Summary
Highlights
This video, part one of a two-part series, provides an overview of insurance law in the Philippines, focusing on its nature, characteristics, and various kinds. The governing law is the Insurance Code, specifically Republic Act No. 10607, which took effect in 2013. An insurance contract is defined as an agreement where an insurer, for a premium, indemnifies or pays an insured for loss, damage, or liability resulting from an unknown or contingent event (peril).
The two main parties are the insurer (a duly authorized corporation, partnership, or association) and the insured (anyone with the capacity to contract, insurable interest, and not a public enemy). A beneficiary, chosen by the insured to receive proceeds, is not a party unless they are the insured themselves. Certain persons, like those guilty of adultery, concubinage, or specific criminal offenses, or public officers and their relatives by reason of office, are disqualified from being beneficiaries. An irrevocable designation of a beneficiary grants them a vested right, preventing the insured from assigning the policy, taking cash surrender value, or changing the beneficiary without their consent. If a beneficiary causes the insured's death, they lose their rights, and proceeds go to other named persons or the deceased's estate.
Insurance covers loss, damage, or liability from unknown or contingent events, which can be future events (like fire or death) or past events unknown to both parties at the time of contract (like marine transport incidents). Insurance functions as a risk-spreading or distributing device, where individuals contribute premiums to a common fund managed by the insurer, which then pays out for covered losses. Property insurance is a contract of indemnity, meaning the insured can only recover actual losses to prevent profiting from the insurance. Life insurance, however, is not a contract of indemnity and is always a valued policy, as human life cannot be priced.
Insurance contracts are aleatory, executory, and conditional, as the insurer's obligation to pay depends on the insured event occurring. They are voluntary, commutative (reciprocal obligations of equal value), and "uberrima fides" (of utmost good faith), requiring disclosure of material facts. Insurance contracts are also personal, meaning they bind the specific parties and consider the insured's qualifications. They are almost always contracts of adhesion, meaning terms are prescribed by the insurer, and the insured can only accept or reject them. In cases of doubt, these contracts are interpreted strictly against the insurer and liberally in favor of the insured.
Insurance contracts can be classified into three general types: against loss or impairment of property interests, against loss of earning power due to various events, and against contingent liability. They are also categorized by object: life/health, property, and liability insurance. Life insurance covers human life and related aspects like health, with various types such as ordinary life, limited life/term, endowment policies, and group or industrial life insurance. Insurance can also be personal (life, disability, motor vehicle) or business (ensuring employees' lives or company properties).
Non-life insurance includes marine insurance (covering vessels, aircraft, cargo, and transportation infrastructure, including ocean marine, inland marine, and aircraft hull policies). Fire insurance covers loss by fire, lightning, windstorm, tornado, or earthquake, and only covers "hostile fire" (uncontrolled fire). Casualty insurance covers losses or liabilities from accidents not covered by other types, such as employer liability, motor vehicle liability, plate glass, and burglary insurance. Suretyship acts as insurance, where a surety guarantees a principal's obligation to an obligee, being directly and primarily liable. Microinsurance is designed for the poor, with low premiums and limited benefits. Compulsory Motor Vehicle Liability Insurance (CMVLI) provides protection for third parties and passengers against negligent motor vehicle operation. Variable contracts offer benefits that fluctuate based on the investment results of segregated portfolios, allowing for investment opportunities in the stock market.