What are PREMIUMS

These are the amounts the insured has promised to pay the insurer to keep the policy active.
What is premium?
It is the amount agreed upon to be paid by the insured to the insurer for the latter’s assumption of the risk
insured against.
>Premiums are determined by the insurer.
Sa umpisa pa lang yan sasabihin na ni insurance representative, “Sir,premium for this amount of insurance
coverage is so much.”

Pag property insurance yan, sabi ko kanina, yung premium nay un is only good for one year. Basta pag property
insurance, coverage is ALWAYS ONE YEAR.
For Life Insurance, for as long as you keep on paying the premiums, you remain insured.

How is it computed in Property Insurance

✓ As a general rule, they are computed on an annual basis and fully paid in advance.

How are premiums paid: CASH ON DELIVERY (COD) of policy. In the policy, there is a printed acknowledgement of
premium payment. Policies thus serve as receipts as well.

When should premiums be paid?

Rule No. 1 –Premiums should be paid upon DELIVERY of the policy. Kaya sabi CASH DELIVERY. Whether it
be property or life insurance, premiums should be paid upon delivery policy.

May premiums be paid on credit and in the meantime, be insured already?- YES.
These days, premiums may also be paid by credit card which is as good as cash. According to the SC, it is not
prohibited by law. THUS, when the risk happens when the premium is not yet paid, the insurer is obliged to pay as
long as the premium is paid within the credit term. The insured must thus pay the premium first before he files his
claim.

Ganito, property insurance muna ito, basta yung sinabi kong, “Premiums should be paid upon delivery of the
policy”, that’s applicable to both life and non-life insurance. Ngayon sa property insurance, sabi ko sa inyo the
coverage is always for a year, kaya taon-taon, dinideliver ang policy.

Yung mga insurers para makatipid sa papel, hindi na nagpaparint ng bagong policy, nagpapaprint na lamang ng
RENEWAL CERTIFICATE –referring to the policy that was earlier issued.

A Renewal Certificate –para bang sinasabi na yang policy na yan was renewed for this period

Kaya lang sa life insurance, the moment one policy is issued, that’s valid for as long as the insured will keep
paying the premiums. Premiums not be paid –we have rules on LAPSING OF POLICY.

Illustration of Premiums payable in Credit

Yung property insurance, taon-taon yan, taon-taon ka magbabayad ng premiums. If you had been paying for
some time baka gusto mong maglambing na lang sa insurer. Sabihin mo sa insurer, “Pwede ba yung premiums,
imbes na February 1, pwede bang hanggang February 28. And as you have been a client for some time, sabihin
ng insurer, “O sige, we will grant you credit until Feb 28, 2019.” –In writing yan.
So binigay na ang policy sayo, nakalagay naman dun –“Premiums shall be payable on Feb 28, 2019.” Yung
bahay mong pinainsured nasunog. Hindi ka pa nakakabayad ng premium.

Q: May you recover indemnity from the insurer?

Ang pagsagot dapat ganito:
A: For as long as, the premiums would be paid within the credit term, the insurer should be obliged to
pay the indemnity.

Kaya kung ikaw ang nakainsured, nasunugan ka na, wag ka munang mag file ng claim. Siguruhin mo muna na
nabayaran mo yung premium. Kasi baka malibang ka, sabihin ng insurer, ay boss, kulang pa yung pera, kulang
pa yung requirement, pakigawa ito. –Naubos yung oras mo to comply with the requirement, hanggang
lumampas yung Feb 28, hindi ka na nakabayad, then the insurer will say –CLAIM DENIED, reson: Premium
was not paid.

So the rule again is:

If premiums would be on credit, loss meanwhile takes place, for as long as the premium would be paid
within the credit term, the insurer shall have to pay the indemnity.

May isang kakaibang kaso, itong kaso ng UCPB General Insurance vs. Masagana Tela Mart. –Talagang strange yung
kasong yun.
 UCPB v. Masagana: Masagana procured fire insurance from an agent. It was not able to pay immediately because
of the internal processing time of the check. The policy was delivered to Masagana, but before its check was
released to the agent, fire broke and damaged the properties. Masagana tried to pay the insurer and the insurer
accepted. The following day, it filed a claim, but the claim was rejected because premium had not been paid. The
SC considered the insurer in estoppel because it was regular procedure for the insured and insurer to pay at a date
later than the effectivity of the policy. There was a customary date of payment.

Meron dating nagtitinda ng tela, ang pangalan nya, MASAGANA TELA MART. –It insured its properties against
fire. Alam nyo sa insurance, you deal with an agent, you deal with a salesman. So kung ako ang Masagana Tela Mart,
corporation ako, kausap ko salesman. So ibibgay sa akin ang application form, fill up ko, balik ko sa kanya, then the
salesman brings it to the office of the insurer, the insurer processes the policy, and then the policy is given to the
salesman, salesman goes back to me. Sasabihin, “Sir, ito nap o ang policy ninyo.”
Corporation ako, alam nyo naman ang corporation, di yan nagbabayad ng cash. Sasabihin, “O balikan mo next
week, ipa-process naming yung checke.” Alam nyo naman ang practice sa corporate. Paano ba ginagawa ang checke?
–E di ito na yung billing, pag nakita yung billing, gagawa ng voucher, yung voucher, maraming pipirma nyan, kung di man
isa, dalawa. Kung napirmahan na yung voucher, preparationng check. Pag nagawa na yung checke, ung checke naman
papipirmahan. Pag corporation yan, isa o dalawa ang pumipirma.
Over a number of years, in the case of Masagana Tela Mart, premium was never paid upon delivery of the
policy –BUT sometime later. Taon-taon, ganun ang nagging experience. Kunwari lang, taon-taon, binabayaran ang
premium by February 10. I pepresent yung renewal billing Feb 1, ipaprocess, kaya yung checke, naireremit sa insurer ng
salesman ng Feb 10, taon-taon. Then there was one year, ang nangyari, naibigay na yung billing, di pa nababayaran
yung premium, nasunog. Dahil nasunog na, ang ginawa ng masagana tela mart, umorder lang manager’s check at
syang ipinambayad as premium sa UCPB General, tinaggap naman.
Following date, nagfile ng claim ang masagana tela mart, nakita ng ucpb na yung premium was not yet paid at
the time of loss kaya yung claim –DENIED. Pinasurrrender yung Manager’s check and denied the claim. Ang nangyari,
nagkaso na si Masagana Tela Mart and the RTC ruled in favor of Masagana Tela Mart, UCPB was ordered to pay the
indemnity. Kaya lang on appeal, the Court of Appeals reversed the ruling of the RTC kasi nga at the time of loss,
premium was not yet paid. MR Filed –denied. Nagfile ng petition for review with the Supreme Court ang Masagana Tela
Mart. Initially –dismissed. But on Motion for Reconsideration, The SC reversed the ruling of the CA. Ang ginamit na
principle ng SC –Principle of Estoppel.
Pagkalayo-layo XD Kaya sabi ko sa inyo, very strange ruling. Wala tayong magagawa, yun ang ruling. Kaya lagi
kong binabanggit pa dito kasi who knows, that might also be asked in the Bar Exams. Ang gagamitin/invoke mong
principile –ESTOPPEL.