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1. Give the order of priority of LAWS governing e. Executory contract after payment of
insurance. premium

a. Insurance code
b. New civil code
Definitions:
c. Special laws
d. Decisions of the SC a. ALEATORY CONTRACT. One of the parties or
e. General principles prevailing on the subject both reciprocally bind themselves to give or
in the United States particularly in to do something in consideration of what
California the other shall give or to do upon the
happening of an event which is uncertain at
an indeterminate time.
Note: The exact origin of insurance is unknown, b. CONDITIONAL CONTRACT. Insurance is
but some writers say that similar concept may conditional in the sense that the insurer is
be traced in ancient Greeks, romans, Chinese, not obliged to pay, unless the loss arises
Hebrews, and Christians for mutual benefit and from a specified peril.
assistance.
Note: In property, loss may or may not happen.
Modern insurance started with MARINE In life, death will definitely happen.
INSURANCE, and from there the law of
c. EXECUTORY UPON PAYMENT OF PREMIUM.
insurance has gradually taken form, or kind of
Executed on the part of the insured upon
risk seems to be covered.
payment of premiums, and wholly
executory on the part of the insurer.
d. PERSONAL CONTRACT. (self-explanatory)
2. Define Contract of Insurance. ex. A insured his house from fire. A sold the
house to B. Can be recover from the
An agreement whereby one undertakes for a insurance company? No. Because
consideration to indemnify another against Insurance contract is personal. The
loss, damage or liability arising from an insurance taken by one person will not
unknown or contingent event. apply to the interest of another person in
the same property insured. The assignment
Note: The requisites of a CONTRACT are: a) or conveyance of the property insured does
Consent; b) Objects; c) Consideration not transfer the insurance, and instead the
policy is suspended.
Note: a contract of insurance must be assented e. CONTRACT OF INDEMNITY
to by both parties. So long as an application
has not been accepted, it is merely an offer or 5. How do we know if a contract is an insurance
proposal to make a contract. There must be contract?
meeting of minds of the parties, and the
premium on the policy must be paid before the The description of the agreement controls, NOT
contract can be valid and binding. The insurer’s the designation.
acceptance is manifested when it issues a
corresponding policy to the applicant. We need to look on the nature of the promise,
the act required, exact nature of the agreement
in light of the occurrence, contingency, or
3. What are the elements of CONTRACT OF circumstance under which the performance
INSURANCE? becomes requisite.

a. Payment of premium
b. Assumption of risk
6. Define premium.
c. Insurable interest
d. Risk of loss
It is the consideration paid an insurer for
e. Scheme to distribute losses
undertaking to indemnify the insured against a
specified peril.

4. Give the characteristics of an Insurance Contract. Note: Payment of premium is a condition


precedent to, and essential for the efficacy of
a. Contract of indemnity the contract of insurance. Unless the premium
b. Aleatory is paid, the policy shall not be valid and binding
c. Personal contract notwithstanding any agreement to the
d. It is a conditional contract contrary.
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GR: the provisions must be construed in their


Exceptions? plain, ordinary, and popular sense.
Except: If the policy is ambiguous, uncertain or
a. In case of life or industrial life insurance, when doubtful- should be interpreted strictly and
the grace periods apply most strongly against the insurer, and liberally
b. When the insurer makes a written in favor of the insured.
acknowledgment of the receipt premium
c. The parties have agreed to the payment of the STRICTISSIMI JURIS or strictest terms against
premium in installments and partial payment the insurer.
has been made at the time of the loss
d. Where a credit term has been agreed upon Note: courts cannot alter the terms of the
e. Where the parties are barred by estoppel contract when it is clear and unambiguous.

7. When can we consider a person to have an insurable 12. Define beneficiary and assured.
interest on the subject matter?
Beneficiary
A person is deemed to have an insurable - A person who is entitled to the benefit of a
interest in the subject matter insured, when he contract, that is, the one whom the insurance is
has a relation, connection, or concern in it, that payable or who is entitled to the proceeds of
he will derive pecuniary benefit or advantage the policy on the occurrence of the event
for its preservation. And will suffer pecuniary designated.
loss from its destruction or injury by the
happening of the event insured against. Assured
- The person whose application policy was
8. What is a suretyship? issued, who is the beneficiary and who pays the
premiums.
An agreement whereby a surety guarantees the
performance by the principal or obligor of an
obligation or undertaking in favor of an obligee.
13. PROVIDE THE RULES: SEC. 8

In a nutshell, it is a contract whereby a person


a. Insurance taken by mortgagor for the
binds himself solidarily with the principal
benefit of mortgagee.
debtor for the fulfillment of an obligation.
Upon the recovery by the mortgagee, the
9. When is surety deemed to be an insurance?
mortgagor is released from his indebtedness
(theres still more….????)
A surety shall be deemed to be an insurance
b. Insurance taken by mortgagee concerning
contract, only if made by a surety who or
his interest.
which, as such, is doing an insurance business.
The mortgagee will be entitled to the
10. Distinguish INSURANCE from SURETYHIP.
extent of his interest.
(there’s still more… ???)

a. Insurance is a contract of indemnity,


whereas suretyship is a credit
accommodation
b. Insurance is a principal contract, while
suretyship is only an accessory contract. 14. What is a Mortgage Redemption Insurance?
c. In Insurance, there are 2 parties: the
insurer and insured; while in suretyship, A life insurance taken pursuant to a group
there are 3 parties: the surety, obligor, and mortgage redemption scheme by the lender of
obligee. money on the life of a mortgagor who, to
d. In insurance, there is no need for the secure the loan, mortgages the house
acceptance by any third party for it to be constructed from the use of the proceeds of the
valid, while suretyship requires acceptance loan, to the extent of the mortgage
of obligee to be valid. indebtedness such that if the mortgagor dies,
the proceeds of his life insurance will be used
to pay for his indebtedness to the lender
assured and the deceased’s heirs will thereby
11. What is the INTERPRETATION of the Insurance
be relieved from paying the
contract?
unpaid balance of the loan.
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Note: Group Life – Essentially a single


insurance contract that provides
coverage for many individuals.

15. What is a Union Mortgage Clause?

Subsequent acts of the mortgagor cannot affect


the rights of the assignee

16. What is an insurable risk?

One that may cause damage to the insurer or


one that may create liability against him.

Note: an insurer cannot exempt himself liability


by claiming that the cause of loss or damage to
the insured is a fortuitous event, where such
event is one included in the policy.

17. May a married woman take an insurance contract


without the consent of her husband?
SEC. 3

18. May an insurer be liable for the past event?

SEC. 3

19. What is the effect if the orginal owner of a policy


taken for the life of a minor should predecease the
latter?

All rights, title, and interest in the policy shall


automatically vest in the minor, unless
otherwise provided in the policy.

Thus, even if the original owner of the policy


designated himself as beneficiary in a policy
insuring the life of a minor, the death of the
original policy owner shall automatically vest
title to the minor.

20. Can a jueteng operator obtained an insurance policy


covering his possible losses?

No. gambling cannot be covered by insurance.

21. Why is it necessary for a person to have an insurable


interest over the subject matter of the insurance?

It is because insurance is a contract of


indemnity. If the insured has no insurable
interest on the subject matter, he will not stand
to suffer any loss or damage by happening of
the event insured against. Hence, he will profit.
This is contrary t public policy, as they have the
tendency to create a desire for the event
insured against to happen.

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