DEFINITIONS
1. 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 event.
2. Doing an insurance business shall include:
a. making or proposing to make, as insurer, an insurance contract;
b. 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;
c. doing any kind of business, including a reinsurance business, specifically recognized as constituting the doing of an insurance business;
d. doing or proposing to do any business in substance equivalent to any of the foregoing in an manner designed to evade the provisions of this Code.
WHAT MAY BE INSURED
SECTION 3. Any contingent or unknown event, past or future, which may damnify a person having an insurable interest, or create a liability against him, may be insured against, subject.
Any minor of the age of 18 or more,may notwithstanding such minority, contract for life, health, and accident insurance with any insurance company duly authorized, provided the insurance is taken on his own life and the beneficiary appointed is the minor's estate or the minor's father, mother, husband, wife, child, brother, or sister.
PARTIES TO THE CONTRACT
SECTION 6. Every person, partnership, association or corporation duly authorized to transact insurance business may be an insurer.
SECTION 7. Anyone except a public enemy may be insured.
INSURABLE INTEREST
SECTION 10. Every person has an insurable interest in the life and health:
a. of himself, spouse, and 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;
d. of any person upon whose life any estate or interest vested in him depends.
SECTION 19. An interest in property insured must exist when the insurance takes effect and when the loss occurs, but not exist in the meantime; and the interest in the life or health of a person insured must exist when the insurance takes effect but need not exist thereafter or when the loss occurs.
SECTION 20. Except in the cases specified in the next four sections, and in cases of life, accident, and health insurance, a change of interest in any part of a thing insured unaccompanied by a corresponding change in interest in the insurance, suspends the insurance to an equivalent extent, until the interest in the thing and the interest in the insurance are vested in the same person.
SECTION 23. A change on interest, by will o succession, on the death of the insured, does not avoid an insurance; and his interest in the insurance passes to the person taking his interest in the thing insured.
CONCEALMENT
SECTION 26. A neglect to communicate that which a party knows and ought to communicate, is called a concealment.
SECTION 27. A concealment whether intentional or unintentional entitles the injured party to rescind a contract of insurance.
SECTION 28. Each party to a contract of insurance must communicate to each other, in good faith, all facts within his knowledge which are material to the contract as to which he makes no warranty, and which the other has not the means of ascertaining.
SECTION 29. An intentional and fraudulent omission, on the part of the insured, to communicate information of matters proving or tending to prove the falsity of a warranty, entitles the insurer to rescind.
SECTION 30. 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.
REPRESENTATION
SECTION 45. 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. The right to rescind granted by this Code to the insurer is waived by the acceptance of premium payments despite knowledge of the ground for rescission.
SECTION 48. 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 years from date of issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or misrepresentation of the insured or his agent.
THE POLICY
SECTION 52. Cover notes may be issued to bind insurance temporarily pending the issuance of the policy. Within 60 days after the issue of the 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 therefore.
Cover notes may be extended or renewed beyond such 60 days with the written approval of the Commissioner if he determines that such extension is not contrary to ans is not for the purpose of violating any provisions of the 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.
SECTION 60. An open policy is one in which the value of the thing insured is not agreed upon, but is left to be ascertained in case of loss.
SECTION 61. A valued policy is one which expresses on its face an agreement that the thing insured shall be valued at a specific sum.
SECTION 62. a running policy is one which contemplates successive insurances and which provides that the object of the policy may be from time to time defines, especially as to the subjects of insurance, by additional statements or indorsements.
SECTION 63. A condition, stipulation, or agreement in any policy of insurance, limiting the time for commencing an action thereunder to a period of less than one year from time when the cause of action accrues, is void.
SECTION 64. 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. non-payment of premium;
b. conviction of a crime arising our 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; or
f. a determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code.
PREMIUMS
SECTION 77. An insurer is entitled to payment of the premium as soon as the thing insured is exposed to the peril insured against. Notwithstanding any agreement to the contrary, no policy or contract of insurance issued by an insurance company is valid and binding unless and until the premium thereof has been paid, except in the case of a life or an industrial life policy whenever the grace period provision applies.
SECTION 82. In case of an over-insurance by several insurers, the insured is entitled to a ratable return on the premium, proportioned to the amount by which the aggregate sum insured in all the policies exceeds the insurable value of the thing at risk.
LOSS
SECTION 83. An agreement not to transfer the claim of the insured against the insurer after the loss has happened, is void if made before the loss except as otherwise provided in the case of life insurance.
NOTICE OF LOSS
SECTION 88. In case of loss upon an insurance against fire, an insurer is exonerated if notice thereof be not given to him by an insured, or some person entitled to the benefit of the insurance, without unnecessary delay.
DOUBLE INSURANCE
SECTION 93. A double insurance exists where the same person is insured by several insurers separately in respect to the same subject interest.
REINSURANCE
SECTION 95. a contract of reinsurance is one by which an insurer procures a third person to insure him against loss or liability by reason of such original insurance.
SECTION 98. The original insured has no interest in a contract of reinsurance.
MARINE INSURANCE
CONCEALMENT
SECTION 108. In marine insurance, information of the belief or expectation of a third person, in reference to a material fact, is material.
SECTION 110. A concealment in a marine insurance, in respect to any of the following matters, does not vitiate the entire contract, but merely exonerates the insurer from a loss resulting from the risk concealed:
a. the national character of the insured;
b. the liability of the thing insured to capture and detention;
c. the liability to seizure from breach of foreign laws of trade;
d. the want of necessary documents; and
e. the use of false and simulated papers.
IMPLIED WARRANTIES
SECTION 114. A ship is seaworthy when reasonably fit to perform the service and to encounter the ordinary perils of the voyage contemplated by the parties to the policy.
THE VOYAGE AND DEVIATION
SECTION 123. Deviation is a departure from the course of the voyage insured, mentioned in the last two sections, or an unreasonable delay in pursuing the voyage.
SECTION 124. A deviation is proper:
a. when caused by circumstances over which neither the master nor the owner of the ship has any control;
b. when necessary to comply with a warranty, or to avoid a peril, whether or not the peril is insured against;
c. when made in good faith, and upon reasonable grounds of belief in its necessity to avoid a peril; or
d. when made in good faith, for the purpose of saving life or relieving another vessel in distress.
SECTION 125. Every deviation not specified in the last section is improper.
LOSS
SECTION 130. An actual total loss is caused by:
a. a total destruction of the thing insured;
b. the irretrievable loss of the thing by sinking, or by being broken up;
c. any damage to the thing which renders it valueless to the owner for the purpose for which he held it; or
d. any other event which effectively deprives the owner of the possession at the port of destination of the thing insured.
SECTION 131. A constructive total loss is one which gives to a person insured a right to abandon under Section 139.
SECTION 132. An actual loss may be presumed from the continued absence of a ship without being heard of. The length of time which is sufficient to raise this presumption depends on the circumstances of the case.
ABANDONMENT
SECTION 138. Abandonment, in marine insurance, is the act of the insured by which, after a constructive total loss, he declared the relinquishment to the insurer of his interest in the thing insured.
SECTION 143. Abandonment is made by giving notice thereof to the insurer, which may be done orally or in writing; provided that if the notice be done orally, a written notice of such abandonment shall be submitted within 7 days from such oral notice.
SECTION 155. If a person insured omits to abandon, he may nevertheless recover his actual loss.
FIRE INSURANCE
SECTION 167. As used in this Code, the term Fire Insurance shall include 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.
SECTION 168. An alteration in the use or condition of a thing insured from that to which it is limited by the policy made without the consent of the insurer, by means within the control of the insured, and increasing the risks, entitles an insurer to rescind a contract of fire insurance.
SECTION 169. an alteration in the use or condition of a thing insured from that to which it is limited by the policy, which does not increase the risk, does not affect a contract of fire insurance.
SECTION 170. A contract of fire insurance is not affected by any act of the insured subsequent to the execution of the policy, which does not violate its provisions, oeven though it increases the risk ans is the cause of the loss.
SECTION 173. No policy of fire insurance shall be pledged, hypothecated, or transferred to any person, firm, or company who acts as agent for or otherwise represents the issuing company and any such pledge, hypothecation, or transfer hereafter made shall be void and of no effect as it may affect other creditors of the insured.
CASUALTY INSURANCE
SECTION 174. 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 glassinsurance, burglary and theft insurance, personal accident and health insurance as written by non-life insurance companies, and other substantially similar kinds of insurance.
SURETYSHIP
SECTION 175. 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 an under the provisions of Act 536 as amended by Act 2206.
SECTION 176. The liability of the surety or surities shall be joint and several with the obligor and shall be limited to the amount of the bond.
LIFE INSURANCE
SECTION 179. Life insurance is insurance on human lives and insurance appertaining thereto or connected therewith.
SECTION 180. an insurance upon life may be made payable on the death of the person, or on his surviving a specified period, or otherwise contingently on the continuance or cessation of life.
Every contract or pledge for the payment of endowments or annuities shall be considered a life insurance contract for the purpose of this Code.
In the absence of judicial guardian, the father, or in the latter's absence or incanapcity, the mother, of any minor, who is an insured or a beneficiary uncer a contract of life, health, or accident insurance, may exercise, in behalf of said minor, any right under the policy, without necessity of court authority or the giving of bond where the interest of the minor in the particular act involved does not exceed 20,000 pesos. such right may include, but shall not be limited to obtaining a policy loan, surrendering the policy, receiving the proceeds of the policy, and giving the minor's consent to any transaction on the policy.
SECTION 180-A. The insurer in a life insurance contract shall be liable in case of suicides only when it is commited after the policy has been in force for a period of 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 sate of insanity shall be compensable regardless of the date of commission.
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