friend, as his beneficiary. Jacob, no double insurance as the insurances obtained are
however, changed his mind and wants Yob and Jojo and his separate.
other friends to be included as beneficiaries considering that 3. Businessman 5M full value of his goods. Creditor
the proceeds of the policy are sufficient for the three friends. based on the credit he extended.
Can Jacob designate Yob and Jojo?
Juan Dela Cruz was issued Policy No. 888 of the Midland Life
Insurance Co. on a whole life plan for P500,000 on January
20, 2024 with Purita, his common-law-wife, as the beneficiary.
S.Y. 2024 - 2025 | 2nd Semester Gas Notes
INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
Question boils down whether or not there is a perfected
contract.
MLQ cannot recover. Beneficiary must have an insurable
interest. In this case, he has no insurable interest.
Benny conceal his hepatoma which is a serious condition
material to the insurer.
S.Y. 2024 - 2025 | 2nd Semester Gas Notes
INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
Yes
1. When ALAC approved, it constituted a waiver to the
age requirement.
2. Yes, it resulted in perfection. INCONTESTABILITY CLAUSE
● Requisites for applicability
● Effect: Insurer can no longer rescind on the grounds of
concealment or representation
What if the insurer dies?
What defenses cannot be raised by insurer when requisites
are present?
- That it is void
- That it is rescissible due to misrepresentation
Is there no recourse?
Defenses: (1) lack of insurable interest (2) cause of death is an
excepted risk (3) fraud is particularly vicious type (4)
Yes, payment of check will retroact
beneficiary failed to furnish proof of death or comply condition
S.Y. 2024 - 2025 | 2nd Semester Gas Notes
INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
imposed by the policy (5) action not brought within time
specified
S.Y. 2024 - 2025 | 2nd Semester Gas Notes
INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
S.Y. 2024 - 2025 | 2nd Semester Gas Notes
INSURANCE LAW
Atty. Prime Ramos | Mon 7:30 pm to 9:30 pm
SC decided that the cause of death was negligence of the
driver of the car was the proximate cause.
Assignment: Claims and settlement, double insurance and
reinsurance
S.Y. 2024 - 2025 | 2nd Semester Gas Notes