The Basics of an Insurance Contract

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Insurance Contracts in the Philippines

In entering into an insurance contract, one must be able to know the basics of an insurance contract such as what an insurance contract is and who may be parties to such contract.

The laws which govern insurance contract in the Philippines are 1) Republic Act No. 10607, or otherwise known as the Insurance Code (“Insurance Code”); 2) Republic Act No. 386 or the Civil Code, in the absence of applicable provisions in the Insurance Code; and 3) the general principles on the subject in the United States, in the absence of applicable provisions in the Insurance Code and the Civil Code.

The Insurance Code defines an insurance contract as an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event.

Parties to an Insurance Contract

Every corporation, partnership, or association, duly authorized to transact insurance business as elsewhere provided in the Insurance Code, may be an insurer. Anyone except a public enemy may be insured.

The insurer is the party who agrees to indemnify another upon the happening of specified contingency. The insured is the party to be indemnified in case of a loss. The beneficiary is the person who receives the benefits of an insurance policy upon its maturity.

Basics of Insurance Contracts in the Philippines

Section 3 of the Insurance Code provides what may be insured against. Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest, or create a liability against him, may be insured against.

The consent of the spouse is not necessary for the validity of an insurance policy taken out by a married person on his or her life or that of his or her children.

All rights, title and interest in the policy of insurance taken out by an original owner on the life or health of the person insured shall automatically vest in the latter upon the death of the original owner, unless otherwise provided for in the policy.

What can be Insured? Section 10 of the Insurance Code enumerates the insurable interest, viz:

Section 10. Every person has an insurable interest in the life and health:

(a) Of himself, of his spouse and of his 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; and (d) Of any person upon whose life any estate or interest vested in him depends.”

About Nicolas and De Vega Law Offices

If you need assistance in corporate law, commercial law, corporate or commercial litigation, or civil or other criminal law-related issues,  we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website