REPUBLIC ACT NO.

10607 "In the application of the provisions of this

Code, the fact that no profit is derived from
AN ACT STRENGTHENING THE INSURANCE the making of insurance contracts,
INDUSTRY, FURTHER AMENDING PRESIDENTIAL agreements or transactions or that no
DECREE NO. 612, OTHERWISE KNOWN AS "THE separate or direct consideration is received
INSURANCE CODE", AS AMENDED BY therefor, shall not be deemed conclusive to
PRESIDENTIAL DECREE NOS. 1141, 1280, 1455, 1460, show that the making thereof does not
1814 AND 1981, AND BATAS PAMBANSA BLG. 874, constitute the doing or transacting of an
AND FOR OTHER PURPOSES insurance business.

Be it enacted by the Senate and House of Representatives of "(c) As used in this Code, the
the Philippines in Congress assembled: term Commissioner means the Insurance
Commissioner.
Section 1. Presidential Decree No. 612, as amended, is hereby
further amended to read as follows: "CHAPTER I
"THE CONTRACT OF INSURANCE
"GENERAL PROVISIONS
"TITLE 1
"Section 1. This Decree shall be known as The Insurance "WHAT MAY BE INSURED
Code.
"Section 3. Any contingent or unknown event, whether past or
"Section 2. Whenever used in this Code, the following terms future, which may damnify a person having an insurable
shall have the respective meanings hereinafter set forth or interest, or create a liability against him, may be insured
indicated, unless the context otherwise requires: against, subject to the provisions of this chapter.

"(a) A contract of insurance is an agreement whereby "The consent of the spouse is not necessary for the validity of
one undertakes for a consideration to indemnify an insurance policy taken out by a married person on his or
another against loss, damage or liability arising from her life or that of his or her children.
an unknown or contingent event.
"All rights, title and interest in the policy of insurance taken
"A contract of suretyship shall be deemed to be an out by an original owner on the life or health of the person
insurance contract, within the meaning of this Code, insured shall automatically vest in the latter upon the death of
only if made by a surety who or which, as such, is the original owner, unless otherwise provided for in the policy.
doing an insurance business as hereinafter provided.
"Section 4. The preceding section does not authorize an
"(b) The term doing an insurance insurance for or against the drawing of any lottery, or for or
business or transacting an insurance business, within against any chance or ticket in a lottery drawing a prize.
the meaning of this Code, shall include:
"Section 5. All kinds of insurance are subject to the provisions
"(1) Making or proposing to make, as of this chapter so far as the provisions can apply.
insurer, any insurance contract;
"TITLE 2
"(2) Making or proposing to make, as surety, "PARTIES TO THE CONTRACT
any contract of suretyship as a vocation and
not as merely incidental to any other "Section 6. Every corporation, partnership, or association,
legitimate business or activity of the surety; duly authorized to transact insurance business as elsewhere
provided in this Code, may be an insurer.
"(3) Doing any kind of business, including a
reinsurance business, specifically recognized "Section 7. Anyone except a public enemy may be insured.
as constituting the doing of an insurance
business within the meaning of this Code; "Section 8. Unless the policy otherwise provides, where a
mortgagor of property effects insurance in his own name
"(4) Doing or proposing to do any business providing that the loss shall be payable to the mortgagee, or
in substance equivalent to any of the assigns a policy of insurance to a mortgagee, the insurance is
foregoing in a manner designed to evade the deemed to be upon the interest of the mortgagor, who does not
provisions of this Code. cease to be a party to the original contract, and any act of his,
prior to the loss, which would otherwise avoid the insurance, "(a) An existing interest;
will have the same effect, although the property is in the hands
of the mortgagee, but any act which, under the contract of "(b) An inchoate interest founded on an existing
insurance, is to be performed by the mortgagor, may be interest; or
performed by the mortgagee therein named, with the same
effect as if it had been performed by the mortgagor. "(c) An expectancy, coupled with an existing interest
in that out of which the expectancy arises.
"Section 9. If an insurer assents to the transfer of an insurance
from a mortgagor to a mortgagee, and, at the time of his "Section 15. A carrier or depository of any kind has an
assent, imposes further obligations on the assignee, making a insurable interest in a thing held by him as such, to the extent
new contract with him, the acts of the mortgagor cannot affect of his liability but not to exceed the value thereof.
the rights of said assignee.
"Section 16. A mere contingent or expectant interest in any
"TITLE 3 thing, not founded on an actual right to the thing, nor upon any
"INSURABLE INTEREST valid contract for it, is not insurable.

"Section 10. Every person has an insurable interest in the life "Section 17. The measure of an insurable interest in property
and health: is the extent to which the insured might be damnified by loss
or injury thereof.
"(a) Of himself, of his spouse and of his children;
"Section 18. No contract or policy of insurance on property
"(b) Of any person on whom he depends wholly or in shall be enforceable except for the benefit of some person
part for education or support, or in whom he has a having an insurable interest in the property insured.
pecuniary interest;
"Section 19. An interest in property insured must exist when
"(c) Of any person under a legal obligation to him for the insurance takes effect, and when the loss occurs, but need
the payment of money, or respecting property or not exist in the meantime; and interest in the life or health of a
services, of which death or illness might delay or person insured must exist when the insurance takes effect, but
prevent the performance; and need not exist thereafter or when the loss occurs.

"(d) Of any person upon whose life any estate or "Section 20. Except in the cases specified in the next four
interest vested in him depends. sections, and in the cases of life, accident, and health
insurance, a change of interest in any part of a thing insured
"Section 11. The insured shall have the right to change the unaccompanied by a corresponding change of interest in the
beneficiary he designated in the policy, unless he has insurance, suspends the insurance to an equivalent extent, until
expressly waived this right in said policy. Notwithstanding the the interest in the thing and the interest in the insurance are
foregoing, in the event the insured does not change the vested in the same person.
beneficiary during his lifetime, the designation shall be
deemed irrevocable. "Section 21. A change of interest in a thing insured, after the
occurrence of an injury which results in a loss, does not affect
"Section 12. The interest of a beneficiary in a life insurance the right of the insured to indemnity for the loss.
policy shall be forfeited when the beneficiary is the principal,
accomplice, or accessory in willfully bringing about the death "Section 22. A change of interest in one or more of several
of the insured. In such a case, the share forfeited shall pass on distinct things, separately insured by one policy, does not
to the other beneficiaries, unless otherwise disqualified. In the avoid the insurance as to the others.
absence of other beneficiaries, the proceeds shall be paid in
accordance with the policy contract. If the policy contract is "Section 23. A change of interest, by will or succession, on the
silent, the proceeds shall be paid to the estate of the insured. death of the insured, does not avoid an insurance; and his
interest in the insurance passes to the person taking his interest
"Section 13. Every interest in property, whether real or in the thing insured.
personal, or any relation thereto, or liability in respect thereof,
of such nature that a contemplated peril might directly "Section 24. A transfer of interest by one of several partners,
damnify the insured, is an insurable interest. joint owners, or owners in common, who are jointly insured,
to the others, does not avoid an insurance even though it has
"Section 14. An insurable interest in property may consist in: been agreed that the insurance shall cease upon an alienation
of the thing insured.
"Section 25. Every stipulation in a policy of insurance for the facts upon the party to whom the communication is due, in
payment of loss whether the person insured has or has not any forming his estimate of the disadvantages of the proposed
interest in the property insured, or that the policy shall be contract, or in making his inquiries.
received as proof of such interest, and every policy executed
by way of gaming or wagering, is void. "Section 32. Each party to a contract of insurance is bound to
know all the general causes which are open to his inquiry,
equally with that of the other, and which may affect the
political or material perils contemplated; and all general
usages of trade.

"Section 33. The right to information of material facts may be

waived, either by the terms of insurance or by neglect to make
inquiry as to such facts, where they are distinctly implied in
other facts of which information is communicated.
"TITLE 4
"CONCEALMENT "Section 34. Information of the nature or amount of the
interest of one insured need not be communicated unless in
answer to an inquiry, except as prescribed by Section 51.
"Section 26. A neglect to communicate that which a party
knows and ought to communicate, is called a concealment.
"Section 35. Neither party to a contract of insurance is bound
to communicate, even upon inquiry, information of his own
"Section 27. A concealment whether intentional or
judgment upon the matters in question.
unintentional entitles the injured party to rescind a contract of
insurance.
"TITLE 5
"REPRESENTATION
"Section 28. Each party to a contract of insurance must
communicate to the other, in good faith, all facts within his
knowledge which are material to the contract and as to which "Section 36. A representation may be oral or written.
he makes no warranty, and which the other has not the means
of ascertaining. "Section 37. A representation may be made at the time of, or
before, issuance of the policy.
"Section 29. An intentional and fraudulent omission, on the
part of one insured, to communicate information of matters "Section 38. The language of a representation is to be
proving or tending to prove the falsity of a warranty, entitles interpreted by the same rules as the language of contracts in
the insurer to rescind. general.

"Section 30. Neither party to a contract of insurance is bound "Section 39. A representation as to the future is to be deemed a
to communicate information of the matters following, except promise, unless it appears that it was merely a statement of
in answer to the inquiries of the other: belief or expectation.

"(a) Those which the other knows; "Section 40. A representation cannot qualify an express
provision in a contract of insurance, but it may qualify an
"(b) Those which, in the exercise of ordinary care, the implied warranty.
other ought to know, and of which the former has no
reason to suppose him ignorant; "Section 41. A representation may be altered or withdrawn
before the insurance is effected, but not afterwards.
"(c) Those of which the other waives communication;
"Section 42. A representation must be presumed to refer to the
"(d) Those which prove or tend to prove the existence date on which the contract goes into effect.
of a risk excluded by a warranty, and which are not
otherwise material; and

"(e) Those which relate to a risk excepted from the

policy and which are not otherwise material.

"Section 31. Materiality is to be determined not by the event,

but solely by the probable and reasonable influence of the
"Section 43. When a person insured has no personal "Unless applied for by the insured or owner, any rider, clause,
knowledge of a fact, he may nevertheless repeat information warranty or endorsement issued after the original policy shall
which he has upon the subject, and which he believes to be be countersigned by the insured or owner, which
true, with the explanation that he does so on the information of countersignature shall be taken as his agreement to the
others; or he may submit the information, in its whole extent, contents of such rider, clause, warranty or endorsement.
to the insurer; and in neither case is he responsible for its truth,
unless it proceeds from an agent of the insured, whose duty it "Notwithstanding the foregoing, the policy may be in
is to give the information. electronic form subject to the pertinent provisions of Republic
Act No. 8792, otherwise known as the Electronic Commerce
"Section 44. A representation is to be deemed false when the Act and to such rules and regulations as may be prescribed by
facts fail to correspond with its assertions or stipulations. the Commissioner.

"Section 45. If a representation is false in a material point, "Section 51. A policy of insurance must specify:
whether affirmative or promissory, the injured party is entitled
to rescind the contract from the time when the representation "(a) The parties between whom the contract is made;
becomes false.
"(b) The amount to be insured except in the cases of
"Section 46. The materiality of a representation is determined open or running policies;
by the same rules as the materiality of a concealment.
"(c) The premium, or if the insurance is of a character
"Section 47. The provisions of this chapter apply as well to a where the exact premium is only determinable upon
modification of a contract of insurance as to its original the termination of the contract, a statement of the
formation. basis and rates upon which the final premium is to be
determined;
"Section 48. Whenever a right to rescind a contract of
insurance is given to the insurer by any provision of this "(d) The property or life insured;
chapter, such right must be exercised previous to the
commencement of an action on the contract. "(e) The interest of the insured in property insured, if
he is not the absolute owner thereof;
"After a policy of life insurance made payable on the death of
the insured shall have been in force during the lifetime of the "(f) The risks insured against; and
insured for a period of two (2) years from the date of its issue
or of its last reinstatement, the insurer cannot prove that the
"(g) The period during which the insurance is to
policy is void ab initio or is rescindable by reason of the
continue.
fraudulent concealment or misrepresentation of the insured or
his agent.
"Section 52. Cover notes may be issued to bind insurance
temporarily pending the issuance of the policy. Within sixty
"TITLE 6
(60) days after issue of a cover note, a policy shall be issued in
"THE POLICY
lieu thereof, including within its terms the identical insurance
bound under the cover note and the premium therefor.
"Section 49. The written instrument in which a contract of
insurance is set forth, is called a policy of insurance.
"Cover notes may be extended or renewed beyond such sixty
(60) days with the written approval of the Commissioner if he
"Section 50. The policy shall be in printed form which may determines that such extension is not contrary to and is not for
contain blank spaces; and any word, phrase, clause, mark, the purpose of violating any provisions of this Code. The
sign, symbol, signature, number, or word necessary to Commissioner may promulgate rules and regulations
complete the contract of insurance shall be written on the governing such extensions for the purpose of preventing such
blank spaces provided therein. violations and may by such rules and regulations dispense
with the requirement of written approval by him in the case of
"Any rider, clause, warranty or endorsement purporting to be extension in compliance with such rules and regulations.
part of the contract of insurance and which is pasted or
attached to said policy is not binding on the insured, unless the "Section 53. The insurance proceeds shall be applied
descriptive title or name of the rider, clause, warranty or exclusively to the proper interest of the person in whose name
endorsement is also mentioned and written on the blank spaces or for whose benefit it is made unless otherwise specified in
provided in the policy. the policy.
"Section 54. When an insurance contract is executed with an "(a) Nonpayment of premium;
agent or trustee as the insured, the fact that his principal or
beneficiary is the real party in interest may be indicated by "(b) Conviction of a crime arising out of acts
describing the insured as agent or trustee, or by other general increasing the hazard insured against;
words in the policy.
"(c) Discovery of fraud or material misrepresentation;
"Section 55. To render an insurance effected by one partner or
part-owner, applicable to the interest of his co-partners or "(d) Discovery of willful or reckless acts or
other part-owners, it is necessary that the terms of the policy omissions increasing the hazard insured against;
should be such as are applicable to the joint or common
interest.
"(e) Physical changes in the property insured which
result in the property becoming uninsurable;
"Section 56. When the description of the insured in a policy is
so general that it may comprehend any person or any class of
"(f) Discovery of other insurance coverage that
persons, only he who can show that it was intended to include
makes the total insurance in excess of the value of the
him, can claim the benefit of the policy.
property insured; or

"Section 57. A policy may be so framed that it will inure to the

"(g) A determination by the Commissioner that the
benefit of whomsoever, during the continuance of the risk,
continuation of the policy would violate or would
may become the owner of the interest insured.
place the insurer in violation of this Code.

"Section 58. The mere transfer of a thing insured does not

"Section 65. All notices of cancellation mentioned in the
transfer the policy, but suspends it until the same person
preceding section shall be in writing, mailed or delivered to
becomes the owner of both the policy and the thing insured.
the named insured at the address shown in the policy, or to his
broker provided the broker is authorized in writing by the
"Section 59. A policy is either open, valued or running. policy owner to receive the notice of cancellation on his
behalf, and shall state:
"Section 60. An open policy is one in which the value of the
thing insured is not agreed upon, and the amount of the "(a) Which of the grounds set forth in Section 64 is
insurance merely represents the insurers maximum liability. relied upon; and
The value of such thing insured shall be ascertained at the time
of the loss.
"(b) That, upon written request of the named insured,
the insurer will furnish the facts on which the
"Section 61. A valued policy is one which expresses on its face cancellation is based.
an agreement that the thing insured shall be valued at a
specific sum.
"Section 66. In case of insurance other than life, unless the
insurer at least forty-five (45) days in advance of the end of
"Section 62. A running policy is one which contemplates the policy period mails or delivers to the named insured at the
successive insurances, and which provides that the object of address shown in the policy notice of its intention not to renew
the policy may be from time to time defined, especially as to the policy or to condition its renewal upon reduction of limits
the subjects of insurance, by additional statements or or elimination of coverages, the named insured shall be
indorsements.1wphi1 entitled to renew the policy upon payment of the premium due
on the effective date of the renewal. Any policy written for a
"Section 63. A condition, stipulation, or agreement in any term of less than one (1) year shall be considered as if written
policy of insurance, limiting the time for commencing an for a term of one (1) year. Any policy written for a term longer
action thereunder to a period of less than one (1) year from the than one (1) year or any policy with no fixed expiration date
time when the cause of action accrues, is void. shall be considered as if written for successive policy periods
or terms of one (1) year.
"Section 64. No policy of insurance other than life shall be
cancelled by the insurer except upon prior notice thereof to the
insured, and no notice of cancellation shall be effective unless
it is based on the occurrence, after the effective date of the
policy, of one or more of the following: