GENERAL CONCEPTS

Question 1

CONTRACT OF INSURANCE

Answer 1

 An agreement whereby one
undertakes for a consideration to
indemnify another against loss, damage
or liability arising from an unknown or
contingent event

Question 2

DOING AN INSURANCE BUSINESS OR
TRANSACTING AN INSURANCE
BUSINESS

Answer 2

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, not as a mere incident to
   any other legitimate business of a
   surety;
3. Doing any insurance business,
   including a reinsurance business;
4. Doing or proposing to do any
   business in substance equivalent to
   any of the foregoing

Question 3

CHARACTERISTICS OF AN INSURANCE
CONTRACT

Answer 3

1. Consensual
2. Voluntary
3. Aleatory
4. Unilateral
5. Conditional
6. Contract of indemnity
7. Personal

Question 4

5 CARDINAL PRINCIPLES IN INSURANCE

Answer 4

1. Insurable Interest
2. Principle of Utmost Good Faith
3. Contract of Indemnity
4. Contract of Adhesion
5. Principle of Subrogation

Question 5

Principle of Subrogation

Answer 5

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.

Question 6

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.

Answer 6

Principle of Subrogation

Question 7

PURPOSES OF SUBROGATION

Answer 7

1. To make the person who caused the
   loss legally responsible for it.
2. To prevent the insured from
   receiving a double recovery from the
   wrongdoer and the insurer.
3. To prevent tortfeasors from being
   free from liabilities and is thus
   founded on considerations of public
   policy.

Question 8

RULES OF SUBROGATION

Answer 8

1. Applicable only to property insurance.
2. Insured reced Indemnity fro the insurer from the loss
3. There is Loss or injury arising from the risk insured againsted the covered by the loss

Question 9

SUBROGATION NOT APPLICABLE

Answer 9

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

Question 10

ELEMENTS OF AN
INSURANCE CONTRACT

Answer 10

1. The insured possesses an insurable
   interest susceptible of pecuniary
   estimation;
2. The insured is subject to a risk of loss
   through the destruction or
   impairment of that interest by the
   happening of designated perils;
3. The insurer assumes that risk of loss;
4. 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)
5. The insured makes a ratable
   contribution (premium) to a general
   insurance fund.

Question 11

PERFECTION OF AN INSURANCE
CONTRACT

Answer 11

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

Question 12

POLICY OF INSURANCE

Answer 12

The written instrument in which a
contract of insurance is set forth.

Question 13

CONTENTS OF INSURANCE

Answer 13

1. Parties
2. Amount of insurance, except in open
   or running policies;
3. Rate of premium;
4. Property or life insured;
5. Interest of the insured in the
   property if he is not the absolute
   owner;
6. Risk insured against; and
7. Duration of the insurance.

Question 14

REVERSE

Persons entitled to recover on the
policy

Answer 14

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

Question 15

KINDS OF POLICIES

Answer 15

1. OPEN POLICY
2. VALUED POLICY
3. RUNNING POLICY

Question 16

OPEN POLICY

Answer 16

Value of thing insured
is not agreed upon, but left to be
ascertained in case of loss.

The actual loss, as determined,
will represent the total indemnity
due the insured from the insurer
except only that the total indemnity
shall not exceed the face value of
the policy.

Question 17

REVERSE

Value of thing insured
is not agreed upon, but left to be
ascertained in case of loss.

The actual loss, as determined,
will represent the total indemnity
due the insured from the insurer
except only that the total indemnity
shall not exceed the face value of
the policy.

Answer 17

OPEN POLICY

Question 18

VALUED POLICY

Answer 18

definite valuation
of the property insured is agreed by both
parties, and written on the face of
policy. (Sec. 61)

 In the absence of fraud or
mistake, the agreed valuation will be
paid in case of total loss of the
property, unless the insurance is for
a lower amount.

Question 19

REVERSE

definite valuation
of the property insured is agreed by both
parties, and written on the face of
policy. (Sec. 61)

 In the absence of fraud or
mistake, the agreed valuation will be
paid in case of total loss of the
property, unless the insurance is for
a lower amount.

Answer 19

VALUED POLICY

Question 20

RUNNING POLICY

Answer 20

KINDS OF INSURANCE

contemplates
successive insurances and which provides
that the object of the policy may from
time to time be defined (Sec. 62)

Question 21

REVERSE

KINDS OF INSURANCE

contemplates
successive insurances and which provides
that the object of the policy may from
time to time be defined (Sec. 62)

Answer 21

RUNNING POLICY