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Insurance
Classes of Insurance Under the
Insurance Code of the Philippines
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CLASSES OF INSURANCE UNDER

THE INSURANCE CODE OF THE PHILIPPINES
 Contract of Surety or
Life Insurance Non-Life Insurance
Bonding
1. Liability is absolutely Liability may or may Undertakes to answer
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& conditions for the
debt, default or
miscarriage of another
(principal or obligor),
such as failure to
perform a contract of
certain duties , or
breach of trust,
negligence and the
like, in favor of a third
(3rd) party;
2. Accessory Contract;
Principal Contract; Principal Contract;
3. NOT a contract of A contract of Credit accommodation
Indemnity; Indemnity; with the surety
assuming primary
liability.
4. Amount of policy is Amount of policy is
without limit; dependent on the
things insured;
5. Valued Policy; Open or Valued Policy

6. Can be transferred or Transferee or

assigned to any Assignee must have
person even if he has an insurable interest;
no insurable interest;
7. Consent of Insurer is In the absence of
not essential to the waiver by the insurer,
validity of the consent is essential in
assignment of a life the assignment of a
policy; fire or marine policy;
8. Insurable Interest Insurable Interest
need not exist after must exist when the
the insurance takes insurance takes effect
effect or when loss and when loss occurs;
occurs;
9. Insurable Interest Legal basis on
need not have any insurable interest is a
legal basis; must;

10 Contingency is a Contingency may or

. certain event; may not occur;

11 Can be terminated by Can be cancelled by Can be cancelled by or

. the insured but either party and is with the consent of
cannot be cancelled usually for a term of the oblige or by the
by the insurer, and is one (1) year, under Commissioner or by a
usually a long-term the grounds provided court of competent
contract; by law; jurisdiction;
12 “Loss” can seldom be Loss of property can
. measured accurately easily be computed
in terms of cash or and measured; and
value; and
13 No obligation to Insured is required to
. prove actual financial submit proof of his
loss as a result of the actual pecuniary loss
death of the insured. as a condition
precedent to
collecting insurance.
14 To be valid and
Does not need Does not need
. enforceable
acceptance of any acceptance of any
acceptance of the
third (3rd) Party. third (3rd) Party.
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NON-LIFE INSURANCE
Ocean/ Marine
Insurance
1. A policy of insurance
of a vessel engaged
on navigation;
2. Constructive loss
(secs.131 & 139) and
abandonment
(sec.132)apply;
3. Partial loss of the
thing insured for less
than its actual value,
insured becomes co-
insurer;
Fire Casualty
Where the hazard is Includes all forms of
fire alone, even if the insurance or mishap
subject if an excluding certain
unfinished vessel; types of loss or
liability which are not
within the scope of
other insurance,
namely: marine, fire,
suretyship and life;
Constructive loss and
abandonment do not
apply;
Insured may become
co-insurer only if it is
expressly agreed upon
by parties;

LIFE INSURANCE
Individual Group Industrial
1. Protection is issued Unit selection is Tailored to suit the
on the basis of through the group needs of a class;
individual application, rather than the
a separate contract individual;
policy for each
purchase;
2. Group-risk and no Sold through
Need of individual
need for any medical individual solicitation
medical examination
examination and without medical
and evidence of
evidence of examination;
insurability;
insurability;
3. Each individual is a Employer or a group
policy holder and with leader is the policy
individual protection; holder and the group
is the one insured;
4. Less economic; and Low-cost mass Written on small
protection; and amount and payable
either monthly or
oftener; and
5. Dependent on one Continuing in nature, Adapted to a
individual; as long as the group particular market.
insured exist;

SAMPLE INSURANCE
By: PhilCharter
PERSONAL ACCIDENT
Refers to that insurance, which provides benefits/indemnity in case of loss/es to the life or
well being of a person arising out of an accident.
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Coverage
1. Accidental Death - covers loss of life arising from the injuries sustained by the
individual.

2. Accidental Loss of Limb - covers loss of limb that may either be permanently disabled
or the actual dismemberment of the limb.
Medical Expenses – covers expenses incurred for the treatment of the injuries sustained
from the accident.

2) Classes of Occupation
CLASS I - Duties with no manual work :

Accountant, Advertising Manager, Architect (office only), Auditor (office

only), Banker, Chemist (dispensing only), Clergyman, Clerk, Engineer
(office only), Jeweler, Lawyer (office only), Manager (office only), Optician,
Photographer (studio only), Teacher, similar professions and occupations.

- Duties with no manual work but include traveling, inspecting or

CLASS II
surveying:

Agents, Appraiser, Adjusters, Auditor (including travel), Automobile Dealer,

Bookseller, Buyer, Commercial Traveler, Inspector, Land Surveyor, Lawyer
(including travel), Press Photographer, Physician, similar professions and
occupations.

CLASS III - Duties involving supervision of manual work:

Includes occasional manual work in superintending workmen like Bakery

Manager, Brew Master, Chemist (laboratory analyst), Decorating
Contractor, Dentist, Engineer, Foreman, Grocery Manager, Hair-dresser,
Manicurist, Pharmacist, Painting Contractor, Surgeon, Master Tradesman
generally who only superintend workmen.

CLASS IV - Duties involving manual work:

Baker, Barber, Chauffeur (private), Engraver, Gardener, Messenger, Radio

Technician, Tailor, Upholsterer, Veterinary Surgeon, Master Tradesman
generally who do light manual work.

I. TRAVEL ACCIDENT INSURANCE

II. FAMILY UMBRELLA ACCIDENT PLAN
III. BREADWINNER PLUS
IV. Auto Passenger Travel Accident Insurance

MISCELLANEOUS CASUALTY

Provides indemnity to the policyholder in respect of liability at law for bodily injury including
death or property damage to third parties
I. COMPREHENSIVE PERSONAL LIABILITY
Liabilities and Medical Payments Coverage is provided for all liabilities resulting from Bodily
Injury, sickness or disease sustained by any person, including death sustained by any
person, loss of earnings as well as damage to property.
II. GOODS IN TRANSIT
Designed to cover any property as described against loss, damage or destruction caused by
any of the peril while such property is within the geographical area stated in the Policy and
is being carried by any conveyance (other than by air) specified in the Schedule while
loaded on such conveyance and temporarily housed in the course of transit
III. FIDELITY GUARANTEE
Provides insurance on the amount of financial loss suffered by the Insured from an
employee, who, while acting in capacity opposite the name of such employee in the said
Schedule, committed acts of fraud and dishonesty.
IV. PROPERTY FLOATER POLICY
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Insurance on all risk of direct physical loss or damage to property Insured from any external
cause, subject to the conditions and exclusions of the Policy.
GOLFER’S COMPREHENSIVE POLICY

FIRE INSURANCE
Definition of Fire Insurance
A contract whereby one (PhilCharter) promises, for a consideration (Premium) to indemnify
another (Insured) for direct loss or damage of the latter’s property by fire or lightning.
The Sum Insured
The maximum limit of liability Philcharter may assume and the basis upon which the
premium is calculated. It is not a declaration of the insured property’s value nor it is the
amount which PhilCharter should pay in the even of loss, unless there is stipulation to this
effect.

Who may be Insured?

1) Absolute or registered owner of property;
2) Part-owner or joint owner of property;
3) Mortgagor or mortgagee;
4) Lessor or lessee, or;
5) Bailee - to whom the property is entrusted.

I) STANDARD FIRE POLICY

Basic Coverage
Covers the peril of fire and/or lightning

What may be Insured?

1) Buildings (completed or under construction);
2) Contents
a) Stocks in trade, goods and merchandise;
b) Machinery, equipment, spare parts, accessories and tools;
c) Business and Household appliances, utensils, furnitures, fixtures
and fittings;
d) Personal effects and belongings (cash and jewelry excluded);
e) Other tangible property such as books, tables, chairs, and others
SPECIAL ALLIED PERILS INSURANCE

Perils that are customarily excluded in the Standard Fire Policy but may be availed of
through additional premium. They may also be known as Extra Perils, Special Perils,
Extraneous Perils or simply as Other Perils.

A) Earthquake Fire and Shock

B) Typhoon and/or Flood
C) Extended Coverage Endorsement (EC) – covers the perils of Explosion, Falling Aircraft,
Vehicle Impact, and Smoke.
1) Explosion - covers loss or damage due to Explosion except loss or damage due to
Explosion except loss or damage to pressure vessels from their own explosion, and
centrifugal force of rotating machinery.

2) Aircraft and Vehicle Impact - covers loss or damage due to physical contact or
impact of an aircraft or vehicle, including falling objects from aircraft.
3) Smoke - covers loss or damage due to sudden, unusual faulty operations of any
heating or cooking unit when connected to a chimney by smoke pipe/vent in the
premises excluding however smoke from fire
places or industrial apparatus.
D) Riot and Strike - this covers loss or damage directly caused by:
1) Strikers and locked out worker;
2) Persons disturbing the place, and;
3) Lawful authorities acting to suppress the disturbance.

ENGINEERING INSURANCE
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Engineering Insurance is primarily aimed to provide a comprehensive and adequate

protection to contract works/ erection works, construction plant and equipment and/ or
machinery, computer data and equipment. It also covers third party claims for property
damage and bodily injury in connection with the construction and erection works.

Types of Engineering Insurance Products

1) Contractor’s All Risk (CAR)

2) Erection All Risk (EAR)
3) Computer All Risk (COAR)
4) Machinery Breakdown Insurance (MBI)
5) Electronic Equipment Insurance (EEI)

Who can be Insured?

1) Principal
2) Contractors
3) Subcontractors

I. CONTRACTOR’S ALL RISKS (CAR)

CAR covers all type of civil engineering and construction works.

Types of Work Covered

All types of works may be insured, whether it is civil engineering or normal construction.

1) Dwellings, houses, bungalows, office/commercial buildings;

2) Factories, warehouses, silos’
3) Civil engineering works like roads, bridges, skyways, viaducts, tunnels, railways, dams,
irrigation systems, etc.

The erection of machines and metallic structures may be included in CAR policies, i.e.,
power plants, factories, steel bridges and other similar risk.

II. ERECTION ALL RISK (EAR)

The Erection All Risk insurance covers all sorts of erection, be it for complete plants or for
individual machines.

EAR insurance is not limited to machines; steel construction may be included. Since civil
engineering work can be included, the total construction is rather complete.

Furthermore, EAR insurance can also cover construction of prefabricated elements,

excluding building. It is also important to note that EAR insurance is not for the purpose of
relieving the contractor of his commercial risks. Therefore, the coverage must be limited to
purely technical aspect. In other words, financial losses, e.g. penalties, delay, capacity, etc.,
are totally excluded.

III. COMPUTER ALL RISKS INSURANCE (COAR)

Coverage

1) All Risks on Material Damage to Computer Equipments

2) Extra Cost Insurance in case of Damage
3) Data Media Cover

Valuation

The Computer including component parts may be valued for insurance purposes by either of
the two types of valuation:

1) Actual Cash Value - Actual value less depreciation

2) Replacement Cost - Actual retail costs of the property at the time
of loss or damage.
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IV. MACHINERY BREAKDOWN INSURANCE (MBI)

The machinery breakdown is a type of Accident Insurance for machines and mechanical
installations. It covers all types of stationary and mobile machinery as well as apparatus
used in the industry from the smallest electric motor up to the steam turbo alternators used
in the modern electric power plants, whether normal, working or not.

Machinery Breakdown Insurance covers only sudden and unforeseen loss or damage
excluding normal wear and tear.

V. ELECTRONIC EQUIPMENT INSURANCE (EEI)

Unforeseen and sudden physical loss or damage to the insured equipment from any cause,
other than those specifically excluded, in a manner necessitating repair or replacement.

MARINE INSURANCE

A contact whereby the Insurer (PhilCharter) guarantees, for a consideration (Premium) to

indemnify the other (Insured), in manner and to the extent thereby agreed, against losses
incident to marine adventure.

Kinds of Marine Insurance

Marine Insurance can be classified according to:

1. Subject-Matter
a. Marine Cargo
b. Marine Hull
c. Freight Insurance
d. Insurance on Taxes and Duties
2. Risk Area
a. Ocean Marine
b. Inter-Island Marine
c. Inland Cargo

Five Basic Perils in the Marine Policy

1. Perils of the Sea – extraordinary happenings of the seas that include stranding,
sinking, collision of the vessels and damage to unusually heavy weather.
2. Fire
3. Assailing Thieves – robbery with force and not just ordinary theft or pilferage.
4. Jettison – throwing overboard of cargo to lighten and / or refloat the vessel, which
was stranded.
5. Barratry – fraudulent act of the master or mariner against the shipowner’s interest.
MARINE CARGO INSURANCE

It is an insurance against risk connected with navigation, transportation or any stage in the
preparation for shipment, to which a ship, cargo, freightage, profits or other insurance
interest in movable may be exposed during a certain voyage, shipment, transit or stage of
preparation for a fixed period of time. Marine Cargo Insurance is designed to insure
merchandise from the time it leaves the seller's premises until it reaches the buyer. It
encompassed all modes of conveyances, be it by land, sea or air.
COVERAGE
1. TYPE OF COVER
Base on various business needs, various types of policies can be arranged.
a. SINGLE POLICY
b. OPEN POLICY
2. INSURED VALUE
a. Agreed Insured Value
b. Valued Policy
Marine Hull Insurance

Insurance that covers the damage or loss for the vessel caused by perils of the seas such as
bad weather, collision, sinking, stranded. It also covers risks of fire, explosion, piracy,
jettison, collision, crew negligence, etc. Moreover, Marine Hull Insurance also covers for third
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party liability caused by collision liability and general average loss.

Policy provided includes full terms coverage and total loss coverage. Full terms insurance is
for partial loss and total loss. Total loss condition is only for total loss coverage.
A. The Risk Covered
Perils of the seas, rivers, lakes or other navigable waters
The most obvious perils of the sea are grounding, stranding, sinking, capsizing, collision,
heavy weather, contacts with floating/submerged or fixed objects.
Fire, explosion
Fire arising from accident or other unascertained cause is covered as is fire caused by
somebody’s negligence.
Violent theft by persons from outside the vessel
It does not cover clandestine theft or pilferage or theft committed by the ship’s crew (could
be considered barratry) or passengers (if a mutiny, could be considered a piracy). Violence
refers to the fact force or threat of force is used in a theft but not necessarily against a
person.
Jettison
Throwing over board of part of the vessel’s equipment
Piracy
Piracy is an act of “plundering indiscriminately for their personal ends”
Breakdown of or accident to nuclear installations or reactors
Incorporating the Institute Radioactive Contamination Exclusion Clause reduces the
coverage.
Contact with aircraft or similar objects, or objects falling there from, land
conveyance, dock or harbour equipment or installation
Earthquake, volcanic eruption or lightning
These are intended to cover damage caused by natural calamities that are not necessarily
perils of the seas.
Accident in loading, discharging or shifting cargo or fuel
Bursting of boilers, breakage of shafts or any latent defect in the machinery or
hull
This covers the consequential damage caused by the above events.
Latent Defect
Latent defect is a flow or condition causing premature failure in the hull or machinery
whether it is constructed or installed originally or it comes into existence as a result of the
way in which the part was designed, constructed or installed.
Negligence of Master, Officers, Crew or Pilot
Negligence means doing something, which ought either to be done in a different way or not
at all, or omitting to do something, which ought to be done.Negligence of Repairers or
Charterers provided such Repairers or Charterers is not an Assured
Barratry of master, officers or crew
Barratry is a wrongful act willfully committed by the master or crew to the prejudice of
shipowners.

MOTOR CAR INSURANCE

Motor Car Insurance is any insurance pertaining to the ownership, maintenance, or use of
motor vehicle. It is also a contract between two (2) parties whereby one (the Insurer)
promises for a consideration (premium) to indemnify another (the Insured) for direct loss or
damage of the insured vehicle and to pay any claim for death of or bodily injury to and
property damage of any Third Party caused by or arising from the ownership or operation of
the motor vehicle.
1. Private Car Policy. This policy covers private motor vehicles used for social,
domestic and pleasure purposes, and for the Insured’s business or profession. This
excludes cars being hired out to other parties.
2. Commercial Vehicle Policy. This policy covers motor vehicles used mainly for
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commercial (business) purposes such as those transporting goods or products from

one place to another in connection with the Insured’s business except carriage of
goods for hire or reward, used for transporting passengers for compensation.

Basic Coverages of Motor Insurance Policy

1. Compulsory Third Party Liability (CTPL). Its an insurance against liability for
death or bodily injury of third parties arising from motor vehicles accidents resulting
from fault or negligence of the assured or any authorized driver while driving the
insured motor vehicle. This is further subject to the Schedule of Indemnities stated in
the policy.

2. No Fault Indemnity. This section ensures the protection of third party against
bodily injury and/or death without the necessity of proving fault or negligence of any
kind provided :
a. Total indemnity of any one Third Party shall not exceed P15,000.00.
b. Following documents shall be submitted, under oath:
i. Police report of the accident or any evidence sufficient to
establish the claim;
ii. Medical report and evidence of medical or hospital expenses
iii. Death Certificate and evidence sufficient to establish the
proper payee
3. Loss and Damage. This cover protects and will indemnify the Insured against
loss or damage to the insured motor vehicle as well as its built-in accessories and its
spare parts resulting from:
a. Accidental collision or overturning
b. Fire, external explosion, self-ignition
c. Malicious act; and
d. Whilst in transit

Fair Market Value. This is the basis for arriving at the estimate of the value to
be used as the limit of liability for the loss and damage cover.

Deductible. This is the participation of the insured for each and every
loss/damage.

4. Excess Liability Insurance

a. Excess Liability against death / bodily injury (to any Third Party). This
cover is similar to that of CTPL. However, this will only respond once CTPL limit of
P50,000.00 has been exhausted and this no longer subject to Schedule of
Indemnities. Amount of cover may range from 100,000 to 500,000 depending on
the type of motor vehicle being insured and its corresponding premium is based
on the regulated premiums of Insurance Commission.
b. Excess Liability against Property Damage (to any Third Party). This
cover is only limited to protect assured against damages to properties of third
party which he might incur in the use or operation of his insured motor vehicle.
Amount of cover may range from 100,000 to 500,000 depending on the motor
vehicle being insured and its corresponding premium is based on the regulated
premiums of Insurance Commission.

5. Unnamed Personal Accident. This is an optional cover that provides protection

to occupants riding in, boarding in, or alighting out of the insured motor vehicle.
Premiums may vary from one insurance company to another.

BONDS / SURETY
SURETYSHIP is commonly referred to as a triparty contract primarily because it involves
three parties and three contracts which are as follows:
PARTIES

1. SURETY – also known as the insurer. it issues and writes the surety bond; one who
agrees to guarantee the performance or non-performance of an obligation imposed
upon the obligor.
2. PRINCIPAL – also known as the obligor or debtor. it is the person in whose behalf
the bond is issued; the one obliged to perform or not perform a particular task or act
pursuant to the terms and conditions of the principal contract.
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3. OBLIGEE – also known as the creditor or beneficiary. it is the one who obliges the
obligor / principal the performance of a particular act pursuant to a contract; the
ultimate beneficiary of the bond.

CONTRACTS

1. SURETY BOND - contract that whereby the surety guarantees the performance of
the principal's obligation as specified in the contract.
2. PRINCIPAL CONTRACT - specifies the main undertaking to be performed or not
performed by the obligor and to be guaranteed by the surety.
3. INDEMNITY AGREEMENT - executed by the principal in favor of the surety;
guarantees that, in case of
default of the obligor, whatever amount the surety would shell out as a result of a
claim, he would be reimbursed for the same by the former.
SIX MAJOR CLASSIFICATIONS OF BONDS
acc. to PHILASSURERS
1. Contractor's Bond
2. Customs Bond
3. Judicial Bonds
4. Guaranty Payment
5. License and Permit Bonds
6. Fidelity Bonds
Note: Bonds may also be classified into two (2) major classes, to wit:

1. Judicial Bonds.
2. Non-Judicial Bonds
COMMONLY ISSUED BONDS IN PHILCHARTER BASED ON CLASS
CONTRACTOR’S BONDS

1. Bidder’s Bond
2. Performance Bond
3. Warranty Bond
4. Downpayment Bond
5. Payment Bond
CUSTOMS BOND

Class of bonds which primarily guarantees the payment of taxes and proper handling of
goods while within the custody of the warehouseman.

1. General Bond for Bonded Warehouse

2. General Warehousing Bond
1. Filed by the importer in an amount equal to 100% of the estimated duties and taxes
on the merchandise which the importer expects to import during the calendar year.
2. The regular and and lawful withdrawal of imported articles declared in the entry for
warehousing within the maximum period of one year from the date of arrival of the
imported articles, after the same have been examined and the duties, taxes, and
other chargers determined.
3. Payment of the duties, taxes, and other charges to which the articles
shall then be subjected.
JUDICIAL BOND

1. Attachment Bond
2. Heir’s Bond
3. Replevin Bond
4. Supersedeas Bond

GUARANTY PAYMENT BOND

1. Dealership Bond
2. Lease Agreement
3. Distributorship Bond

LICENSE AND PERMIT BOND

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1. Importer’s Bond - required by the Bureau of Customs

2. Insurance Broker’s Bond - required by the Insurance Commission
3. Custom Broker’s Bond - required by the Bureau of Customs
4. Stock Broker’s Bond - required by the Securities and Exchange
Commission.
FIDELITY BONDS

1. Individual Fidelity Bonds