INSURANCE A. DEFINITION Sec. 2.

Whenever used in this Code, the following terms shall have the respective meanings hereinafter set forth or indicated, unless the context otherwise requires: (1) A "contract of insurance" is an agreement whereb one underta!es for a consideration to indemnif another against loss, damage or liabilit arising from an un!nown or contingent event" A contract of suret ship shall be deemed to be an insurance contract, within the meaning of this Code, onl if made b a suret who or which, as such, is doing an insurance business as hereinafter provided" Sec. 3. An contingent or un!nown event, whether past or future, which ma damnif a person having an insurable interest, or create a liabilit against him, ma be insured against, sub#ect to the provisions of this chapter" Vance: $contract of insurance is an agreement b which one part , for a consideration, promises to pa mone or its equivalent, or to do some act valuable to the insured or his nominee, upon the happening of a loss, damage, liabilit or disabilit arising from an un!nown or contingent event"% 1" &n!nown v Contingent 'vent ( An un!nown event is something which is certain to happen but the time of its happening is not !nown, while a contingent event is something which is not certain to ta!e place) *" +nsurance v Assurance ( latter term has been referred to as relating to an event which must happen, li!e death, while the former is supposed to relate to all other events which are contingencies because the ma or ma not occur) -oss, damage, liabilit

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0istinguishing 'lements a" +nsurable interest ( interest in life or thing capable of pecuniar estimation 1is! of loss or damage ( insured is sub#ected to ris! through the destruction or impairment of that interest b the happening of designated peril 0esignated peril as cause (ris! coverage/qualifiers) ( cause of damage or loss must be caused b the designated perils stated in the contract

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B. ELEMENTS 1" Consent, .b#ect and Cause a" b" Consent ( insurer and insured .b#ect ( transfer or distribute ris! of loss, damage, liabilit or disabilit from insured to insurer Cause/Consideration ( premiums +nsurable +nterest ( insured possesses an interest of some !ind susceptible of pecuniar estimation

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Consideration: premium ( a insurer underta!es to assume the ris! of loss for a consideration(premium) 2 premium is a ratable contribution to a general insurance fund e" 1is! distributing scheme (because of definition of insurance business) ( not ris!2 transferring scheme, the assumption of ris! is a part of the general schemes to distribute actual losses among a large group of persons bearing similar ris!s ," 0istinguished from ( a" Contracts of Contingent 3ersonal 4ervices ( purpose: render personal services) e"g" law firm which enters into contracts with clients whereb in consideration of periodical pa ment, it promises to represent such clients in all suit for or against them) b" Contracts with contingent +ncidental 5enefits ( contain incidental provisions b which under certain contingencies an added benefit ma accrue to one of the parties) so long as the benefit in question is not the main reason, or one of the main reasons, for the other part 6s entering the contract it will not ma!e the contract one of insurance) if found to be a contract of insurance, it ma void because insurance is ultra vires of the corporation ma!ing the contract) c" 4uret ship Contracts ( the suret guarantees the performance b another part of an obligation in favour of a third part ) C. Nature and Characteri tic a" Consensual and voluntar ( meeting of mind of parties b" Aleator ( liabilit of insurer depends upon some event w/c is uncertain, or w/c though certain, is to occur at some future undetermined time c" 'xecutor and conditional ( insurer has no obligation to pa until and unless the peril insured against ta!es place

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Conditional ( sub#ect to conditions the principa one of which is the happening of the event insured against +ndemnit : for non2life ( ou can6t recover more than the value of our loss : for life ( investment ( measure of economic securit for the insured during his lifetime and for the beneficiaries during his death 3ersonal and uberrimae fides 3ersonal ( each part has in view character, credit and conduct of other &berrimae fides ( highest degree of good faith en#oined b law Contract of adhesion ( $ta!e it or leave it% 4 nallagmatic ( 1ights and obligations of the parties correlate and mutuall correspond" +nsurer assumes the ris! of loss w/c insured might suffer in consideration of pa ments under a ris!2 distributing scheme" 3ooling of resources, legal reserve"

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D. C!a i"icati#n 1" Classification According to 7 pe of -oss a" In urance a$ain t !# #r i%&air%ent #" &r#&ert' ri$ht , which ma be either in existence or merel expected) that is, present rights or profits et to accrue: -oss or impairment ma be due to: marine perils, fire, earthqua!e, explosion, etc" or due to the non2performance of contracts which the insured is a part (guarant insurance)) or insolvenc of debtors(credit insurance)) or defalcation of emplo ees and agents(fidelit insurance)) or theft and burglar (theft insurance policies)) or defective titles or interest in propert (title insurance)) b" In urance a$ain t !# #" earnin$ &#(er due to death (life insurance), accidental in#ur , ill2health, sic!ness, old age or other disabilit , or even unemplo ment) and c" In urance a$ain t c#ntin$ent !ia)i!it' t# %a*e &a'%ent t# an#ther + the insured is protected against his loss with regard to claims for damages) thus we have reinsurance, wor!men6s compensation insurance and motor vehicle liabilit insurance) all designed to reimburse the insured for an liabilit he might incur to a third part ) d" M#derni,ed c!a i"icati#n: includes four more categories: marine, propert , personal and liabilit ) -r#&ert' in urance + designed to indemnif the insured for loss to his propert interests) -er #na! in urance + intended to protect individual interests) In urance c#ntract : divided to two large classes: propert and personal insurance)

Classification b +nterests 3rotected a" 8irst2part vs" third2part insurance: 1st part ( it is the insured (or other insureds such as famil members) who suffers the loss or damage) he is the one paid b the insurance compan ) ,rd part ( insurance is for liabilit , pa ment is made to ,rd person for the in#ur caused b the insured) casualt insurance a" 3ropert insurance ( 1st part insurance) damage to propert is an immediate, direct diminution of the insured6s assets) b" -iabilit insurance ( sometimes described as ,rd part insurance because the interests protected b the contract are ultimatel those of third parties in#ured b the insured6s conduct) the insured6s loss, however, is indirect in the sense the third part suffers the $direct% loss) c" All insurance except liabilit can be fairl thought of as 1st part insurance) d" -ife insurance ( insured ordinaril designates a beneficiar to receive the proceeds of the polic , but does not mean it6s a ,rd part insurance) loss is suffered b insured (his life)) unless the owner of the polic chooses to create 9rd part rights in a beneficiar , insured6s estate receives the proceeds) e" :ealth insurance ( 1st part insurance) health insurer pa s the provider of health care services directl , rather than pa ing the proceeds to the insured) but the loss (illness and expenses) suffered directl b insured) f" 1st part vs" ,rd part insurance distinction assists in understanding the concept of $no2fault% insurance) $no2fault insurance% is essentiall the substitution of first2part insurance for tort liabilit ) the victim of a tort, instead of going after tortfeasor and his insurer, loo!s to his own insurer for first2part protection) $no2fault% connotes that the victim recovers his loss from his own insurer, without regard to the fault of the third part or his own contributor fault) b" All2ris! vs" specified ris! All2ris! ( reimburses the insured for damage to the sub#ect matter of the polic from all causes except those specificall are automaticall included) 4pecified2ris! ( covers damage to the sub#ect matter of the polic onl if it results from specificall identified causes listed in the polic )

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5urden of proof ( under a specified2ris! polic , the burden is ordinaril placed on the insured to initiall prove that the loss falls within the polic 6s provisions on coverage) however, under an all2ris! polic , once the insured establishes that loss occurred thru some event other than an inherent defect or normal depreciation, the burden is ordinaril placed on the insurer) Classifications under the Code: a" -ife +nsurance Contracts 1" +ndividual life) pure endowment (1;<21=,) **;) Sec. ./0" -ife insurance is that pa able upon 1") 0eath of insured) or *") :is surviving a specified period" Contract for pa ment of endowments or annuities considered a life insurance contract under +nsurance Code" +n the absence of a #udicial guardian, the following exercise rights of minor insureds or beneficiaries under life insurance policies (without court authorit or bond): 1") 8ather *") +n latter6s absence or incapacit , the >other 3rovided minor6s interest does not exceed 3*?,??? Sec. ./. A life insurance polic ma pass b transfer, will or succession whether transferee has insurable interest or not Sec. ./2 @otice to insurer of transfer not necessar unless stipulated Sec. ./3 >easure of indemnit under life insurance polic is face amount of Li"e in urance ( an insurance pa able on the death of a person, or on his surviving a specified period, or otherwise contingentl on the continuance or cessation of life" +t is a contract to ma!e specific pa ments upon the death of a person whose life is insured" -ife insurance ma be made pa able: 1") .n the death of the person) *") .n his surviving a specified period) or ,") .therwise contingentl on the continuation or cessation of life @ature: 1" -iabilit absolutel certain *" Amount of insurance generall without limit ," -ife polic is a valued polic 9" 0irect pecuniar loss not required 3arties involved in a polic of life insurance: 1") +nsurer) *") .wner of the polic ( who has the power to name or change the beneficiar , to assign the polic , to cash it in for its surrender value, or to

use it as collateral in obtaining a loan, and who has the obligation of pa ing the premiums) ,") 3erson whose life is sub#ect of the polic , also !nown as the cestui que vie ) 9") 7he beneficiar to whom the proceeds are paid" @ote that one person might occup all , positions b naming his estate as beneficiar ) but then again, each other , positions ma also be held b separate parties" 0ifferent t pes of life insurance policies: 1") .rdinar life insurance polic ) *") -imited pa ment life polic ) ,") 7erm insurance polic ) 9") 'ndowment polic ) and A") -ife annuit " Ordinar' !i"e &#!ic': .ne under the terms of which the insured is required to pa a certain fixed premium annuall or at more frequent intervals throughout the life and the beneficiar is entitled to receive pa ment under the polic onl after the death of the insured" 7hus, the ultimate pa ment of the insurance proceeds is as certain as death itself" +n this t pe of polic , do ou get pa ment onl when death occursB @ot reall because this t pe of polic has an alternative form of pa ment which is called the cash surrender value" 7his feature means that in case the owner cancels the polic or the polic lapses through non2pa ment of premium, the insurer returns a certain amount which is found in a table of rates in the polic itself" 7his amount is called the cash surrender value" Li%ited -a'%ent Li"e &#!ic': .ne under the terms of which the premiums are pa able onl during a limited period of ears" When the specified number of premium pa ments has been made, the insurance is full paid for" +t is li!e ordinar life policies in that it is pa able onl at the death of the insured" +f the insured should die within the specified period, the beneficiar is entitled to all the proceeds of the polic without an liabilit for the unpaid premiums" 5ecause of the limited number of pa ments to be made b the insured, the premiums are proportionatel higher" Ter% In urance &#!ic': .ne which provides coverage onl if the insured dies during a limited period" +t is an insurance for a fixed or specific term" +f the insured dies within the period specified, the polic is paid to the beneficiar " +f he survives the period, the contract terminates" 7he premium is levied during the specified terms and increases with each renewal terms" 7he premium is lower than in the case of ordinar life insurance because of the possibilit that the insurer ma not be obliged to pa an thing in the proceeds whatsoever if the insured survives the

term" >oreover, there is generall no provision for pa ment of a cash surrender value upon surrender or lapse of the polic " 7he insured ma however be given the option to convert the polic to ordinar or endowment life" End#(%ent &#!ic': .ne under the terms of which the insurer binds himself to pa a fixed sum to the insured if he survives for a specified period, or if he dies within such period, to some other person indicated" 7he premium is higher because the cash values of the polic grow more rapidl " 7his !ind of polic differs from the limited pa ment life polic in that in the case of the latter, the polic is paid onl upon the death of the insured" :ere, the insured stands a chance of being paid the proceeds of the polic while still alive" 7he proceeds on maturit can be paid either in lump sum or as an annuit " 7his t pe of polic is thus useful in retirement planning" Li"e annuit': A contract whereb the insurer binds himself to pa an annual pension or income during the life of one or more determinate persons in consideration of a capital consisting of mone or other propert , whose ownership is transferred to him at once with the burden of the income" Although essentiall , annuities differ from ordinar life policies, the law considers them as life insurance contracts" 7he law governing annuities is the Civil Code" *" Croup life (A?, last par") **=)

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+ndustrial life (**<2*,1)

Sec 221 Dthat form of life insurance under which the &re%iu% are &a'a)!e either %#nth!' #r #"tener, if the face amount of insurance provided in an polic is n#t %#re than "i2e hundred ti%e that #" the current tatut#r' %ini%u% dai!' (a$e in the Cit' #" Mani!a3 and if the words $industrial polic % are printed upon the polic as part of the descriptive matterD EitF shall not lapse for non2 pa ment of premium if such non2pa ment was due to the failure of the compan to send its representative or agent to the insured at the residence of the insured or at some other place indicated b him for the purpose of collecting such premium: 3rovided, 7hat the provisions of this paragraph shall not appl when the premium on the polic remains unpaid for a period of three months or twelve wee!s after the grace period has expired Indu tria! !i"e in urance ( that form of life insurance under which the premiums are pa able either monthl or oftener, if the face amount of insurance provided in an polic is not more than five hundred times that of the current statutor minimum dail wage in the Cit of >anila, and if the words $industrial polic % are printed upon the polic as part of the descriptive matter) 2 'ssentiall whole life, term or endowment insurance) 2 Written in small amounts 2 4old thru individual solicitation) without medical examination, the insurer rel ing upon statements in the application b the applicant and the agent) 2 Adopted to the mar!et" b" @on2-ife +nsurance Contracts 1" >arine ( <<21GG) Tran &#rtati#n in urance ( concerned with the perils of propert in (or incidental to) transit as opposed to the perils at a generall fixed location) does not include normal motor vehicle insurance which is treated separatel b law" Ma4#r di2i i#n :

4ec" A?" 8ormal requirements of a polic : 1") +n printed form w/c ma contain blan! spaces) and *") An word, phrase, clause, mar!, sign, s mbol, signature, number or word necessar to complete the contract of insurance shall be written in the blan! spaces provided therein" 8ormal requirements of a rider, clause, warrant , endorsement as part of the contract: 1") 7he descriptive title or name of the rider w/c is pasted or attached to the polic must be mentioned and written on the blan! spaces provided in the polic ) and *") &nless applied for b the insured or owner, said insured or owner must countersign the rider" Characteristics: a" Croup selection of ris!s) issued without medical examination or other evidence of individual insurabilit ) b" Coverage of a number of persons under a single contract) persons insured not actuall parties to the contract, since legall , the contract is between the insurer and the group polic holder, most commonl an emplo er) c" -ow2cost mass protection) d" 3remiums are sub#ect to experience rating

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.cean marine insurance ( insurance of sea perils) old law ( marine insurance: insurance against ris! connected with navigation, to which a ship, cargo, freightage, profits or other insurable interest in movable propert , ma be exposed during a certain vo age or a fixed period of time) +nland marine insurance ( covers primaril th eland or over the land transportation perils of propert shipped b railroads, motor truc!s, airplanes and other means of transportation) also covers ris!s of la!e, river, or other inland waterwa transportation and other waterborne perils outside of those ris!s that fall definitel within the ocean marine categor ) 8ire ( 1G;21;,) Fire in urance + contract of indemnit b which the insurer, for a stipulated premium, agrees to indemnif the insured against loss, or damage to, a propert caused b hostile fire) 2 includes insurance in the so2called $allied lines% that protect against loss b lightning, windstorm, etc" but onl when such ris!s are covered b extension to fire insurance policies or under separate policies sub#ect to the pa ment of additional premiums) 2 coverage ma be attached b endorsements 2 nature: contract of indemnit ) indemnit is its sole purpose and an contract that contemplates a possible gain to the insured b the happening of the event upon which the liabilit becomes fixed is contrar to its proper nature and is not allowed) C#nce&t #" Fire + spontaneous combustion is usuall a rapid oxidation) fire is oxidation which is so rapid as to produce a flame or a glow) alwa s caused b combustion but combustion does not alwa s cause fire) Hspontaneous6 ( internal development without the action of an external agent) 2 there can be no fire unless ignition ta!es place) 2 friendl fire ( so long as a fire burns in a place where it was intended to burn and ought to be, it is to be merel regarded as merel an agenc for the accomplishment of some purpose) 2 hostile fire ( when it occurs outside the usual confines or begins as a friendl fire and becomes hostile b escaping from the place where it ought to be to some place where it ought not to be)

Sec 11: all !inds of propert and interests therein in connection with an and all ris!s of navigation, transit or transportation, preparation for shipping, while awaiting shipment, or during dela s, storage, transhipment, or reshipment" 2persons or propert in connection with or appertaining to marine, inland marine, transit or transportation insurance, including liabilit for loss of or damage 2bridges, tunnels and other instrumentalities of transportation and communication, piers, wharves, doc!s and slips, and other aids to navigation and transportation, including dr doc!s and marine railwa s, dams and appurtenant facilities for the control of the waterwa s" 2legal liabilit of the insured for loss, damage, or expense incident to ownership, operation, chartering, maintenance, use, repair, or construction of an vessel, craft or instrumentalit in ," Casualt (1;9) Sec .56 Casualt insurance is insurance covering loss or liabilit arising from accident or mishap, excluding certain t pes of loss which b law or custom are considered as falling exclusivel within the scope of other t pes of insurance such as fire or marine" +t includes, but is not limited to, emplo er6s liabilit insurance, motor vehicle liabilit insurance, plate glass insurance, burglar and theft insurance, personal accident and health insurance as written b non2life insurance companies, and other substantiall similar !inds of(insurance" Casualt Haccident6) violent mishap proceeding from an un!nown or unexpected cause) casualt insurance might be presumed to include an loss or damage when an accident is the cause of the loss) 9" Contracts of 4uret ship (1;A21;<)

Sec .57 A contract of suret ship is an agreement whereb a part called the suret guarantees the performance b another part called the principal or obligor of an obligation or underta!ing in favor of a third part called the obligee" +t includes official recogniIances, stipulations, bonds or underta!ings issued b an compan b virtue of and under the provisions of Act @o A,G as amended b Act @o **?G

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Are 31'2@''0 3-A@4 Contracts of +nsurance)B 4ec" ,"< 1A =;<< @o express stipulation that pre2need is insurance +t is placed under insurance commission" 0oes it ma!e it an establishment doing insuranceB +nsurance based on phrase $mobiliIation of savings% in the declaration of polic RA 1/21 + -re8Need C#de Sec 6 9): $pre2need plans% are contracts, agreements, deeds, or plans for the benefit of the planholders which provide for the performance of future services, pa ment of monetar considerations or deliver of other benefits at the time of actual need or agreed maturit date, as specified therein, in exchange for cash or installment amounts with or without interest or insurance coverageD 9c: $pre2need compan % refers to an corporation registered with the Commission and authoriIed/licensed to sell or offer to sell pre2need plansD Sec 7 All pre2need companies, as defined under this act, shall be under the primar and exclusive supervision and regulation of the +nsurance CommissionD Sec .0 @o person shall operate as a pre2 need compan or engage in the business of a pre2need compan unless licensed b the