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LIFE INSURANCE where the interest of the minor in the

particular act involved does not


Sec. 179. Life insurance is exceed twenty thousand pesos. Such
insurance on human lives and right may include, but shall not be
insurance appertaining thereto or limited to, obtaining a policy loan,
connected therewith. surrendering the policy, receiving the
proceeds of the policy, and giving the
Or maybe, a contract whereby one minor's consent to any transaction on
party insures a person against loss by the policy.
the death of another. Or an contract
by which the insurer, for a stipulated Sec. 180-A. The insurer in a life
sum, engages to pay a certain amount insurance contract shall be liable in
of money if another dies within the case of suicides only when it is
time limited by the policy, etc (read committed after the policy has been in
book) force for a period of two years from
the date of its issue or of its last
Valued Policy – Life insurance is not reinstatement, unless the policy
a contract of indemnity. The interest provides a shorter period: Provided,
of the person insured in his or another however, That suicide committed in
person’s life is not susceptible of exact the state of insanity shall be
pecuniary measurement. Hence, the compensable regardless of the date of
measure of indemnity is whatever is commission. (As amended by
fixed in the policy. Batasang Pambansa Blg. 874).

Sec. 180. An insurance upon life may Sec. 181. A policy of insurance upon
be made payable on the death of the life or health may pass by transfer, will
person, or on his surviving a specified or succession to any person, whether
period, or otherwise contingently on he has an insurable interest or not,
the continuance or cessation of life. and such person may recover upon it
whatever the insured might have
Every contract or pledge for the recovered.
payment of endowments or annuities
shall be considered a life insurance Sec. 182. Notice to an insurer of a
contract for purpose of this Code. transfer or bequest thereof is not
necessary to preserve the validity of a
In the absence of a judicial guardian, policy of insurance upon life or health,
the father, or in the latter's absence or unless thereby expressly required.
incapacity, the mother, or any minor,
who is an insured or a beneficiary Sec. 183. Unless the interest of a
under a contract of life, health or person insured is susceptible of
accident insurance, may exercise, in exact pecuniary measurement,
behalf of said minor, any right under the measure of indemnity under a
the policy, without necessity of court policy of insurance upon life or
authority or the giving of a bond,

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health is the sum fixed in the classified according to modes of
policy. payment
1. Single premium
Example of situation where the 2. Continuous premium
interest of person insured is 3. Limited Payment Period
susceptible of exact pecuniary
measurement is when creditor insures Term Insurance – The insurer
the life of the debtor, the interest of promises to pay the fact amount of
the insured creditor is measurable the policy to the beneficiary if the
because it is the value of insured dies within a specified period.
indebtedness. The contract expires if insured not
dead within the period. Features are:
Not also correct to say that insurer will 1. It has fixed period
accept the application for life 2. Little or no cash values
insurance without regard to economic accumulated.
value.
In life insurance policy matures either
Human life value is a measure of the on expiration of the term payment to
actual future earnings or services of the insured, or upon death of the
an individual, that is the capitalized insured payment to beneficiaries.
value of an individual’s net future
earnings less the costs of self Term insurance may further be
maintenance. classified into
1. Short Term
Prudent insurer must do the ff. 2. Long Term
1. Set various classes of risks and 3. Renewable insurance
applicants to determine who 4. Convertible insurance – which
among them belong to the so- could be converted into a whole
called “substandard group” life policy or endowment policy
2. Establish the limits for various within a certain period without
classes of risks proof of insurability
3. Adopt Selection and Term insurance is used for short term
classification procedures that need, such as insurance of a debtor by
will permit the placing of the creditor which may be no longer
applicants for life insurance into needed when the debt is paid.
the proper categories.
Endowment Policy. If policy of
KINDS insurance provides that proceeds shall
1. Whole Life Insurance be payable to the assured, if he lives
2. Term insurance to a certain date, and in case of his
3. Endowment Policy death before that date, then they shall
be payable to the beneficiary
Whole Life Insurance – Offers designated. In this case, the interest
permanent protection. May be further of the beneficiary is a contingent one,

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and the benefit of the policy will only Annuity is diametrically opposed. Pays
inure to such beneficiary in case the a fixed sum at one time, in return for
assured dies before the end of the which the company must then perform
period designated in the policy. a series of obligations over a period of
years, at designated times. The hazard
Industrial Life Insurance. That form of loss is not upon the company but
of life insurance under which upon the recipient who may die before
1. The premiums are payable any benefits are received.
either monthly or oftener
2. If the face value of the amount Life insurance – gives protection for
of insurance provided in any immediate death, Annuity gives
policy is not more than five protection for excessive longevity.
hundred times that of the There is also a pooling of money in
current statutory minimum daily annuity but the same spreads the risk
wage in Manila, that some of those who contribute to
3. And if words “Industrial Policy” the pool will live beyond their life
are printed upon the policy as expectancy and outlive their income.
part of the descriptive matter.
MINOR AS INSURED.
Annuity. IC provides that every
contract of pledge for payment of Sec. 180. An insurance upon life may
endowments or annuities shall be be made payable on the death of the
considered a life insurance contract person, or on his surviving a specified
for purpose of the Code. period, or otherwise contingently on
the continuance or cessation of life.
Strictly speaking, may be considered
as investment rather than a species of Every contract or pledge for the
insurance. It is like an investment payment of endowments or annuities
scheme, you pay they invest for you shall be considered a life insurance
(something like that) contract for purpose of this Code.

Anyway, a life insurance involves In the absence of a judicial


payments of amounts known as guardian, the father, or in the
premium by the insured over a period latter's absence or incapacity, the
of years in return for which, the mother, or any minor, who is an
insurer creates an immediate estate in insured or a beneficiary under a
a fixed amount in the event of his contract of life, health or accident
death while in good standing. And that insurance, may exercise, in behalf
in insurance there is an immediate of said minor, any right under the
hazard of loss thrown upon an insurer, policy, without necessity of court
with the required performance by the authority or the giving of a bond,
insured of certain obligations at where the interest of the minor in
designated intervals of time. the particular act involved does
not exceed twenty thousand

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pesos. Such right may include, but The insurer is liable in case of suicide
shall not be limited to, obtaining a even before the two year period if.
policy loan, surrendering the 1. A shorter period is provided for
policy, receiving the proceeds of in the policy
the policy, and giving the minor's 2. When suicide committed in the
consent to any transaction on the state of insanity
policy.
ACCIDENTAL DEATH BENEFIT
Bond of parents now P 50,000.00 CLAUSE – Gives the beneficiary
additional benefits if the death of
Art 225 of family code provides that insured is through accidental means.
father and mother shall jointly Meaning aside from face value of
exercise legal guardianship over the policy, additional benefits. Thus an
property of the unemancipated insured may be given additional
common child without necessity of benefits if he died or got injured in an
court appointment. Father’s decision accident.
shall prevail unless there is a judicial Calanoc Case and Biagtan Case
order to the contrary. Sec 180 should
be modified, such that father and
mother have joint guardianship.
SUICIDE CLAUSE

The policy may provide for suicide as


an excepted peril. It may also include
suicide as a peril insured against. But
suicide clause not necessary for
insurer to be liable if policy has been
in force for period of two years from
the date of issue or last reinstatement.
TRANSFER OF POLICY. Policy of life
Sec. 180-A. The insurer in a life insurance may be the object of
insurance contract shall be liable in voluntary and involuntary transfer.
case of suicides only when it is Insurable interest in part of transferee,
committed after the policy has been in NOT NECESSARY. Notice to insurer is
force for a period of two years from also NOT NECESSARY.
the date of its issue or of its last
reinstatement, unless the policy Sec. 181. A policy of insurance upon
provides a shorter period: Provided, life or health may pass by transfer, will
however, That suicide committed in or succession to any person, whether
the state of insanity shall be he has an insurable interest or not,
compensable regardless of the date of and such person may recover upon it
commission. (As amended by whatever the insured might have
Batasang Pambansa Blg. 874). recovered.

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Sec. 182. Notice to an insurer of a Group Life Insurance Policy and
transfer or bequest thereof is not Industrial Life Policy.
necessary to preserve the validity of a
policy of insurance upon life or health, Sec. 227. In the case of individual life
unless thereby expressly required or endowment insurance, the policy
shall contain in substance the
EXEMPT FROM EXECUTION. following conditions:
Proceeds of life insurance policies are
exempt from execution according to (a) A provision that the
Section 13(k) Rule 39 of the Rules of policyholder is entitled to a grace
Civil Procedure. Which declares as period either of thirty days or of one
exempt from execution “monies, month within which the payment of
benefits, privileges, or annuities any premium after the first may be
accruing or in any manner growing out made, subject at the option of the
of any life insurance” . Any life insurer to an interest charge not in
insurance means those growing out of excess of six per centum per annum
ordinary life insurance contracts or for the number of days of grace
those risks arising from accident. elapsing before the payment of the
premium, during which period of grace
INSOLVENCY. Assignee acquires no the policy shall continue in full force,
beneficial interest in insurance but in case the policy becomes a claim
effected on the life of the insolvent, during the said period of grace before
except to the extent that such the overdue premium is paid, the
insuranc contains assets which can be amount of such premium with interest
realized upon as of the date when the may de deducted from the amount
petition of insolvency is filed. Section payable under the policy in
32 of the Insolvency law provides that settlement;
properties which are exempt from
execution do not pass to the assignee. (b) A provision that the policy shall
be incontestable after it shall have
This is because of the prohibition of been in force during the lifetime
public policy. Insurance is a species of of the insured for a period of two
property that should be conserved and years from its date of issue as shown
not dissipated. in the policy, or date of approval of
last reinstatement, except for non-
CONTENTS OF POLICY. The forms of payment of premium and except for
policies are subjected to the approval violation of the conditions of the policy
of the Insurance Commission. relating to military or naval service in
Generally, insurer may insert time of war;
stipulations which are not contrary to
law, etc. But IC makes it mandatory to (c) A provision that the policy
have certain provisions for Individual shall constitute the entire
Life Insurance, Endowment Policy, contract between the parties, but
if the company desires to make the

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application a part of the contract it centum of the amount insured and any
may do so provided a copy of such dividend additions thereto;
application shall be indorsed upon or
attached to the policy when issued, (2) One or more paid-up
and in such case the policy shall benefits on a plan or plans specified in
contain a provision that the policy and the policy of such value as may be
the application therefor shall purchased by the cash surrender
constitute the entire contract between value;
the parties; (g) A provision that at anytime
after a cash surrender value is
(d) A provision that if the age of available under the policy and while
the insured is considered in the policy is in force, the company will
determining the premium and the advance, on proper assignment or
benefits accruing under the policy, pledge of the policy and on sole
and the age of the insured has security thereof, a sum equal to, or at
been misstated, the amount the option of the owner of the policy,
payable under the policy shall be less than the cash surrender value on
such as the premium would have the policy, at a specified rate of
purchased at the correct age; interest, not more than the maximum
allowed by law, to be determined by
(e) If the policy is participating, a the company from time to time, but
provision that the company shall not more often than once a year,
periodically ascertain and apportion subject to the approval of the
any divisible surplus accruing on the Commissioner; and that the company
policy under conditions specified will deduct from such loan value any
therein; existing indebtedness on the policy
and any unpaid balance of the
(f) A provision specifying the premium for the current policy year,
options to which the policyholder is and may collect interest in advance on
entitled to in the event of default in a the loan to the end of the current
premium payment after three full policy year, which provision may
annual premiums shall have been further provide that such loan may be
paid. Such option shall consist of: deferred for not exceeding six months
after the application therefor is made;
(1) A cash surrender value
payable upon surrender of the policy (h) A table showing in figures cash
which shall not be less than the surrender values and paid-up options
reserve on the policy, the basis of available under the policy each year
which shall be indicated, for the then upon default in premium payments,
current policy year and any dividend during at least twenty years of the
additions thereto, reduced by a policy beginning with the year in
surrender charge which shall not be which the values and options first
more than one-fifth of the entire become available, together with a
reserve or two and one-half per provision that in the event of the

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failure of the policyholder to elect one This section shall not apply to policies
of the said options within the time of group life or industrial life
specified in the policy, one of said insurance.
options shall automatically take effect
and no policyholder shall ever forfeit GROUP LIFE INSURANCE. Group of
his right to same by reason of his individuals are covered by one master
failure to so elect; contract. Policyholder maybe an
employer who obtains group insurance
(i) In case the proceeds of a policy coverage over lives of his employees.
are payable in installments or as an
annuity, a table showing the minimum - Essentially a single insurance
amounts of the installments or annuity contract that provides coverage
payments; for many individuals.
- Employer acts as functionary in
(j) A provision that the policyholder the collection and payment of
shall be entitled to have the policy premiums and in performing
reinstated at any time within three related duties.
years from the date of default of - Most policies require employees
premium payment unless the cash to pay part of the premium and
surrender value has been duly paid, or part to be paid by the owner, or
the extension period has expired, the excess of the unpaid
upon production of evidence of premium of the employee.
insurability satisfactory to the - Although employer may be the
company and upon payment of all titular or named insured, the
overdue premiums and any insurance is actually related to
indebtedness to the company upon the life and health of the
said policy, with interest rate not employee.
exceeding that which would have - Gives the benefit to employees,
been applicable to said premiums and for goodwill, enable employees
indebtedness in the policy years prior to carry a larger amount of
to reinstatement. insurance than they could
afford.
Any of the foregoing provisions or - Employer is an agent of the
portions thereof not applicable to insurer, since employee has no
single premium or term policies shall knowledge or control over the
to that extent not be incorporated employer’s actions in handling
therein; and any such policy may be the policy or its administration.
issued and delivered in the Philippines
which in the opinion of the Mandatory provisions
Commissioner contains provisions on
any one or more of the foregoing Sec. 228. No policy of group life
requirements more favorable to the insurance shall be issued and
policyholder than hereinbefore delivered in the Philippines unless it
required. contains in substance the following

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provisions, or provisions which in the the policyholder or by persons insured
opinion of the Commissioner are more shall be deemed representations and
favorable to the persons insured, or at not warranties, and that no statement
least as favorable to the persons made by any insured shall be used in
insured and more favorable to the any contest unless a copy of the
policy-holders: instrument containing the statement is
or has been furnished to such person
(a) A provision that the or to his beneficiary;
policyholder is entitled to a grace
period of either thirty days or of one (d) A provision setting forth the
month for the payment of any conditions, if any, under which the
premium due after the first, during insurer reserves the right to require a
which grace period the death benefit person eligible for insurance to furnish
coverage shall continue in force, evidence of individual insurability
unless the policyholder shall have satisfactory to the insurer as a
given the insurer written notice of condition to part or all of his coverage;
discontinuance in advance of the date
of discontinuance and in accordance (e) A provision specifying an
with the terms of the policy. The policy equitable adjustment of premiums or
may provide that the policyholder of benefits or of both to be made in
shall be liable for the payment of a pro the event that the age of a person
rata premium for the time the policy is insured has been misstated, such
in force during such grace period; provision to contain a clear statement
of the method of adjustment to be
(b) A provision that the validity of used;
the policy shall not be contested,
except for non-payment of premiums
after it has been in force for two years (f) A provision that any sum
from its date of issue; and that no becoming due by reason of death of
statement made by any insured under the person insured shall be payable to
the policy relating to his insurability the beneficiary designated by the
shall be used in contesting the validity insured, subject to the provisions of
of the insurance with respect to which the policy in the event that there is no
such statement was made after such designated beneficiary, as to all or any
insurance has been in force prior to part of such sum, living at the death of
the contest for a period of two years the insured, and subject to any right
during such person's lifetime nor reserved by the insurer in the policy
unless contained in written instrument and set forth in the certificate to pay
signed by him; at its option a part of such sum not
exceeding five hundred pesos to any
(c) A provision that a copy of the person appearing to the insurer to be
application, if any, of the policyholder equitably entitled thereto by reason of
shall be attached to the policy when having incurred funeral or other
issued, that all statements made by

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expenses incident to the last illness or belongs, and to his age attained on
death of the person insured; the effective date of the individual
policy.
(g) A provision that the insurer will
issue to the policyholder for delivery
to each person insured an individual (i) A provision that if the group
certificate setting forth a statement as policy terminates or is amended so as
to the insurance protection to which to terminate the insurance of any
he is entitled, to whom the insurance class of insured persons, every person
benefits are payable, and the rights insured thereunder at the date of such
set forth in paragraphs (h), (i) and (j) termination whose insurance
following; terminates and who has been so
insured for five years prior to such
(h) A provision that if the termination date shall be entitled to
insurance, or any portion of it, on a have issued to him by the insurer an
person covered under the policy individual policy of life insurance
ceases because of termination of subject to the same limitations as set
employment or of membership in the forth in paragraph (h), except that the
class or classes eligible for coverage group policy may provide that the
under the policy, such person shall be amount of such individual policy shall
entitled to have issued to him by the not exceed the smaller of (a) the
insurer, without evidence of amount of the person's life insurance
insurability, an individual policy of life protection ceasing less the amount of
insurance without disability or other any life insurance for what he is or
supplementary benefits, provided becomes eligible under any group
application for the individual policy policy issued or reinstated by the
and payment of the first premium to same or another reinsurer within thirty
the insurer shall be made within thirty days after such termination, and (b)
days after such termination and two thousand pesos;
provided further that:
(j) A provision that if a person
(1) the individual policy shall insured under the group policy dies
be on any one of the forms, except during the thirty-day period within
term insurance, then customarily which he would have been entitled to
issued by the insurer at the age and an individual policy issued to him in
for an amount not in excess of the accordance with (h) and (i) above and
coverage under the group policy; and before such individual policy shall
have become effective, the amount of
(2) the premium on the life insurance which he would have
individual policy shall be at the been entitled to have issued to him as
insurer's then customary rate an individual policy shall be payable
applicable to the form and amount of as a claim under the group policy
the individual policy, to the class of whether or not application for the
risk to which such person then

9 Life Insurance Notes : From Timoteo Aquino’s Insurance Laws

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individual policy or the payment of the
first premium has been made; DEFINITION.

(k) In the case of a policy issued to Sec. 174. Casualty insurance is


a creditor to insure debtors of such insurance covering loss or liability
creditor, a provision that the insurer arising from accident or mishap,
will furnish to the policyholder for excluding certain types of loss
delivery to each debtor insured under which by law or custom are
the policy a form which will contain a considered as falling exclusively
statement that the life of the debtor is within the scope of other types of
insured under the policy and that any insurance such as fire or marine.
death benefit paid thereunder by It includes, but is not limited to,
reason of his death shall be applied to employer's liability insurance,
reduce or extinguish indebtedness. motor vehicle liability insurance,
plate glass insurance, burglary
The provisions of paragraphs (f) to (j) and theft insurance, personal
shall not apply to policies issued to a accident and health insurance as
creditor to insure his debtors. If a written by non-life insurance
group life policy is on a plan of companies, and other
insurance other than term, it shall substantially similar kinds of
contain a non-forfeiture provision or insurance.
provisions which in the opinion of the
Commissioner is or are equitable to
the insured or the policyholder:
Provided, That nothing herein
contained shall be so construed as to
require group life policies to contain
the same non-forfeiture provisions as
are required of individual life policies. Casualty insurance includes the ff:
Baden Powell GEMO
(BP-PEMO)
CASUALTY INSURANCE AND 1. Burglary and Theft insurance
COMPULSORY THIRD PARTY 2. Personal accident and health
LIABILITY INSURANCE insurance as written by NON-
LIFE insurance companies
Derived mainly from practice of life 3. Plate glass insurance
insurance. Difference is that. 4. Employers liability Insurance
Casualty insurance or accident 5. Motor vehicle Liability
insurance – rests upon a contingent Insurance
even which may or may not happen. 6. Other Substantially similar
Life insurance- rests upon the kinds of insurance
happening of an event which is certain a. Pollution liability
to happen, the contingency is the time insurance
when it would happen, such as death.

10 Life Insurance Notes : From Timoteo Aquino’s Insurance Laws

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b. Pharmacist liability PERSONAL ACCIDENT AND HEALTH
insurance INSURANCE
c. Medical malpractice Includes
insurance 1. Income coverage
d. Garage insurance 2. Coverage for Loss of sight or
e. Directors and officers limb, or
liability insurance 3. Medical expenses coverage

GENERAL RULES. Except with CMVLI ACCIDENT.


the insurance code contains no other
provisions applicable to casualty To be construed and considered to the
insurance contracts, and are governed ordinary understanding and common
by general provisions applicable to all usage and speech of people generally.
types of insurances. Meaning, in substance, that which
happens by chance or fortuitously,
THEFT AND ROBBERY INSURANCE. without intention or design, and which
- Moral hazard is so great, that is unexpected, unusual or unforeseen.
there are may restrictions That which takes place without one’s
- EG. Exception on insured’s foresight or expectation.
personnel under employment
who commits theft. WILLFULL EXPOSURE TO
- Service and employment means NEEDLESS PERILS.
selection, control, Indicates a reckless risking of life,
compensation. tantamount to almost suicide intent.
- When theft and robbery Even in the absence of the express
insurance uses the term exclusion of willful exposure to
employee, it contemplates any needless perils, such willful exposure
person who qualifies as such as may likewise be deemed excluded
generally and universally under the rule that insurers are
understood or jurisprudentially exonerated by the gross negligence of
established in the light of the the insured.
four standards in the
determination of the employer- VOLUNTARY ACTS. General Rule.
employee relationship, or even Death or injury does not result from
in a limited sense. Does not accident or accidental means within
include legitimate job the terms of an accident-policy if it is
contracting. the natural result of a voluntary act,
- Fortune insurance v. ca – unaccompanied by anything
security guards in the armored unforeseen except the death or injury.
car There is no accident when a deliberate
act is performed unless some
additional, unexpected, independent
and unforeseen happening occurs
which produces or brings about the

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result of injury or death. Those which 3. When the Insured failed to
are not ordinarily anticipated to result comply with health and safety
are accidents. regulations
Boxing, basket ball. 4. When the employer discharges,
coerces, or discriminates
Sun Insurance v. Lim – Not suicide but against an employee.
accident, secretary, gun. Bang!
MOTOR VEHICLE LIABILITY
Finman – was stabbed, purely INSURANCE
accidental to victim. The insurer becomes liable for the
damage or injury caused in the
GLASS INSURANCE operation of motor vehicles. May be
voluntary or compulsory and covers
Insures against breakage or damage death, incapacity, or injury and
caused by chemicals accidentally or damage to property. Not limited to
maliciously applied. There is breakage third party liability, and may be
when the break penetrates through comprehensive covering damage or
the entire thickness of glass. injury to the person or property of the
insured himself or third persons.
In addition to cost of glass, policy may
provide for coverage for the ff: DIRECT LIABILITY. Third party victim
1. Repairing or replacing damaged may proceed directly against the
frame insurer for indemnity. Depends upon
2. Boarding up or installing whther the contract of insurance is
temporary plates or openings against liability to third persons or for
3. Removing and replacing fixtures benefit of the insured.
and other obstructions
4. Removal of debris of covered Test. Where the contract provides for
property resulting from a indemnity against liability to third
covered loss persons, then third person to whom
the insured is liable can sue the
EMPLOYER’S LIABILITY insurer. Where the contract is
INSURANCE. Insurance against indemnity against actual loss or
employer’s liability, covers injuries payment, then third persons cannot
sustained by employees which arise proceed against insurer, the contract
out of and in the course of the insured being solely to reimburse the insured
employee’s employment for liability actually discharged by him
thru payment to third persons, said
Exclusions third person’s recourse being thus
1. Serious or willful misconduct on limited to the insured alone.
the part of the insured
2. When employee was hired in The liability of the insurer to such third
violation of law person is based on contract while the

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liability of the insured to the third Qualified driver clause does not apply
party is based on tort. when the person driving is the insured
himself.
Not Joint tortfeasor. The third party
liability is only up to the extent of the Distinguished from Theft Clause
insurance policy and those required by When car is taken wrongfully without
law. The insurer may be held solidarily owners consent it should be the theft
liable up to the extent that the insurer clause that should apply and not the
may be held liable under the contract authorized driver clause. Villacorta v.
of insurance. Insurance Commission. Not authorized
gf, then driven to repair shop, stolen
Policy as measure of liability. by repair boys.
Insurer liable only as fixed in the
policy. COMPULSORY MOTOR VEHICLE
LIABILITY INSURANCE (CMVLI)
No Action Clause disallowed. If Insurance code makes it mandatory
direct liability to third party is provided for all motor vehicles to be covered by
for, a no Action clause cannot be motor vehicle liability insurance as
provided. No action clause is a clause defined and governed by 374 to 376.
that disallows suit against insurer
unless final judgment is obtained by a Sec. 374. It shall be unlawful for any
third party against the insured. No land transportation operator or owner
action clause may not go against of a motor vehicle to operate the same
court’s policy against multiplicity of in the public highways unless there is
suits in force in relation thereto a policy of
insurance or guaranty in cash or
AUTHORIZED DRIVER CLAUSE surety bond issued in accordance with
Means that the insurer will be liable the provisions of this chapter to
only if the driver is an authorized indemnify the death, bodily injury,
driver at the time of the incident. and/or damage to property of a third-
Driver must be permitted in party or passenger, as the case may
accordance with the licensing or other be, arising from the use thereof. (As
laws or regulations to drive the motor amended by Presidential Decree No.
vehicle and is not disqualified from 1455 and 1814).
driving such motor vehicle by order of
a court of law or by reason of any
enactment or regulation in that behalf. Sec. 376. The Land Transportation
Commission shall not allow the
Purpose is to make sure that a person registration or renewal of registration
other than the insured owner who of any motor vehicle without first
drives the car, such as friends, requiring from the land transportation
authorized drivers, etc has a license operator or motor vehicle owner
and no disqualification to drive. concerned the presentation and filing
of a substantiating documentation in a

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form approved by the Commissioner No insurance company may issue
evidencing that the policy of insurance the policy of insurance or surety
or guaranty in cash or surety bond bond required under this chapter
required by this chapter is in effect. unless so authorized under
(As amended by Presidential Decree existing laws.
No. 1455).
The authority to engage in the
Rationale. Intended to provide casualty and/or surety lines of
compensation for the death or bodily business of an insurance company
injuries suffered by innocent third that refuses to issue or renew,
parties or passengers as a result of without just cause, the insurance
the negligent operation and use of policy or surety bond therein
motor vehicles. The victims and/ required shall be withdrawn
dependents are assured of immediate immediately. (As amended by
financial assistance, regardless of the Presidential Decree No. 1455 and
financial capacity of motor vehicle 1814).
owners.
Premium. Paid by operators or
NO unreasonable denial. owners of vehicles, it is unlawful for
land transportation operator or owner
Sec. 379. No land transportation of motor vehicle to require his or its
operator or owner of motor drivers or other employees to
vehicle shall be unreasonably contribute in the payment of
denied the policy of insurance or premiums.
surety bond required by this
chapter by the insurance Agents. No government agency
companies authorized to issue the having the duty of implementing the
same, otherwise, the Land provisions of this chapter nor any
Transportation Commission shall official or employee thereof shall act
require from said land as agent in procuring the insurance
transportation operator or owner policy or surety bond provided herein.
of the vehicle, in lieu of a policy of The commission of an agent procuring
insurance or surety bond, a the said policy bond shall in no case
certificate that a cash deposit has exceed ten percentum of the amount
been made with the Commissioner of the premiums thereof.
in such amount required as limits
of indemnity in section three DEFINITIONS
hundred seventy-seven to answer
for the passenger and/or third- Sec. 373. For purposes of this
party liability of such land chapter:
transportation operator or owner (a) "Motor Vehicle" is any vehicle
of the vehicle. as defined in section three,
paragraph (a) of Republic Act
Numbered Four Thousand One

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Hundred Thirty-Six, Otherwise of passengers for compensation,
known as the "Land including school buses;
Transportation and Traffic Code."
(any vehicle propelled by any power (f) "Insurance policy" or "Policy"
other than muscular power using the refers to a contract of insurance
public highways, pub excepting road against passenger and thirty-
rollers (pison), trolley cars, party liability for death or bodily
(b) "Passenger" is any fare paying injuries and damaged to property
person being transported and arising from motor vehicle
conveyed in and by a motor accidents. (As amended by
vehicle for transportation of Presidential Decree No. 1455 and
passengers for compensation, 1814).
including persons expressly
authorized by law or by the ALTERNATIVE COMPLIANCE. Under
vehicle's operator or his agents to section 377, registration of motor
ride without fare. vehicle shall, before applying for
registration or renewal of registration
(c) "Third-Party" is any person may either.
other than a passenger as defined (IBC)
in this section and shall also 1. Secure an insurance policy
exclude a member of the issued by any insurance
household, or a member of the company authorized by the
family within the second degree commissioner
of consanguinity or affinity, of a 2. Post a surety bond issued by
motor vehicle owner or land any insurance company
transportation operator, as authorized by the
likewise defined herein, or his commissioner.
employee in respect of death, 3. Make a cash deposit in such
bodily injury, or damage to amount which is the required
property arising out of and in the limit of liability for compulsory
course of employment. (As motor vehicle liability insurance.
amended by Presidential Decree
No. 1814 and 1981). COVERAGE.
The commissioner may, if warranted,
(d) "Owner" or "motor vehicle set forth schedule of indemnities for
owner" means the actual legal the payment of claims for death or
owner of a motor vehicle, in bodily injuries setting forth the each
whose name such vehicle is duly coverage.
registered with the Land
Transportation Commission; Amount. Memo circular of the CIC,
Memo Circular no. 4-2006 dated July
(e) "Land transportation operator" 26, 2006. Provides for third party
means the owner or owners of liability coverage of P100,000.00 with
motor vehicles for transportation additional P100,000.00 coverage for

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passenger liability for public utility c. Medical report and
vehicle. evidence of medical or
hospital disbursement in
Schedule of Indemnity. respect of which refund is
Not more than 100,000.00 per claimed.
accident.
Any claim for death or bodily
NO FAULT INDEMNITY CLAUSE. No injuries sustained by a passenger
fault indemnity provision where proof or third party shall be paid
of fault or negligence is not necessary without the necessity of proving
for payment of any claim for death, or fault or negligence of any kind
injury to a passenger or a third party, provided the total indemnity in
are established. respect of any person shall be
fifteen thousand pesos
1. A claim may be made against (P15,000.00) for all motor
one motor vehicle only vehicles.
2. If the victim is an occupant of a
vehicle, the claim shall lie CANCELLATION OF CMVLI
against the insurer of the
vehicle in which he is riding, Sec. 380. No cancellation of the policy
mounting or dismounting from. shall be valid unless written notice
3. In any other case, if victim is thereof is given to the land
not an occupant of a vehicle, transportation operator or owner of
claim shall lie against the the vehicle and to the Land
insurer of the directly offending Transportation Commission at least
vehicle. fifteen days prior to the intended
4. In all cases, the right of the effective date thereof.
party paying the claim to Upon receipt of such notice, the Land
recover against the owner of Transportation Commission, unless it
the vehicle responsible for the receives evidence of a new valid
accident shall be maintained insurance or guaranty in cash or
5. The total indemnity in respect surety bond as prescribed in this
to any person shall not exceed chapter, or an endorsement of revival
fifteen thousand pesos (P5, of the cancelled one, shall order the
000.00). immediate confiscation of the plates of
6. The following proofs of loss, the motor vehicle covered by such
when submitted under oath, cancelled policy. The same may be re-
shall be sufficient evidence to issued only upon presentation of a
substantiate the claim. new insurance policy or that a
a. Police report of accidents guaranty in cash or surety band has
b. Death certificate and been made or posted with the
evidence sufficient to Commissioner and which meets the
establish the proper requirements of this chapter, or an
payee, or. endorsement or revival of the

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cancelled one. (As amended by CLAIMS SETTLEMENT. In any
Presidential Decree No. 1455). settlement, and payment of claims,
the indemnity shall not be availed of
Sec. 381. If the cancellation of the by any accident victim or claimant as
policy or surety bond is contemplated an instrument of enrichment by
by the land transportation operator or reason of an accident, but as an
owner of the vehicle, he shall, before assistance of restitution insofar as can
the policy or surety bond ceases to be fairly be ascertained.
effective, secure a similar policy of Sec. 384. Any person having any claim
insurance or surety bond to replace upon the policy issued pursuant to this
the policy or surety bond to be Chapter shall, without any
cancelled or make a cash deposit in unnecessary delay, present to the
sufficient amount with the insurance company concerned a
Commissioner and without any gap, written notice of claim setting forth
file the required documentation with the nature, extent and duration of the
the Land Transportation Commission, injuries sustained as certified by a
and notify the insurance company duly licensed physician. Notice of
concerned of the cancellation of its claim must be filed within six
policy or surety bond. (As amended by months from date of accident,
Presidential Decree No. 1455). otherwise, the claim shall be deemed
waived. Action or suit for recovery of
CHANGE OF OWNERSHIP. Transfer damage due to loss or injury must be
of ownership does not suspend the brought, in proper cases, with the
policy provided that section 382 of the Commissioner or the Courts within one
insurance code is complied with. year from denial of the claim,
otherwise, the claimant's right of
Sec. 382. In case of change of action shall prescribe. (As amended by
ownership of a motor vehicle, or Presidential Decree 1814 and Batas
change of the engine of an insured Pambansa Blg. 874).
vehicle, there shall be no need of
issuing a new policy until the next Prescriptive period. One year from
date of registration or renewal of the time, the cause of action accrues.
registration of such vehicle, and Period is counted from the date of
provided that the insurance company rejection by the insurer as this is the
shall agree to continue the policy, time when the cause of action
such change of ownership or such accrues.
change of the engine shall be
indicated in a corresponding Again, written claim first, then suit.
endorsement by the insurance
company concerned, and a signed Sec. 385. The insurance company
duplicate of such endorsement shall, concerned shall forthwith ascertain
within a reasonable time, be filed with the truth and extent of the claim and
the Land Transportation Commission. make payment within five working
days after reaching an agreement. If

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no agreement is reached, the or failed to prevent, said violation
insurance company shall pay only the shall be held liable as principals.
"no-fault" indemnity provided in
section three hundred seventy-eight
without prejudice to the claimant from
pursuing his claim further, in which
case, he shall not be required or
compelled by the insurance company
to execute any quit claim or document
releasing it from liability under the
policy of insurance or surety bond
issued. (As amended by Presidential
Decree No. 1455).

PENALTY CLAUSES.

Sec. 388. Any land transportation


operator or owner of motor
vehicle or any other person
violating any of the provisions of
the preceding sections shall be
punished by a fine of not less than
five hundred pesos but not more
than one thousand pesos and/or
imprisonment for not more than
six months. The violation of
section three hundred seventy-
seven by a land transportation
operator shall be a sufficient
cause for the revocation of the
certificate of public convenience
issued by the Board of
Transportation covering the
vehicle concerned.

Sec. 389. Whenever any violation


of the provisions of this chapter is
committed by a corporation or
association, or by a government
office or entity, the executive
officer or officers of said
corporation, association or
government office or entity who
shall have knowingly permitted,

18 Life Insurance Notes : From Timoteo Aquino’s Insurance Laws

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