INSURANCE

Commercial Laws 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
INSURANC E
event. (Sec. 2)
 ELEMENTS OF AN
INSURANC E CONTRACT

1. The insured has an insurable interest capable of pecuniary estimation;

2. The insured is subject to a risk of loss by the happening of the designated
peril;
3. The insurer assumed the risk of loss;
4. Such assumption of risk is part of a general scheme to distribute actual
losses among a large group of persons bearing a similar risk; and
5. In consideration of the insurer’s promise, the insured pays a premium.
 PARTIES TO AN INSURANCE CONTRACT

Premium

Insured Risk
Insurer

Designate any beneficiary,

subject to Art. 739, CC. The insurance proceeds shall be applied
exclusively to the proper interest of the
person in whose name or for whose
Beneficiary benefit it is made unless otherwise
(Irrevocable / Revocable) specified in the policy. (Sec. 53)
 BENEFIC IARIES VS. LEGAL HEIRS

Mistress and
Illegitimate child Legal Heirs
Designated as beneficiaries
Mistress is disqualified based on Art. 739, CC.
Art. 739, CC
(1) Those made between persons who are 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, descendants and ascendants, by reason of his office.
 BENEFIC IARIES VS. LEGAL HEIRS

A was a rich businessperson with two wives. He married B, with whom he had
three children namely, C, D, and E. While their marriage was subsisting, he met X
with whom he madly fell in love. He also married her despite his first marriage.
They had a child named Y. In his life insurance policy from XYZ Life Insurance Corp.,
A designated his second wife, X, and their son, Y, as beneficiaries. Five years later, A
died. X filed a claim for the proceeds of the policy for herself and for Y as the
designated beneficiaries. At the same time, B also filed a claim for death benefits for
herself and her children, C, D, and E, as A’s legal wife and legitimate children. Who
is/are entitled to the life insurance proceeds? Reason(s).
 THE INSURER

(1) Making or proposing to make, as insurer, any insurance

contract;
(2) 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;
(3) Doing any kind of business, including a reinsurance business,
Insurer specifically recognized as constituting the doing of an insurance
business within the meaning of this Code;
(4) 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.
 CHARACTERISTICS OF AN
INSURANC E CONTRACT

1. Risk-distributing scheme
2. Uberrimae Fides Contract
3. Contract of Indemnity
4. Contract of Adhesion
5. Generally, voluntary
6. Personal in nature
 TYPES OF INSU RANCE CONTRACTS

Life vs. Non-Life

Life vs. Property Life Property
Individual vs. Group 1. Term Insurance 1. Fire
2. Whole Life Insurance 2. Marine
3. Endowment Policy 3. Casualty
4. Industrial Life
5. Ordinary Life *Open
*Valued
*Running
 OPEN, VALUED, RUNNING POLICY

A policy is either open, valued or running. (Sec. 59)

• 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. (Sec 60)
• A valued policy is one which expresses on its face an agreement that the thing insured
shall be valued at a specific sum. (Sec. 61)
• 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. (Sec. 63)
 OPEN, VALUED, RUNNING POLICY

Open = value of the thing insured is not agreed upon and is determined at the time of
loss
Valued = Value is fixed and agreed upon in the policy
Running = for successive insurances, the subject matter may be defined by subsequent
statements or endorsements
 OPEN, VALUED, RUNNING POLICY

Type of Policy Example

Open Insurance over shipment of onions for up to PHP 1,000,000.00.

If the shipment is damaged or lost in transit, the value at the time of loss
determines the value to be indemnified. For instance, if the value of the onions
were at PHP 600,000.00, the indemnification is such value.
Valued Insurance over shipment of onions valued at PHP 1,000,000.00.

Value is PHP 1,000,000.00

Running Running insurance policy for a fleet of taxis (e.g., fleet insurance)

Each new acquisition of a taxi is added by way of endorsement to the insurer.

 MORTGAGE REDEMPTION INSURANCE

A mortgage redemption insurance (MRI) is an insurance required by lenders

(e.g., banks) to cover the property of borrowers (mortgagor) in case of their
death during the pendency of the loan.

As to the mortgagor, in the event of one’s death, the mortgage obligation will
be extinguished by the application of the insurance proceeds to the debt. As to
the mortgagee, in the event of the mortgagor’s death during the subsistence of
the the mortgage, the proceeds of such insurance will be applied to the
payment of the mortgage debt. [Insular Insurance Company v. Heirs of Jose
Alvarez]
 VARIABLE C ONTRACTS

Any policy or contract on either a group or on an individual basis issued by an

insurance company providing for benefits or other contractual payments or
values thereunder to vary so as to reflect investment results of any segregated
portfolio of investments or of a designated separate account in which
amounts received in connection with such contracts shall have been placed
and accounted for separately and apart from other investments and accounts.
This contract may also provide benefits or values incidental thereto payable in
fixed or variable amounts, or both. (Sec. 238, b)
 REINSURANCE

“Insurance of an insurance”
• A contract of reinsurance is one by which an insurer (the "direct insurer" or "cedant")
procures a third person (the "reinsurer") to insure him against loss or liability by reason
of such original insurance. (Sec. 97)
• It is a separate and distinct arrangement from the original contract of insurance, whose
contracted risk is insured in the reinsurance agreement.
• The reinsurer's contractual relationship is with the direct insurer, not the original
insured, and the latter has no interest in and is generally not privy to the contract of
reinsurance.
• The original insured has no interest in a contract of reinsurance. (Sec. 100)
 DOUBLE INSURANCE
Double insurance exists where the same person is insured by several insurers separately in respect to the same subject
and interest. (Sec. 95)
Where the insured in a policy other than life is over insured by double insurance:
(a) The insured, unless the policy otherwise provides, may claim payment from the insurers in such order as he may
select, up to the amount for which the insurers are severally liable under their respective contracts;
(b) Where the policy under which the insured claims is a valued policy, any sum received by him under any other policy
shall be deducted from the value of the policy without regard to the actual value of the subject matter insured;
(c) Where the policy under which the insured claims is an unvalued policy, any sum received by him under any policy
shall be deducted against the full insurable value, for any sum received by him under any policy;
(d) Where the insured receives any sum in excess of the valuation in the case of valued policies, or of the insurable value
in the case of unvalued policies, he must hold such sum in trust for the insurers, according to their right of contribution
among themselves;
(e) Each insurer is bound, as between himself and the other insurers, to contribute ratably to the loss in proportion to
the amount for which he is liable under his contract. (Sec. 96)
 DOUBLE INSURANCE

X obtained an insurance policy for her Porsche Carrera GT from XYZ Insurance
Company. The same car was insured by her creditor-mortgagee, Y, with ABC
Insurance Company. When the car was damaged because of an accident, X filed a
claim with XYZ Insurance Company. The latter denied the claim since it
discovered that the car was also insured with ABC Insurance Company. According
to XYZ Insurance Company, double insurance is prohibited by law. Decide with
reason(s).
Insurable interest is that interest which a
person is deemed to have in the subject
matter of the insurance where he has a
relation or connection to it such that the
person will deprive pecuniary benefit or
INSURABLE
advantage from the preservation of the
subject matter or will suffer pecuniary loss or INTEREST
damage from its destruction, termination, or
injury by the happening of the event insured
against it.
 INSURABLE INTEREST
IN LIFE AND HEALTH

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.
(Sec. 10)
 INSURABLE INTEREST
IN PROPERTY

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. (Sec. 13)

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. (Sec. 14)
 The written instrument in which a
INSURANC E contract of insurance is set forth,
POLICY is called a policy of insurance. (Sec.
49)
 THE INSURANCE POLICY

As to form – may be in printed or in electronic form (Electronic Commerce Act)

As to contents – A policy of insurance must specify:
(a) The parties between whom the contract is made;
(b) The amount to be insured except in the cases of open or running policies;
(c) The premium, or if the insurance is of a character where the exact premium is only determinable
upon the termination of the contract, a statement of the basis and rates upon which the final
premium is to be determined;
(d) The property or life insured;
(e) The interest of the insured in property insured, if he is not the absolute owner thereof;
(f) The risks insured against; and
(g) The period during which the insurance is to continue.
 COVER NOTES

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.
(Sec. 52)
 COVER NOTE VS. BINDING RECEIPT

Cover Note Binding Receipt

Temporary insurance coverage Conditional insurance coverage
pending issuance of the policy and but does not become effective
the insurer is liable if the loss unless eventually approved by the
occurred during such provisional insurer
period
 C ANC ELLATION OF THE POLICY

No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the
insured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effective
date of the policy, of one or more of the following:
(a) Nonpayment of premium;
(b) Conviction of a crime arising out of acts increasing the hazard insured against;
(c) Discovery of fraud or material misrepresentation;
(d) Discovery of willful or reckless acts or omissions increasing the hazard insured against;
(e) Physical changes in the property insured which result in the property becoming uninsurable;
(f) Discovery of other insurance coverage that makes the total insurance in excess of the value of the property
insured; or
(g) A determination by the Commissioner that the continuation of the policy would violate or would place the
insurer in violation of this Code.
 Payments made by the insured (at
PREMIUM
agreed intervals) to the insurer.
 C ASH AND C ARRY RULE

Under the cash and carry rule, an insurance policy is generally not binding unless the premium thereof has not
been paid. Exceptions:
• Whenever the grace period applies in the case of a life or an industrial life policy. (Sec. 77)
• under the broker and agency agreements with duly licensed intermediaries, a ninety (90)-day credit extension
is given. No credit extension to a duly licensed intermediary should exceed ninety (90) days from date of
issuance of the policy. (Sec 77)
• An acknowledgment in a policy or contract of insurance or the receipt of premium is conclusive evidence of
its payment, so far as to make the policy binding, notwithstanding any stipulation therein that it shall not be
binding until the premium is actually paid. (Sec. 79)
• Agreement allows the insured to pay the premium in instalments and partial payment has been made at the
time of loss.
• In cases of estoppel.
• When a cover note is issued to temporarily bind the insurance pending issuance of the policy.
 INSTANC ES WHERE A PERSON IS
ENTITLED TO A RETU RN OF PREMIUM
A person insured is entitled to a return of premium, as follows:
• To the whole premium if no part of his interest in the thing insured be exposed to any of the perils insured
against;
• Where the insurance is made for a definite period of time and the insured surrenders his policy, to such
portion of the premium as corresponds with the unexpired time, at a pro rata rate, unless a short period rate
has been agreed upon and appears on the face of the policy, after deducting from the whole premium any
claim for loss or damage under the policy which has previously accrued: Provided, That no holder of a life
insurance policy may avail himself of the privileges of this paragraph without sufficient cause as otherwise
provided by law; (Sec. 80)
• A person insured is entitled to a return of the premium when the contract is voidable, and subsequently
annulled under the provisions of the Civil Code; or on account of the fraud or misrepresentation of the
insurer, or of his agent, or on account of facts, or the existence of which the insured was ignorant of without
his fault; or when by any default of the insured other than actual fraud, the insurer never incurred any liability
under the policy. (Sec. 82)
 Contracts validly agreed upon may
RESC ISSION be rescinded in the cases
established by law. (Art. 1380, CC)
 RESC ISSION OF
INSURANC E CONTRACTS
1. Concealment
• Whether intentional or unintentional entitles the injured party to rescind a contract
of insurance. (Sec. 27)
2. Representation
• If a representation is false in a material point, whether affirmative or promissory, the
injured party is entitled to rescind the contract from the time when the
representation becomes false. (Sec. 45)
3. Warranties
• The violation of a material warranty, or other material provision of a policy, on the
part of either party thereto, entitles the other to rescind. (Sec. 74)
 CONCEALMENT

Concealment
• A neglect to communicate that which a party knows and ought to communicate, is
called a concealment. (Sec. 26)
• Each party to a contract of insurance must communicate to the other, in good faith, all
facts within his knowledge which are material to the contract and as to which he
makes no warranty, and which the other has not the means of ascertaining. (Sec. 28)
• The right to information of material facts may be waived, either by the terms of
insurance or by neglect to make inquiry as to such facts, where they are distinctly
implied in other facts of which information is communicated. (Sec. 33)
There is no concealment when the insured had no knowledge of such fact.
 CONCEALMENT

What is the test of materiality?

Materiality is to be determined not by the event, but solely by the probable and
reasonable influence of the facts upon the party to whom the communication is
due, in forming his estimate of the disadvantages of the proposed contract, or in
making his inquiries. (Sec. 31)
 CONCEALMENT

Exceptions
Neither party to a contract of insurance is bound to communicate information of the matters
following, except in answer to the inquiries of the other:
(a) Those which the other knows;
(b) Those which, in the exercise of ordinary care, the other ought to know, and of which the former
has no reason to suppose him ignorant;
(c) Those of which the other waives communication;
(d) Those which prove or tend to prove the existence of a risk excluded by a warranty, and which
are not otherwise material; and
(e) Those which relate to a risk excepted from the policy and which are not otherwise material.
 REPRESENTATIONS

Representation refers to any statement, whether oral or written (Sec. 36),

made at the time of, or before, the issuance of an insurance policy (Sec. 37) which
may induce the insurer to enter into a contract.
A representation is deemed false when the facts fail to correspond with its
assertions or stipulations. (Sec. 44)
• If a representation is false in a material point, whether affirmative or promissory, the
injured party is entitled to rescind the contract from the time when the representation
becomes false. (Sec. 45)
 REPRESENTATIONS

What is the test of materiality?

The materiality of a representation is determined by the same rules as the materiality of a
concealment. (Sec. 46)
However, fraudulent intent on the part of the insured must be established
to entitle the insurer to rescind the contract.
 CONC EALMENT OR
MISREPRESENTATION ?

Concealment Misrepresentation
Insured withholds information regarding Insured makes erroneous statements with
material fact from the insurer intent of inducing the insurer to enter into
the insurance contract
Neglect to communicate information as to Insured makes such misrepresentation
a material fact known to the insured
Occurs prior to the insurance contract Made at the time of, or prior, to the
issuance of the insurance policy
Proof of fraudulent intent is not essential Fraudulent intent is essential
 INCONTESTABILITY C LAU SE

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. (Sec. 48)
 INCONTESTABILITY C LAU SE

Not barred by incontestability clause:

• Lack of insurable interest, esp. in property
• Non-payment of premium
• Proximate cause of death due to an excepted risk
• Failure to comply with conditions of the policy
• Failure to file claims within periods prescribed.
 LIABILITY OF INSURER IN C ASE OF
SUICIDE
The insurer in a life insurance contract shall be liable in case of suicide only when
it is committed after the policy has been in force for a period of two (2) years
from the date of its issue or of its last reinstatement, unless the policy
provides a shorter period: Provided, however, That suicide committed in the
state of insanity shall be compensable regardless of the date of commission. (Sec.
183)
 WARRANTY

A warranty refers to a statement or promise, either express or implied (Sec. 67),

made by the insured which forms part of the policy. In the case of express
warranties made at or before the execution of a policy, must be contained in the
policy itself, or in another instrument signed by the insured and referred to in the
policy as making a part of it. (Sec. 70).
Express – a statement in a policy, of a matter relating to the person or thing
insured, or to the risk as a fact (Sec. 71)
Implied – deemed incorporated in the contract although not expressly mentioned.
(Ex. In Marine insurance)
 WARRANTY

When, before the time arrives for the performance of a warranty

relating to the future, a loss insured against happens, or performance
becomes unlawful at the place of the contract, or impossible, the
omission to fulfill the warranty does not avoid the policy. (Sec. 73)
 WARRANTY

Effect of non-compliance
• The violation of a material warranty, or other material provision of a policy, on
the part of either party thereto, entitles the other to rescind. (Sec. 74)
• A policy may declare that a violation of specified provisions thereof shall avoid
it, otherwise the breach of an immaterial provision does not avoid the policy.
(Sec. 75)
• A breach of warranty without fraud merely exonerates an insurer from the
time that it occurs, or where it is broken in its inception, prevents the policy
from attaching to the risk. (Sec. 76)
 A loss is the injury or damage
sustained by the insured as a
consequence of the happening of
LOSS the risk/s insured against which
the insurer, in consideration of the
premium, has undertaken to
indemnify or pay the insured.
 LIABILITY FOR LOSS

• Unless otherwise provided by the policy, an insurer is liable for a loss of which a peril insured
against was the proximate cause, although a peril not contemplated by the contract may have
been a remote cause of the loss; but he is not liable for a loss of which the peril insured against
was only a remote cause. (Sec. 86)
• An insurer is liable where the thing insured is rescued from a peril insured against that would
otherwise have caused a loss, if, in the course of such rescue, the thing is exposed to a peril not
insured against, which permanently deprives the insured of its possession, in whole or in part; or
where a loss is caused by efforts to rescue the thing insured from a peril insured against. (Sec. 87)
• Where a peril is especially excepted in a contract of insurance, a loss, which would not have
occurred but for such peril, is thereby excepted although the immediate cause of the loss was a
peril which was not excepted. (Sec. 88)
• Loss caused by the negligence of the insured, or of the insurance agents or others. (Sec. 89)
 LIABILITY FOR LOSS

Instances where an insurer is not liable despite occurrence of a loss:

• Willful act or through the connivance of the insured (Sec. 89)
• Loss of which the peril insured against was only a remote cause (Sec. 86)
• Loss caused by an excepted risk (Sec. 88)
 NOTICE OF LOSS

After the loss, the insured must submit the notice and proof of loss within the period
stipulated in the policy.
When a preliminary proof of loss is required by a policy, the insured is not bound to give
such proof as would be necessary in a court of justice; but it is sufficient for him to give
the best evidence which he has in his power at the time. (Sec. 91)
If the policy requires, by way of preliminary proof of loss, the certificate or testimony of a
person other than the insured, it is sufficient for the insured to use reasonable diligence to
procure it, and in case of the refusal of such person to give it, then to furnish reasonable
evidence to the insurer that such refusal was not induced by any just grounds of disbelief
in the facts necessary to be certified or testified. (Sec. 94)
 NOTICE OF LOSS

In case of non-submission or delay in the submission of the notice and/or proof of

loss –
• Insured shall be relieved of liability in case of non-submission or delay in the
submission of the notice and/or proof of loss, unless the delay in the
presentation to an insurer of notice or proof of loss is waived by the insurer or
it omits to take objection promptly and specifically upon that ground. (Sec. 93)
• All defects in a notice of loss, or in preliminary proof thereof, which the insured
might remedy, and which the insurer omits to specify to him, without
unnecessary delay, as grounds of objection, are waived. (Sec. 92)
 UNFAIR CLAIMS SETTLEMENT

No insurance company doing business in the Philippines shall refuse, without just cause, to pay or settle claims
arising under coverages provided by its policies, nor shall any such company engage in unfair claim settlement
practices. Any of the following acts by an insurance company, if committed without just cause and performed
with such frequency as to indicate a general business practice, shall constitute unfair claim settlement practices:
(1) Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverage at issue;
(2) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising
under its policies;
(3) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under its
policies;
(4) Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which
liability has become reasonably clear; or
(5) Compelling policyholders to institute suits to recover amounts due under its policies by offering without
justifiable reason substantially less than the amounts ultimately recovered in suits brought by them. (Sec. 247)
 CLASSES OF INSURANC E

1. Marine
2. Fire
3. Casualty Insurance
4. Suretyship
5. Life
6. Microinsurance
7. Compulsory motor vehicle liability insurance
 MARINE INSURANCE

Marine Insurance includes:

(a) Insurance against loss of or damage to:
(1) Vessels, craft, aircraft, vehicles, goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, securities,
choses in action, instruments of debts, valuable papers, bottomry, and respondentia interests and all other kinds of property
and interests therein, in respect to, appertaining to or in connection with any and all risks or perils of navigation, transit or
transportation, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while
awaiting shipment, or during any delays, storage, transhipment, or reshipment incident thereto, including war risks, marine
builder’s risks, and all personal property floater risks;
(2) Person or property in connection with or appertaining to a marine, inland marine, transit or transportation insurance,
including liability for loss of or damage arising out of or in connection with the construction, repair, operation, maintenance
or use of the subject matter of such insurance (but not including life insurance or surety bonds nor insurance against loss by
reason of bodily injury to any person arising out of ownership, maintenance, or use of automobiles);
(3) Precious stones, jewels, jewelry, precious metals, whether in course of transportation or otherwise; and
(4) Bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and
furnishings, fixed contents and supplies held in storage); piers, wharves, docks and slips, and other aids to navigation and
transportation, including dry docks and marine railways, dams and appurtenant facilities for the control of waterways.
 FIRE INSURANCE

Insurance against loss by fire, lightning, windstorm, tornado or earthquake

and other allied risks, when such risks are covered by extension to fire
insurance policies or under separate policies. (Sec. 169)
 CASUALTY INSURANCE

Casualty insurance is insurance covering loss or liability arising from accident or

mishap, excluding certain types of loss which by law or custom are considered as
falling exclusively within the scope of other types of insurance such as fire or marine.
It includes, but is not limited to, employer’s liability insurance, motor vehicle liability
insurance, plate glass insurance, burglary and theft insurance, personal accident and
health insurance as written by non-life insurance companies, and other substantially
similar kinds of insurance. (Sec. 176)
 SURETYSHIP

A contract of suretyship is an agreement whereby a party called the surety

guarantees the performance by another party called the principal or obligor of an
obligation or undertaking in favor of a third party called the obligee. It includes official
recognizances, stipulations, bonds or undertakings issued by any company by virtue of
and under the provisions of Act No. 536, as amended by Act No. 2206. (Sec. 177)
 LIFE INSURANCE

Life insurance is insurance on human lives and insurance appertaining thereto or

connected therewith.
Every contract or undertaking for the payment of annuities including contracts for
the payment of lump sums under a retirement program where a life insurance
company manages or acts as a trustee for such retirement program shall be
considered a life insurance contract for purposes of this Code. (Sec. 181)
 MICROINSURANCE

Microinsurance is a financial product or service that meets the risk protection needs of
the poor where:
(a) The amount of contributions, premiums, fees or charges, computed on a daily basis,
does not exceed seven and a half percent (7.5%) of the current daily minimum wage rate
for nonagricultural workers in Metro Manila; and
(b) The maximum sum of guaranteed benefits is not more than one thousand (1,000)
times of the current daily minimum wage rate for nonagricultural workers in Metro Manila.
(Sec. 187)
 COMPULSORY MOTOR VEHICLE
INSURANC E

A policy where a contract of insurance against passenger and third-

party liability for death or bodily injuries and damage to property from
motor vehicle accidents. (Sec. 386, f)