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1

 

 

 

CONTRACT OF INSURANCE

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

2

DOING AN INSURANCE BUSINESS OR
TRANSACTING AN INSURANCE
BUSINESS

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

3

CHARACTERISTICS OF AN INSURANCE
CONTRACT

1. Consensual

2. Voluntary

 3. Aleatory

4. Unilateral

5. Conditional
6. Contract of indemnity
7. Personal

4

5 CARDINAL PRINCIPLES IN INSURANCE

1. Insurable Interest
2. Principle of Utmost Good Faith

3. Contract of Indemnity

4. Contract of Adhesion

5. Principle of Subrogation

5

Principle of Subrogation

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.

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.

Principle of Subrogation

7

PURPOSES OF SUBROGATION

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.

8

RULES OF SUBROGATION

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

9

SUBROGATION NOT APPLICABLE


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

10

ELEMENTS OF AN
INSURANCE CONTRACT

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.

11

PERFECTION OF AN INSURANCE
CONTRACT

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

12

POLICY OF INSURANCE

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

13

CONTENTS OF INSURANCE

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.

14
REVERSE

Persons entitled to recover on the
policy

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

15

KINDS OF POLICIES

1. OPEN POLICY

2. VALUED POLICY

3. RUNNING POLICY

16

OPEN POLICY

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.

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.

OPEN POLICY

18

VALUED POLICY

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.

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.

VALUED POLICY

20

RUNNING POLICY

KINDS OF INSURANCE

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

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)

RUNNING POLICY