INSURABLE INTEREST Ramil F.

De Jesus Introduction Insurance is a contract of insurance as an agreement whereby one undertakes for a consideration to indemnify another against loss, damage or liability arising from an unknown or contingent event. An insurance contract exists where the following elements concur: 1. The insured has an insurable interest; 2. The insured is subject to a risk of loss by the happening of the designed * peril; 3. The insurer assumes the risk; 4. Such assumption of risk is part of a general scheme to distribute actual losses among a large group of persons bearing a similar risk and 5. In consideration of the insurer's promise, the insured pays a premium.

An insurable interest is one of the most basic and essential requirements in an insurance contract. In general, an insurable interest is that interest which a person is deemed to have in the subject matter insured, where he has a relation or connection with or concern in it, such that the person will derive pecuniary benefit or advantage from the preservation of the subject matter insured and will suffer pecuniary loss or damage from its destruction, termination, or injury by the happening of the event insured against. The existence of an insurable interest gives a person the legal right to insure the subject matter of the policy of insurance. Section 10 of the Insurance Code indeed provides that every person has an insurable interest in his own life. Section 19 of the same code also states that an 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. Violeta R. Lalican vs. Insular Life Assurance Co. Ltd., G.R. No. 183526, August 25, 2009 Hilario Gercio vs. Sun Life Assurance Co. of Canada, G.R. No. 23703, September 28, 1925 . In principle, anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction whether he has or has not any title in, or lien upon or possession of the property. Insurable interest in property may consist in (a) an existing interest; (b) an inchoate interest founded on an existing interest; or (c) an expectancy, coupled with an existing interest in that out of which the expectancy arises. Filipino Merchants Insurance Co., Inc. vs. Court of Appeals, G.R. No. 85141, November 28, 1989

Sec. 14 - Insurable Interest inproperty Sec. 17 - Insurable interest in property A lessee has an insurable interest in the equipment and motor vehicles leased. Section 17 of the Insurance Code provides that the measure of an insurable interest in property is the extent to which the insured might be damnified by loss or injury thereof. Vicente Ong Lim Sing, Jr. vs. Feb Leasing & Finance Corp., G.R. No. 168115, June 8, 2007 Sec. 18 - Contract of insurance on property not enforceable except for benefit of person having insurable interest in property insured. Insurable interest in the property insured must exist at the time the insurance takes effect and at the time the loss occurs. The basis of such requirement of insurable interest in property insured is based on sound public policy: to prevent a person from taking out an insurance policy on property upon which he has no insurable interest and collecting the proceeds of said policy in case of loss of the property. Sps. Nilo Cha vs. Court of Appeals, G.R. No. 124520, August 18, 1997

Sec. 19 - Interest in property insured Violeta R. Lalican vs. Insular Life Assurance Co. Ltd., G.R. No. 183526, August 25, 2009